There is a wide range of options available for prepaid credit cards for a business, and the assortment of ways to use them can benefit any company or business. Businesses and corporations need a variety of financial tools to meet their fiscal goals and obligations. Credit cards and expense accounts are common, but one option that includes just about zero risk is a corporate prepaid credit card.
While prepaid credit cards for a business generally do not include the perks of unsecured credit cards, they have very little risk involved.
What is a prepaid credit card?
A prepaid credit card generally is not an actual credit card in that credit is not extended to a business or corporation. A set amount of money is placed on the card, and then it can be used in all of the same places that accept traditional credit cards. Prepaid cards can be reloadable or for one-time use only.
What can a business use a prepaid credit card for?
Corporate prepaid credit cards can be used in a number of ways. They can be used to pay for expenses such as office supplies and other overhead such as electricity bills. They can also be used to pay vendors, shippers, suppliers and any other business partners.
These cards can also be used to pay employees instead of a paper paycheck or direct deposit. They are useful for:
- Expenses on a business trip
- To “wine and dine” clients
- For petty cash expenses
Additionally, many businesses are finding that corporate prepaid credit cards are a novel way to reward employees, customers and clients. They make great:
- Christmas bonuses
- Rewards for meeting quotas
- Prizes for top sellers or producers
What are the advantages to using a prepaid credit card?
The advantages of using a prepaid card are numerous. First, they can be used online, in a point-of-purchase setting and in many foreign countries. They also have very little risk associated with stolen credit card numbers; a business does not have to worry about large fraudulent purchases because the prepaid cards only have a set amount of money placed on them. Once the money is used, the card cannot be used again until more money is placed on it.
They are useful for keeping expenses for a trip or event within a set amount; employees cannot overuse the card as it only has a set amount on it.
Companies also have the advantage of the paper trail left by traditional credit cards. A business can access the activity on the card to see how much money was spent, where it was spent, and what was purchased. Corporate credit cards are useful tools for keeping a company or business’s expenses accountable and under control.
Prepaid cards also do not have interest amounts charged on purchases like traditional credit cards; the amount spent on an item or expense is the final bill as there is no interest on purchases.
What are the disadvantages?
Fees are the first disadvantage of corporate prepaid credit cards. Fees will vary, but possible fees could include:
- A monthly access fee
- A fee for recharging the cards
- A fee-per-use
- An annual fee
Additionally, some prepaid cards may have an expiration date that the money on the card needs to be used by or be forfeited. Be aware of the expiration date, as federal law now requires cards issued to either be good for five years or prominently disclose their policy regarding expiration.
Next, prepaid cards cannot be used by a business that is experiencing cash flow problems or emergencies; they are not a form of credit. For instance, if a business is waiting for a payment from a client in order to make payroll, a prepaid credit card cannot be used to temporarily cover the expense; a traditional credit card could be used in the above instance if the credit limit would cover the payroll cost. A business can only place existing funds on a prepaid card.
Lastly, prepaid corporate credit cards generally do not have the advantages of an improved credit score or rewards program like traditional credit cards have.
Where can a business get a corporate prepaid credit card?
Many banks offer corporate prepaid credit credits. JD Power lists satisfaction ratings for major retail banks. Those with high customer satisfaction are more likely to have lower fees or fewer restrictions for their prepaid credit cards.
Many traditional credit card companies also offer corporate prepaid credit cards. Research the fees and other restrictions associated with each card before deciding which will be best for your business.
Comparing corporate prepaid credit cards is a good idea. Use the credit card chaser at the top of the page to find the best card for your business now!