If you’re looking for a business credit card, or if you’ve had a business credit card for a while but have questions, this list of frequently asked questions, and their answers, may help you understand the basics.
Q. Will business credit cards be on my personal credit?
A. If you have established a business as a separate entity, such as a DBA, partnership, LLC or corporation, you can set up a business credit profile separate from your business credit. This does take time and diligence in using credit well, but it’s usually worth it. Otherwise, you can get business credit using your personal credit profile.
Q. Do business credit cards have annual fees?
A. Yes, business credit cards do charge an annual fee, and those fees are often much higher than personal credit cards. Cards with higher annual fees usually offer more features, such as detailed statements and rewards. Shop around to find a card that fits your needs.
Q. Do business credit cards have late fees?
A. Like personal credit cards, business credit cards charge a late fee if your payment is not received by the payment due date. You absolutely must get your payment to the card company by that date, or risk paying a $35 or more late fee.
Q. What is the difference between fixed APR and variable?
A. If you have a variable rate APR on your credit card, the card company can adjust your rate at any time. They never adjust down, so your interest rate and payments could go up unexpectedly. The most common reason is chronic late payments, but the lender might also adjust rates on all cardholders because of a change in the prime rate, for example. With a fixed rate APR, your rate remains the same. The company can raise it for certain reasons, but you will have warning, so you can budget for the increase in credit card payments.
Q. Can I get cash from my business credit card?
A. You can get cash advances on your business credit card, and this is one reason to have a card, especially during low cash flow periods. But you should be very careful to use this feature wisely. Take out only what you need and repay it as soon as possible. You can get in trouble with cash advances, so be very cautious about this type of credit card spending. Use it when you need it, but use it wisely.
Q. What kind of support do credit card companies offer business cardholders?
A. Support varies by credit card company, so make sure that you know what to expect from the company you choose. If you want to talk to a live person, you should make sure that’s available. If you prefer to get answers from a website and by email, check the online support your card company offers.
Business credit cards are a very important tool in operating your business, but like any other tool, they can be misused, so make sure that you understand all the terms of your credit card and use it well.