5 Things Entrepreneurs Need to Know About Business Credit Cards 5 Things Entrepreneurs Need to Know About Business Credit Cards A business credit card can be a smart way to earn rewards on your company’s expenses, pay purchases off over time and keep your personal and business spending separate. But make sure you’re smart in choosing and using your card by knowing these 5 things: 1 Some Rewards and Perks are Better for You Than Others The business card rewards field is diverse. Some cards earn flexible travel rewards you can redeem for any travel expense. Others earn miles for a specific airline. Others earn cash back. The bonus categories (categories that let you earn extra rewards on certain purchases) are diverse as well, encompassing everything from car rentals, to office supplies to digital advertising. So instead of applying for the first card your bank offers you, research the field. Match your biggest expenditures to a card’s bonus categories. Make sure the rewards currency you earn will be something you actually use. 2 There’s a Difference Between Credit Cards and Charge Cards Some of the most premium business cards on the market are actually charge cards. That means the balance is due in full every month. If you prefer to carry a balance and pay it off over time, a credit card is what you want. Having your credit pulled can temporarily ding your credit score. 3 Your Personal Credit Will Probably get Pulled When You Apply for a Business Card Especially if your business is a start-up, the bank will use your personal credit to get a read on you, in addition to looking into your business financials. If your personal credit isn’t great, you may not get the best terms on a business card. There’s another hitch, too: Having your credit pulled can temporarily ding your credit score. So, if you’re planning on getting a big loan anytime soon to finance your personal goals (buying a home, for example), consider holding off on applying for the business card. 4 You May Have to Personally Guarantee Your Business Debt Many business cards from major issuers have “personal guarantee” fine print. Scan the application for language referring to you being “personally responsible” both “individually and jointly” for charges made on your business credit card. It means that you’re personally responsible for any charges your business can’t pay. After all, the bank is taking a risk in extending credit to your business. It’s possible to get a business card without a personal guarantee, but it can be tough, especially for start-ups without much money to show. So, recognize the risks — if your business can’t pay off the card and you can’t either, collections and serious credit damage may be in your future. 5 Business Credit Cards Offer Things Personal Credit Cards Do Not Once you recognize the risks of business cards, you can enjoy the rewards. Issuers of business cards have created products tailor-made for entrepreneurs, with rewards and payment schemes personal cards may not offer. American Express, for example, offers a flexible-payment arrangement on its Plum Card, which gives you a rebate if you pay in full — and 60 days interest free if you can’t. Business rewards cards, meanwhile, offer bonus categories you won’t find on personal cards but that can represent significant outlays for companies – things like telecommunications expenses, shipping, office supplies and online advertising. Depending on the rewards program, you can then feed cash rewards straight back into your business, or transfer points to travel programs for a future trip (business or pleasure). Once you recognize the risks of business cards, you can enjoy the rewards. Kristin McGrath Kristin McGrath, editor and financial expert at CreditCardForum has more than 7 years in the financial service industry and is a seasoned expert on credit card products, usage and trends. As the blogger and editorial director for www.CreditCardForum.com, she has first-hand knowledge of what consumers are discussing when it comes to their credit cards.