The average interest rate for small business credit cards is around 15%. The rate differs based on whether the credit card is a rewards card or not. The average rate for a rewards credit card is 15.53% and for cards with no rewards, the average is a bit lower at 14.74%. This keeps interest rates for businesses lower than consumer cards, which average out at 16.99%.
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If you are a small business owner, there are advantages to having a business credit card. Having a card that is separate from your personal credit cards will help you keep your personal and business expenses separate and can help with your business cash flow. There are a number of factors that go into whether or not you are approved for a business credit card as well as what your interest rate and credit limit will be.
Small Business Credit Card Options
There is a wide variety of credit cards available for small businesses, so it is a good idea to know what you need in terms of credit and search for a card that fits your needs.
If you are a small company with few or no employees and you are just looking for a basic credit card to pay for some expenses, you can find a basic card with a lower interest rate.
If you charge a lot on your credit card and you would like to be rewarded for this, you may want to look for a rewards credit card. If you travel a lot for your job, you may want to get a travel rewards card, which can earn you free flights and hotel stays.
If you have employees and would like each of them to have their own card for business expenses there are some companies that offer additional cards for no cost. They often are able to set limits for each card so that you can control employee spending.
One way to save money is to find a credit card that offers a promotional rate. This will often be a 0% rate for anywhere from six to 18 months. Some cards will offer this rate for balances that you transfer over.
One thing to keep in mind with small business cards with a promotional interest rate is that after the promotion is over your rate will increase and often be higher than other small business card rates. If you do have a card with a 0% interest rate, it is a good idea to pay off the balance before the period ends. For tips on how to pay off credit card debt, visit SmartMoney.
Factors to Consider
Just because you apply for a small business credit card does not necessarily mean that you will be approved. With the poor economy of the last few years, many credit card companies have tightened their approval process. One of the biggest factors in being approved is your credit score.
If you have a poor personal credit score, it can affect you in a number of ways. Some companies will deny your application altogether. Others may approve you for a card but will charge you a higher interest rate, often up to 4% higher. If you have a poor credit score that you would like to increase, visit My Fico.
Your credit score will also probably affect what your credit limit will be. The company determines your interest rate as well as limit for credit after your application is approved and the different information is factored in. Along with your credit history, the credit limit will be determined by the annual revenue of your business.
Another thing to consider is the amount and types of fees that may be associated with your business card. Some of them have annual fees while others do not. The rewards cards especially tend to have annual membership fees. Some will waive the fee for the first year and then start applying it your second year and on.
Some companies will charge you for each additional card if you would like your employees to have one, while other companies will give you them for free. Check to see if there are fees if you go over the credit limit or make late payments. Having a credit card for your small business is important. Make sure you do your research and find the right one for your business.
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