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How to choose the right credit card for your business

In business, even decisions that seem relatively insignificant can make the difference between smooth sailing and troubled waters - and choosing a company credit card is no exception. A well-informed decision will save you time and money, so take a look at these key considerations to understand how you could use your credit card to work towards your business goals.

Managing finances

If you are a sole trader or startup, the likelihood is that you’ll be managing your own finances, perhaps even defining your passion project as a business expense for the first time, and choosing a simple credit card option can make the transition easier. Most providers offer a basic charge card that, unlike credit cards, will not charge interest or an annual fee. You’re simply required to pay off your expenses in full every month. In return, you have a bill detailing, and separating, your business expenses. There are no additional bonuses or rewards, but sometimes simplicity is enough.

Protecting your purchases

Credit cards automatically provide purchase protection under Section 75 of the Consumer Credit Act, making them essential for large purchases. But many small business credit cards also offer additional insurance as part of the service, or at discounted prices. These are especially valuable for businesses whose main purchases are for resale (which aren’t subject to the Consumer Credit Act), or to those whose work involves a lot of travelling.

Incentivising employees

Whether you’re your own boss or managing a team of workers, it never hurts to offer bonuses, and credit cards can help do that. Many offer rewards schemes that accrue points based on your spending. These are then redeemable for goods and services, which can be gifted to employees, or used as bonuses and performance incentives.

Maximising returns

Knowing your numbers is every bit as important as discovering the best deal. Low interest rates are a major factor if you’re using your card to boost liquidity, but if your company can clear the balance on time every month, it makes sense to focus on finding the best cashback deals to generate additional revenue. Alternatively, if you’re a frequent flier you may find more value in reward schemes offering air miles, so look out for lucrative offers as well as favourable interest rates.

Finally, look out for specifically designated small business credit cards, as these will have been designed with organisations just like yours in mind. American Express offers a selection of different cards and rewards schemes all tailored for small businesses, so it’s worth exploring your options to find the system that makes sense for your company.

This was posted in Bdaily's Members' News section by Peter Rivers .