A guide in choosing the right credit card for your business (Part 1)

Starting up a new business can sometimes be a financial drain on prospective entrepreneurs or businessmen. The start-up cost of the business, the initial overhead, and other sundry expenses can be a taxing proposition for even the most frugal person.

For some start-up business owners, one trick that they use to extend the available funds for their business is to use credit cards for incidental or office expenses. By paying for purchases at a later date they get to extend their cash on hand and stretch their budgets.

But before you do decide to use a credit card for business use, do consider some facts and assess the situation.

Firstly, determine if the credit card you intend to use for business is suited to the purpose you want to use it for. The credit card you intend to use must fit with your spending or repayment habits. If you use a card that’s not suited to your needs you’ll end up paying more than what you’re supposed to. Remember that a credit card can be a useful tool for business as long as you remember that you have to make it work for you. Find a better deal in terms of interest charges. There are so many good deals out there nowadays that you won’t have difficulty looking for the best ones. But also beware the credit card companies do use some tricks to take back some interest earnings from you by manipulating their terms and conditions. The best way to avoid these things is to use a different card for each different purpose that you have.

Below are some reminders to help you determine the best credit card for you:

For the regular buyer/spender who clears his balance in full every month

You’re the type of person who often uses his credit car for purchases but clears the debt in full every month. The interest rate doesn’t matter in this situation – unless there is no interest-free period, in which case you’ll pay interest whether you pay in full or not. Most credit cards offer an interest-free period of up to 59 days from the date of transaction. Look for a card with no annual fee and decide on whether you want a cash back or reward.

For the regular buyer/spender who usually clears his balance in full every month

You regularly use your card and have been doing well in clearing your balance every month but occasionally you would let a balance carry to the next month. For cases like these, it would be a good idea to get a card that offers a low standard rate so that interest charges that have been accrued for those months you didn’t pay in full won’t be too large. Also, choose a card with no annual fees and have either a cash backor reward promotion.

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