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Update: Some offers mentioned below are no longer available – SimplyCash® Plus Business Credit Card from American Express
A business credit card isn’t just something you need to help separate your personal and company expenditures. When used properly, credit cards are tools that can help you build your business and, more importantly, improve your firm’s bottom line. This is true whether you just opened shop or if you’ve been around for years.
But these tools aren’t one-size-fits-all. If your main goal is to save money on an upcoming major business purchase — or you need to float a balance as cheaply as possible — using a card with big rewards and a big interest rate might not serve you or your business properly.
Let’s look at seven ways credit cards can help you build your business — and matching credit cards to meet your business’ needs.
1. Grab Cheap Financing Where You Can Find It
If you’re just starting out, your low-cost financing options probably are going to be limited, particularly until you build your business credit score. Banks may not be a viable option, as many have strict small-business lending standards that often disqualify new firms with limited credit from getting financing. Government programs could help. But the most reliable source of funding may also be the easiest to obtain.
Since small business credit cards are guaranteed by you personally, you don’t need to have established business credit to get one. A card could help fund your equipment purchases and other startup costs, and you should look out for ones that come with a 0% APR introductory offer.
Intro offers are typically more generous on personal credit cards, but there are some business cards that offer no-interest financing for a year or longer, including the SimplyCash® Plus Business Credit Card from American Express, which offers 0% intro APR on purchases for 15 months (see rates & fees) (then a variable 14.49% to 21.49% APR) (see rates & fees), and the Ink Business Cash Credit Card, which offers 0% intro APR on purchases for the first 12 months (then a variable 15.24% – 21.24% APR). Neither card charges an annual fee. (see rates & fees for SimplyCash Plus)
How much can a 0% offer save you? If you charged $15,000 on a card that levied a 21.49% APR and paid if off in 15 months, you would have paid nearly $2,238 in interest. That’s big savings. Just remember to pay your credit card bill off on time and in full after the introductory period ends.
2. Credit Cards Can Improve Your Cash Flow
Cash flow challenges are not unusual among either new or existing businesses. Bills don’t stop coming due even if you haven’t been paid yet. Credit cards can help, especially if you put most of your expenses on them, and you don’t have access to a bank line of credit. One bill due once a month is much easier to plan for than dozens of invoices spread out over 30 days.
Some business credit cards are even designed to give you more wiggle room when it comes to cash flow crunches. That could save you money on unnecessary interest payments.
The Plum Card® from American Express gives card holders 60 days to pay off a balance before accruing interest (see rates & fees). You’ll have to make your minimum payment — 10% of the balance from new charges plus any previously deferred balance in full — by the due date to avoid interest. Consider that for what it is: A free two-month loan. In months where cash flow isn’t a problem, you can also enjoy a 1.5% discount on the portion of eligible charges you pay off within 10 days of your statement closing date.
3. Rewards Can Save Your Company Money
The federal government doesn’t consider rewards and welcome bonuses as income, but rather the IRS interprets them as a discount on purchases, much like a store coupon or rebate. You don’t have to think this way. This is free money — especially if you don’t change your spending habits in order to accrue bonuses and points.
And the great thing about rewards credit cards is you can use that free money any way you see fit. If your company travels a bunch, plow the rewards you earn from the Business Platinum® Card from American Express back into flights. If you spend a bunch on office supplies, consider the SimplyCash Plus, which includes a bonus category that pays 5% cash back at US office supply stores and on wireless telephone services (up to $50,000 in combined purchases each calendar year; then 1%). That cash may be a rebate on what you spent, but it adds to your bottom line.
Maxed out, that 5% bonus category is worth $2,500 annually to your business.
Apply for the Business Platinum card instead, and you’ll earn up to 100,000 points; 50,000 points after you spend $10,000 and an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Those 100,000 bonus points are worth $2,000 according to TPG’s latest valuations. The card comes with a $595 annual fee (see rates & fees), but you’ll also get up to a $200 annual airline fee credit and a Global Entry or TSA PreCheck application rebate (up to $100).
