Are Business Credit Cards Worth the Expense?
If you run a small business perhaps you’ve considered getting a business credit card. But when you can just use cash or cheques or a debit card, is a business credit card really worth the expense?
Let’s take a look at some of the ways business credit cards like the CitiBusiness credit card might cost you money, and whether or not these costs are worth it for your business.
How Business Credit Cards Cost You Money
- Annual fees — You may have to pay an annual account fee for your credit card. However, you might find a business credit card with a no annual fee offer like the CitiBusiness card which charges no annual fee for up to 99 supplementary cards.
- Interest on purchases — If you use the business credit card to finance any purchases over time (to grow your business beyond the cash you have on-hand), you’ll also pay interest. This interest rate might be higher than what you would pay for a small business loan to invest the same amount in growth.
- Other card fees – If your business credit card will be used to pay for business travel expenses, you might have things like currency conversion fees adding to your costs. Some other fees, like late fees, can be avoided if you pay your bill on time every month.
Is it Worth It?
While a business credit card might cost you money, it can still be a worthwhile addition to your business. It gives you a chance to build a solid credit history around your business, which might influence future lending opportunities for example.
If you travel for work, your business credit card might also provide money-saving perks like frequent flyer points or free travel insurance. If you work to keep your costs down (such as by paying your balance off in full each month to avoid interest) you might even save more money by using a business credit card.
Other perks can also be worthwhile. For example, the CitiBusiness credit card gives you a free bottle of award-winning wine when you dine at participating restaurants. That could be a cost-saving perk if you take clients out for a dinner meeting. You might also get extended warranty coverage which could come in handy if you use your card to purchase office equipment.
In general, a business credit card will only cost as much as you allow it to. You have the power to eliminate interest based on how you choose to use your credit card. And you can seek out a low or no annual fee business credit card, or try to negotiate a lower fee on your own. The benefits of business credit cards will usually outweigh those costs.
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