A business credit card is one of the most versatile—yet often overlooked—tools that small businesses can use to help build their solid financial base. From the earliest stages of your business organization’s development, the benefits of having a business credit card can help your organization on its journey toward financial success.
“When you’re trying to get your business off the ground, (it) can be a great time to apply for a business credit card,” said Cheng Lee, business card solutions leader at Truist. “At Truist, our small business clients often provide us with a personal guaranty that aids in our ability to consider the business organization for a credit card. A business credit card allows small businesses to have a dedicated payment resource to pay business expenses rather than a small business owner overloading his or her personal credit card. Plus, when used responsibly, a small business card can help you stretch your precious startup cash and boost your business’s financial health.”
Why have a business credit card?
There are several reasons small business owners typically lean on a business credit card.
Keep track of your spending.
As an owner, watching your spending—especially in the early days—is important. By using a business card(s) for your business-related expenses, you can categorize your charges by type to closely monitor and exercise control over your expenses and cash flow. You can also authorize your employees to use business credit cards for business purchases while you set limits to control their spending. Your organization will have online access to monitor individual employee transactions and roll them together into an expense picture for the whole organization.
Stretch your cash.
A business credit card offers payment flexibility in several ways. Like all credit cards, you can stretch your cash by paying monthly instead of each time you make a purchase. Additionally, a business credit card often allows you to make a minimum payment due each month instead of the full amount your organization owes on a given statement. This can help ease cash flow needs during tighter times.
Simplify financial reporting.
Most business credit cards exchange information with standard accounting packages so that charges can be recorded, categorized, and analyzed without having to enter transactions twice. As your business grows and its financial reporting becomes more complex, a business credit card synced to your accounting package can simplify your financial processes and offer streamlined reporting on where your cash goes.
Get fraud protection.
Credit cards offer fraud liability protection, so you’re covered if your card is lost or stolen. And credit cards usually reduce your use of checks, a major source of fraud attacks. 1
Find peace of mind.
You can sign up to receive customized mobile notifications for transactions and security alerts. Plus, you can set card controls to lock and unlock cards, control when you travel, and set spending limits. And with mobile apps, you can check recent transactions and more.
Build your business credit history.
It’s easy to apply for a business credit card. If your organization is approved, using your card responsibly helps your organization start down the path to building your business credit. Business credit may one day help your business secure financing since it’s one of the main factors lenders look at when evaluating your loan request. Responsible use of your small business card account includes staying within your credit card limit and diligently paying down your obligations.
Earn rewards and perks.
If your organization is approved for a rewards credit card, your organization can use your business spending to accumulate valuable perks, such as travel rewards or cash back from your purchases. And if you’ve got other employees as authorized cardholders, your organization will earn rewards benefits based on their spending as well.
How to choose the right business credit card for your organization
There are several types of business credit cards. Some cards include cash rewards and travel perks while others appeal to businesses looking to eliminate annual fees and utilize lower interest rates.
Which business credit card is right for you? Start by looking at the benefits:
- Cash back provides rewards based on eligible purchases. The amount of cash back that you get often varies by spending category, so look for cards that best fit your business’s spending pattern.
- Travel rewards such as airline miles or lodging points are an attractive benefit for frequent travelers. Business spending can add up to big savings on flights and hotels.
- Get loyalty rewards for consolidating your business at a single bank. Truist offers business clients a loyalty bonus when they have both a business rewards credit card and a business checking account. With the Truist Business Cash Rewards credit card,2 clients receive a 10% Loyalty Cash Bonus2 if cash rewards are deposited into an eligible Truist business checking, savings, or money market account. And the 10% bonus can increase to 25% or 50% with a Dynamic Business Checking account, based on your Dynamic Tier (Core, Plus or Preferred) at the time of redemption. With the Truist Business Travel Rewards credit card,3 you can also get a similar loyalty bonus when you redeem miles for travel3.
- Potentially find lower rates for businesses wanting a card that provides the flexibility to extend payments instead of earning rewards. The Truist Business credit card offers lower interest rates than other Truist business credit card products.
Then consider the card costs:
- Is there an annual fee?
- What are the interest rates applicable to each type of transaction? Are they different for each type of transaction? Some cards offer fewer rewards but lower interest rates.
- How long is the grace period before interest accrues? Is there a penalty interest rate or other fees if you fail to make payments on time?
What do you want a business credit card to do for you?
If you’re looking to accumulate rewards through high spending while paying off the balance each month, rewards points or cash back may be your best option. If you’re looking for a card where you can stretch payments when your business needs it, look for one with lower interest rates.
Spending management—one of the top features for small business owners—needs to be efficient and easy to use. Look at how you can link your business credit card to your business checking account, and make sure you review your options for adding employee cards as you add staff. Your business may be small right now, but a card that can meet your business purchasing needs as you expand offers added flexibility.
Don’t neglect to read the fine print about penalties and fees. While you may be focused on making payments on time, there are other things that matter too. Don’t exceed your credit and ensure you meet the other requirements; you’ll want to know about potential penalties and fees and when they’re applied.
Look at the full picture so you can choose a card that will offer the best value for your business, both now and in the future.