Finally, you can redeem your points directly for first or business class, or for any seat on the airline of your choice, and get a 35% points rebate.
4. Build Your Business Credit
Issuers will look at your personal credit score and your income when you apply for that first business credit card, but after you open it, that line of credit sits separate from your personal credit line. Congratulations, you’ve just started building your business credit score.
Act responsibly by paying on time and keeping your credit utilization in check, and you will gradually build a strong business credit score. That will open doors to inexpensive business lines of credit through your bank, better interest rates on other loans and lower insurance premiums, saving your business money.
5. Mind Those Perks
Credit cards have some great benefits that you can use to protect yourself against financial loss — and even save a few bucks along the way.
Here’s an example: The Ink Business Preferred Credit Card comes with a unique cell phone insurance benefit that offers up to $600 in protection against covered theft or damage, for up to three claims per year with just a $100 deductible. The policy also covers employees’ cell phones, but you’ll need to use the card to pay their bills, too. That’s $600 you won’t have to spend in case something goes wrong.
You can save money — and earn your company rewards — by picking a credit card that offers free employee credit cards. You may have to pay an annual fee for yourself, but authorized users won’t. Take the Capital One Spark Cash for Business card and its cousin the Capital One Spark Miles for Business card. They both charge a $95 annual fee (waived the first year), but offer free employee cards. Grab cards for five employees and you’re saving nearly $500 a year in annual fees. Plus, your employees earn (for the business account) the same 2% cash back on all purchases on the Spark Cash card and 2x miles per dollar spent on all purchases with the Spark Miles card.
6. Help With the Books
Business and corporate American Express cards come with a feature called Spend Manager, which allows you to add receipts and notes to your transactions using either your computer or smartphone. And if you use QuickBooks to manage your accounting, you can label and transfer your transaction data directly from your card’s online account statement. The Business Platinum Card transfers your card transactions automatically each day.
Features like this may not save you a bunch of money, but they can make organizing your firm’s finances much easier — allowing you to spend more time and energy on other matters important to your business.
7. Monitor Your Employees
You want to trust your employees to make sound spending decisions, but fraud does happen. There are cards that allow you to set limits on what your employees can and can’t do with their cards. You can set up alerts, summary reports and spending limits so a rogue employee doesn’t try to use your card for his benefit.
Limits don’t apply to restaurant tips and hotel stays extended beyond their original reservation period, and the overall account capacity is taken into consideration.
Growing your business is all about saving money where you can, earning money in unexpected places and making as many required tasks as easy as possible. Credit cards — when managed responsibly — can help you do all three of these things. The savings can be significant, especially if your company spends heavily on travel, office supplies or other bonus categories small-business credit cards tend to reward the best.
Featured photo by Rafa Elias / Getty Images
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Aside from the up to 100,000 points welcome bonus, Amex recently made huge improvements to the Business Platinum Card, including the fact that you will now earn 50% more points on purchases of $5,000 or more, earn 5x on flights and eligible hotels at Amextravel.com and cardholders will receive a $200 airline fee credit each year.
- Welcome Offer: Earn up to 100,000 Membership Rewards® points.
- Earn 50,000 Membership Rewards® points after you spend $10,000 and an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership.
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com.
- Get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each eligible purchase of $5,000 or more. You can get up to 1 million additional points per year.
- 35% Airline Bonus: Use Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 35% of the points back, up to 500,000 bonus points per calendar year.
- Enroll to get up to $200 in statement credits annually by getting up to $100 semi-annually for U.S. purchases with Dell. Terms apply.
- Get one year of Platinum Global Access from WeWork. With this membership, you can access 300+ premium, inspiring workspaces in 75+ cities. To get this exclusive offer, enroll between 2/15/2019 and 12/31/2019.
- Terms Apply
- See Rates & Fees