How to Pick a Business Credit Card in Four Simple Steps

If you have an SME that seems to be on the up, you might feel that it’s time to start considering your credit options, and taking out a business-specific credit card can be a really good idea. Giving you more flexibility with regards to your spending, it has only one major drawback: it can be difficult to choose which option would be best for your enterprise.

That’s because business credit cards often come with a far higher credit limit than personal cards, so you’re potentially going to be putting a large amount of money on them. On top of this, you might choose to issue additional cards to your employees, which adds a whole other layer of complexity.

However, don’t let this put you off, especially if you’re a female entrepreneur. According to the latest statistics gathered by Funding Options as part of its commitment to ensuring diversity within their offering, for every £100 lent to businesses, only £16 goes to women, despite funding being seen as an intention of growth. This is something that needs to change, and educating yourself on the best option for your enterprise is one way to do it.

With this in mind, here’s a handy step-by-step guide to help you make an informed decision.

Step #1: Consider Your Monthly Expenditure

The first place to start when it comes to choosing a business credit card is with your own books. As a rule, it’s often handy to look back through the past six to twelve months in order to identify your primary operating costs. Once you know what these are, you can then start looking for a credit card that provides attractive rewards in your key areas of expense.

Help manage the risk of taking on new customers or suppliers by completing self serve business credit reports as changes in cash flow can impact your profitability and force a reduction in monthly expenditure.

Step #2: Look at Your Company Lifestyle

Once you know where your company spends its money, you’ll also want to consider what sort of commercial ‘lifestyle’ a credit card needs to accommodate, and there are a few areas you should focus on to gain an idea of this.

Firstly, ask yourself whether your business requires you or your employees to do any long-distance travelling. If so, look for an option that lets you redeem rewards for flights and/or hotels. Next up, does your business mean you or your staff are behind the wheel a lot? If the answer is ‘yes’, a card that offers perks for spending on vehicles might be useful.

Similarly, if you need to entertain clients at restaurants or bars, look for an option that accommodates this. It’s not necessarily about finding the perfect card but, rather, identifying your ideal match.

Balancing coins and a potato on a calculator

Step #3: Consider Your Preferred Credit Limit

While rewards play a big part in shaping how suitable a card is for you, they’re not the only thing you should consider; you’ll also need to think about expenses. Capital On Tap business credit cards, for example, offer facilities of up to £50,000, meaning they may be better for companies with a higher average outlay than those with a lower limit.

Equally, you’ll need to think about whether it’s worth paying an annual fee, as although it can be tempting to immediately disqualify such options, they often come with very attractive reward rates and lucrative bonuses, which can balance things out or even shift the balance. This makes such fees worth considering.

Step #4: Assess any Fringe Benefits

By the time you’ve run through the steps above, you’ve probably narrowed it down to just a couple of options. But to really sort the wheat from the chaff, don’t forget to take any fringe benefits into consideration. Whether it’s a zero-percent introductory APR deal or a card that provides access to the airport lounge, think about which perks are most important to you and your employees and, if everything else is equal, use these as the deciding factor.

Follow these four simple steps to find the perfect credit card for your business.

Leave a Reply

Your email address will not be published. Required fields are marked *