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A Look at Choosing Between the Five Basic Types of Credit Cards

Choosing Credit Card

You may become quite overwhelmed at the sheer number of credit cards out there at any given time. Although finding the right credit card for your needs, your budget and your financial situation may be a time-consuming process, you can narrow down your options by first deciding which type of credit card you need or want.

The following is a list of the basic types of credit cards so you can begin narrowing down your credit card options:

1. Secured – A secured credit card is the ideal credit card for an individual with either bad credit or no credit. A secured credit card is a credit card that requires a deposit that is equal to your credit limit. The deposit is like an insurance policy for the credit card company, and they hold it as collateral should you fail to make a payment on your credit card. As you begin establishing a positive credit history through timely payments, you will likely then be able to apply for an unsecured credit card.
2. Unsecured – Unsecured credit cards are credit cards best suited for individuals with a strong credit score. Unsecured credit cards require no deposit and usually come with competitive interest rates. Unless the card specifies that it is of the secured variety, you can assume it is an unsecured credit card.
3. Rewards – Rewards credit cards are the name of the game when it comes to credit cards these days. Rewards credit cards can be anything from gasoline and airline rewards to cash back credit cards. In short, they are credit cards that reward customers for shopping and spending money on their credit cards.
4. Student – A student credit card is one that is marketed and targeted primarily to college students. They will likely come with low credit limits and higher interest rates, but are often a smart choice for young adults looking to build a credit history.
5. Business – A business credit card is one that is used primarily by small businesses. A business credit card will likely come with a higher credit limit and features that allow business owners to better manage their businesses and business expenses.

What you Need to Know about Small Business Credit Cards

Choosing Credit Card

If you are a small business owner you’ve no doubt witnessed the flood of business credit card offers as of late. Many banks, in an attempt to lure back their small business owners, are now offering small business credit cards with attractive promotions and rewards programs.

Many small business owners, however, are unsure whether to apply for a small business credit card, and for good reason; these credit cards are not protected under the CARD Act. So, is it a financially smart idea to apply for a small business credit card if you are a small business owner?

Here are a few factors to take into consideration:

• Small business owners who use small business credit cards are not protected by the CARD Act. In short, all those “transparency” regulations afforded to consumers are not afforded to small business owners, so those fantastic offers and promotions may not all they’re cracked up to be.  A good example of this is creditors can issue rate increases at any time and for any reason when it comes to business credit cards. For example, if you fail to make a payment on an unrelated loan, your creditor can raise the interest rate on your business credit card.
• Small business credit cards are not superior when it comes to taxes. In other words, if you charge a business expense to a personal credit card you can still claim it as a business expense on your taxes. A business deduction is a business deduction, regardless of how you pay for it.
• Business credit cards do not protect business owners when their employees overspend. Remember that you are responsible for the expenses charged by your employees if you provide them with their own business credit card. In other words, you can’t ask the credit card to reverse the charges if your employee overspends or charges unapproved purchases. It is ultimately your responsibility to cover any purchases charged by your employees.
• Business credit cards are always personally guaranteed by the business owner. In other words, if your business fails or if you fall behind on your credit card payments on your business credit card, your personal credit history will suffer. The notion that business credit cards do not affect business owners on a personal level is a common misconception.

What you Need to Know about Business Credit Cards

Choosing Credit Card

Business credit cards may seem like the logical choice if you are a business owner. They may be used by businesses that range from one to one thousand employees and everywhere in between. And most business owners naturally assume that they need a business credit card for their business.

This article will explore the many aspects of business credit cards, so you can make the best decisions, both for yourself and your business:

• Your ability to obtain a business credit card will depend as much on your personal credit history as your business credit history. In other words, expect your qualifications and interest rate to be determined by both business and personal credit history. Keep in mind, also, that creditors will look at many different aspects of your business to determine your eligibility, so make sure your license and insurance are up to date.
• Although many individuals assume that they will not be personally liable for their business credit cards, the exact opposite may be true. Look for the terms “commercial liability” and/or “joint and several liability” language in your credit card agreement, as this will detail your personal responsibility regarding your business credit card debt. It is vital to know your rights before applying for a business credit card, as if your business fails, the creditor may go after you personally, as well.
• If you are grappling between using a personal credit and a business credit card for your business, consider that a business credit card may offer you a significantly higher credit limit. A higher credit limit, of course, will afford you the opportunity to better run your business. Some business cards, as a matter of fact, come with no spending limits, although they will tend to carry higher annual fees.
• You can issue cards to your employees with a business credit. Most business credit cards allow you to issue multiple credit cards for one account, and many of them feature customizable features that allow you to grant certain privileges to some employees over others. Plus, you can better track your employees’ spending with a business credit card.
• Payment terms can be varied according to your business needs. Because cash flow can vary for small businesses depending on the time of the year, your ability to pay may also vary. Because of this, many creditors offer payment deferment for customers, thereby allowing business owners to better manage their budget and cash flow.

What you need to know about Secured Business Credit Cards

Credit Repair

Most of us are aware of secured credit cards for consumers. However, with the recent climate of tight lending standards, many businesses are now taking advantage of secured credit cards.

Securing the Money you need for your Business

If you own a business that fell on hard times and as result your business now has poor credit and a bad credit history, your ability to obtain a line of credit may be near impossible. As such, you may have wondered if you can get the extra cash necessary to keep your business running by using a small business credit card.

