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Credit Cards For Your Business: Which Type Is Right For You?

Running your small business comes with a lot of expenses and, while you have a personal credit card, you may wonder if using a credit card for your business is a good choice. As a small business owner you may need an option to allow employees the ability to travel and make everyday business purchases as necessary. Rewards like travel points and cash back are also great perks, especially if your business requires frequent traveling. Business credit cards can be an indispensable resource for small business owners when used wisely.

There are many options today — from business cards (also called small business cards) to purchasing cards. What exactly is the difference and which card is right for you? All are considered commercial cards, and that term can be used interchangeably when referring to each, but there are significant differences to each.

Small business credit cards

Small business credit cards give employees the freedom to make company-related purchases, while allowing the employer to oversee the spending by setting spending limits and purchasing restrictions on the accounts. These cards are beneficial for businesses that may not need an expense-reporting system with a lot of extra features, but simply need to manage their expenses online and in real-time.

The range of businesses and organizations that use a business credit card is endless. Small businesses, churches, organizations and associations can all benefit from this type of payment solution.

Purchasing cards

A purchasing card is a different type of commercial payment solution that is ideal for businesses that require more advanced online functionality. Public and private school systems, municipalities or construction companies are examples of businesses that may typically use this type of system.

When a purchasing card is used, additional information regarding the transaction may be shared with the business owner, such as how many gallons of gas were purchased and the price per gallon. In addition, each company can set specific requirements or limitations for the various cards, such as purchasing restrictions. Purchasing card systems allow the cardholders to create an online expense report with receipt-attachment capabilities and also have the ability for the transaction information to integrate with the businesses accounting system.  

Make sure it’s a good fit

In addition to determining which type of card you need, business owners should research interest rates and the repayment period. How many days after the billing cycle ends is payment due — 10 days, 15 days, 25 days? Also be sure to ask what fees are associated with the card program, such as annual card fee, or a fee for online access. With numerous card options, and the ability to customize a business’s needs, small business owners can ensure they choose the best option by consulting their bank’s commercial credit card specialist.