Pricing and Costs of Small Business Credit Cards

Small business credit card costs and charges explained for business owners

Small business credit cards are a fixture in most business financial reports. In order to utilize these cards successfully, the business owner needs to take into consideration the costs of using them.

The benefits of using a small business credit card are numerous, including easy management of monthly expenses and giving employees a line of credit for business related expenses. The benefits must outweigh the cost of the line of credit, though. Take the following into consideration when investigating the pricing and costs of small business credit cards:

1. Ensure that the business credit is high enough to qualify for the lowest interest rates possible, reducing expenses and costs.

2. Plan to use credit cards for business solely, as mixing personal and business expenses are a tax problem.

3. Maintain all company credit cards and statements for tax purposes at the end of the year.

 

Choose business credit cards with low interest rates

A business credit card can be expensive when interest rates on the line of credit are high. Locate the most affordable credit lender offering the most flexible interest rates to ensure the business is not paying more than it should. Interest rates for businesses are dependent on the lender and on the business's creditworthiness. Expect to pay between 3% and 18% annually, depending on the company. To minimize finance charges, pay the balance in full within the card's grace period.
Try: Locate credit cards for small business with low interest rates. Credit Cards offers a regularly updated list of credit card offers available to small business owners. The company lists the current interest rate charged by the lender. This makes comparing costs easier. Bankrate offers a similar service, allowing business owners to get quotes for interest charges.

Determine the expense of fees on corporate credit cards

In some situations, small business credit companies charge fees for using their service. Fees may be membership fees or fees for multiple credit cards on the same account. Fees may also be charged to reward credit cards, including mile fees and cash back fees. Fees range in cost from $39 to $200 per year, depending on the line of credit. A statement of fees must be made available to the small business owner prior to applying for the line of credit.
Try: Use a business credit card comparison to locate the lowest associated fees. Services such as LowCards allow business owners to compare fees prior to applying for the line of credit. Look for annual fees to be listed for each credit line. The Federal Reserve Board displays all possible fees and gives an estimated cost for some.

Manage credit cards for small business to avoid excessive costs

When a small business has credit cards, small business management must maintain the credit lines effectively to reduce any charges that are not necessary. To maintain expenses, make payments on time. Keep credit card balances as low as possible to avoid over limit fees. Maintain the business' creditworthiness to ensure the business qualifies for low rate cards whenever possible. The cost of late fees and over-the-limit fees will range from state to state, with averages being between $25 and $39 per month, per overage.
Try: Pay the corporate credit card timely and pay as much as possible. The Federal Deposit Insurance Corp. (FDIC) provides information on the results of not maintaining credit lines effectively. Legally, businesses must provide a list of fee charges prior to application. Find out what they are by going to the Credit website.

 

• Choose the best business credit card based on a combination of each of these items. Locating the most affordable card can help a business save thousands of dollars each year on credit usage.

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