In the first article of this two-part series, we went over some of the benefits and potential pitfalls of a business credit card. Here we’ll go over some of the features and rewards, how to choose one that best fits your needs and the latest legislation.
Business Credit Card Features and Rewards
The best business credit card plans offer:
- No annual fee (or no annual fee during the first year)
- 0% intro APR on all purchases (temporary offers w/expiration date)
- Online quarterly and year-end summary reports
- Eligibility for an automatic credit line increase
- $0 fraud liability if your card is lost or stolen
- Employee cards at no additional cost
- You control the credit limits
Common reward programs for business credit cards:
- Cash bonuses if you sign up for employee cards or spend a certain amount within a certain time (for example: $100 cash bonus if you spend $1,000 in the first three months). You can also earn points instead of cash bonuses with some cards
- Cash back (1% to 5%) from select providers
- Special rewards for purchases of everything from airfare and gasoline to hardware and software, advertising, supplies and shipping, to charges for restaurants, hotels, concierge services, and wireless, phone, cable, and TV services
- Ability to redeem cash rewards anytime, for any amount; and to set up automatic redemption for eligible purchases
Natalie Rutledge at LowCards.com provides some advice on how to best use your credit card rewards. Should you spend them all at once or save for later? Should you convert them to cash or save them for online purchases? Natalie offers many good suggestions.
Make sure you know which of your rewards programs have expiration dates -- read the fine print or contact your credit card provider. Also, make sure you know exactly how your reward programs work -- whether you can get cash or use points only; online only or in physical stores too.
If you have more than one credit card, find out if you can combine rewards points between companies. Rutledge also advises you to take advantage of bonus points given throughout the year. "These are excellent opportunities to earn accelerated rewards," she notes.
How to choose a business credit card to suit your needs:
- Compare interest rates, annual fees, and rewards programs of various credit cards. CreditCards.com, CardRatings.com, Credit.com, and Bankrate.com have comparison charts and other resources.
- Know your credit score: Get copies of your personal and business credit reports. Some agencies offer free credit reports, with restrictions.
- Read the fine print to fully understand the advantages and the limitation of the credit card you're getting, its terms and conditions, and the fees.
- Don't just focus on annual fees. Check out benefits like baggage insurance, concierge service, employee-expense tracking, and access to airline clubs.
- Take advantage of introductory zero-percent rates on purchases and balance transfers.
- Apply for a business credit card that will help your company build creditworthiness. That way, you can protect your personal credit and assets.
- Watch out for teaser rates and special offers; most of them come with strings attached. Make sure you understand the terms and how long your teaser rate stays in effect.
- Don't apply for too many cards, as it might raise a red flag with creditors and reflect negatively on your credit score.
The Latest Legislation
In June, 2013, U.S. Rep. Nita Lowey (D-N.Y.) introduced the Small Business Credit Card Act of 2013 (H.R. 2419) to protect small-business owners' credit cards from unfair practices of credit card companies.
According to the National Small Business Association, the Small Business Credit Card Act would require credit card companies to notify businesses before raising their interest rates, apply payments to the balance with the higher interest rate, stop charging late fees unnecessarily, and more.