However, once again, your low credit score will probably inhibit you from receiving a small business credit card.

Rebuilding your Business Credit

If you are in desperate need of a way to rebuild your business credit so that you can once again enjoy the benefits of small business credit cards and lines of credit, then you need to consider obtaining a secured business credit card.

A secured business credit card is one of the easiest ways to build your business’ credit card history back up again. In short, a business credit card may serve as a practical tool for rebuilding your credit. A secured credit card will enable you to prove to creditors that you have established disciplined financial habits. It will also give your credit score a much-needed boost.

Although it may be a bit inconvenient to use a secured credit card because it is necessary that you provide the creditor with a deposit in the amount of your credit limit, if you charge purchases and continue to make timely payments your credit score could start to improve in as little as a few months.

Don’t assume that all secured credit cards are alike, though. It is necessary to research your secured business credit card options before applying for one. There are many websites that will compare secured business credit cards, side by side, to allow you to view different secured business credit cards, as well as their APR, terms and conditions.

Your Guide to Securing a Business Credit Card with a Low Interest Rate

Choosing Credit Card

If you own a small business then you are certainly aware of the advantages of having a small business credit card. In particular, you enjoy the low interest rates and the high credit limits that usually go along with owning a small business credit card.

However, there are certain steps you can take to ensure that you’re receiving the best, possible terms for your business credit card. How can you make sure you are getting the best interest rate with your business credit card?

• Get quotes from several different credit card companies. Don’t assume that all business credit cards carry the same APRs and fees; in fact, there are a wide range of fees that come with business credit cards, so begin your search for a business credit card by getting quotes from several different companies.
• Use the power of negotiation. If you find a business credit card that suits your business needs, but it doesn’t have the lowest APR when compared to other credit cards, you can always contact the credit card company and ask them to lower the APR; often times, credit card companies will comply with your request because they want your business. Make sure to come to the negotiation table with several other quotes from other credit card companies so you have some ammunition when negotiating.
• Consider a secured business credit card. Many times, businesses only look to unsecured credit cards; however, many secured credit cards can offer lower interest rates. If you have collateral, you may want to consider having a secured credit card. However, keep in mind that you will ultimately be responsible for your credit card bills with a secured credit card.
• Establish credit with one company and then ask for a decrease in your APR once you have a proven credit history with them. More often that not, credit card companies will want to keep your business if you have proven yourself to be a good customer, so use this to your advantage and ask for a lower APR.

Beware of Small Business Credit Cards with Personal Liability Clauses

Credit Card Types

Small business credit cards offer many small business owners loads of convenient and practical features that allow them to run their businesses more efficiently; which is why so many small business owners have flocked to small business credit cards over the last, few years.

You may think it is in your best interest to take out a small business credit card for your business, and that generally holds true, but there is an exception to this rule.

As more and more credit card companies put the brakes on consumer credit, there are a number of changes that have also taken place; in particular, there are many credit card companies that include personal liability clauses with their small business credit cards.

Personal Liability Clauses Increasing

A small business credit card that features a personal liability clause is something that you might want to steer clear of, mainly because it means that if you are unable to pay your credit card because your business didn’t succeed, you may be personally responsible for paying back that credit card debt.

In other words, the credit card company can come after you, the cardholder, to pay your business credit card. Most small business owners run their business so that the business’s assets and liabilities remain separate from their own, personal accounts. However, credit card companies, in an effort to recoup some of their losses due to the lousy credit market and equally lousy economy, have started attaching small business debt to the cardholders who own the businesses.

Your Small Business Card may be Linked to your Personal Assets

That essentially means that a creditor may now be able to come after your personal assets if you are unable to pay your small business debt.

Unfortunately, the new credit card legislation does not cover small businesses, leaving many small businesses on their own when it comes to fighting creditors.

It therefore pays to take the time to read the small print of your small business credit card. Ask questions if you don’t understand the card’s terms and conditions and, if the creditor has a personal liability clause in their card’s terms and conditions, consider looking for another small business credit card.

The Top Five Tips to Remember about your Business Credit Card

Choosing Credit Card

A business credit is a smart financial tool for many business owners, and many business credit cards offer a nice variety of features and perks which help business owners manage their business in the most effective manner.

It is therefore extremely important that business owners find the right business card to best suit their needs. With that said, there are five tips to remember when shopping for a business credit card:

1. If you are thinking about simply using a personal credit card for business purchases, think again. Mingling your personal accounts with your business accounts will simply cause confusion – and a great deal of frustration – when balancing your books and filing your income tax returns.
2. Consider searching for a business credit card that offers a year-end, itemized statement. This incredibly practical business credit card feature sure beats searching for receipts, organizing expenditures and scratching your head over where the money was spent.
3. Consider a business credit card for building your business credit. Building business credit is just as important as building personal credit, as it allows you to obtain capital in the future, if necessary.
4. Consider searching for a business credit card that offers small business perks or rewards. There is a nice variety of business credit cards that offer discounts and rebate programs for small businesses, so consider taking advantage of one of these business credit cards for your business.
5. Consider using a business credit card to track your employee spending.  Many business credit card accounts enable you to provide your key employees with their own credit card – with a limit preset by you. This enables you to monitor their spending, yet also allows them to handle some of the financial aspects of your business.

A business credit card may be just what your business needs. From small business incentives and rewards to convenient account features and online tools, it pays to do your research to find out what a business card can offer you and your business.