For most business owners, the words “business credit card” brings two images to mind: deceptive, restrictive contracts that lead to stacks of bills, ruined credit scores, and financial insolvency—or thoughts of frequent flyer miles, bonus points, and cash back.
Thanks to the internet, it’s easier than ever to make the latter, and not the former, your reality. But the truth is that credit card contracts tend to be confusing, unclear, and downright deceptive in their wording.
Before you make any commitments, consider the following when shopping for the perfect credit card for your business.
1. Match your business needs to the credit card
There are a dizzying array of business credit cards out there, but before you even begin to research them, sit down and take stock of your business needs and expenditures. Consider what ranks high on your list of expenses, and see if there are any specialized, niche cards that reward your business for what you’re already doing.
For instance, if you run a growing construction business that often bids on projects in other states (or countries), then you should look at travel logistics for your sales and engineering teams: factors like airfare, hotel, transportation, and food. Add in expenses for wining and dining potential clients, rugged vehicle rentals to access remote work sites, and frequent flyer miles—and it’s easy to see your top spending categories.
You may also consider a card like SimplyCash Plus from American Express, with rewards that include 3% cashback on hotels, airfare, restaurants, and car rentals, as well as the ability to earn up to $500 in statement credit after spending $15,000 in the first year. SimplyCash Plus doesn’t have a card fee, allowing you to make money on rewards, rather than simply putting earned cash back into annual usage fees.
Constantly shopping for office supplies or telecommunications? Try the InkPlus from Chase. Need a card with no foreign transaction fees for frequent travelers, a long grace period, and high cashback bonuses for staying ahead of annual payments? Take a look at the Plum Card by American Express.
Whatever card you choose, always play to the strengths of your business.
2. Budget payments accordingly
All business owners (whether they use a business credit card or not) need to master revenue forecasting, which helps entrepreneurs create a realistic profit-loss summary, balance their budgets, and understand their overall financial health.
Also called financial forecasting, this skill is particularly relevant to business credit cards when it comes to the size and frequency of payments. While some cards will have longer grace periods, business owners still need to know how much they can afford to pay in a given payment, whether it’s collected monthly, bimonthly, or quarterly.
Done right, a proper revenue forecast can help business cardholders work card rules to their advantage, keeping their purchases at a sustainable level, paying off the balance in full every payment cycle, and reaping the rewards.
3. Look for low APR rates
The annual percentage rate (APR) is the interest rate charged to customers who carry a balance on their credit card. APR can really inflate your credit card bill, particularly if you carry a month-to-month balance rather than paying it off in full.
Consider this: if you carry a balance of $1,000 from one month to the next, you can easily end up paying off nearly $1,200 when you factor in your APR. Most credit cards have high APRs and interest rates.
That’s why the cards that offer 0% interest or APR are so appealing. While these cards usually offer 0% interest or APR as part of an introductory deal rather than a permanent feature (banks do need to make money after all), this sort of offer is still attractive. Interest-free periods generally range from 15-21 months, which can translate into a lot of money saved, particularly if your revenue forecasts are off and you have to carry a balance.
But be careful! Should you fail to pay off your balance on a deferred rate card when your time is up, the issuer will charge interest on your full balance, including items purchased during the interest-free period.
Make your credit card work for you
With so many different cards all using a variety of different reward structures, fees, and limited-time introductory offers, the landscape can be very confusing. If you learn the ins and outs of business credit cards and game the system correctly, you (and your business) will reap considerable rewards.
Meredith Wood is the Head of Content and Editor-in-Chief at Fundera, an online marketplace for small business loans. Prior to Fundera, Meredith was the CCO at Funding Gates. Meredith manages financing columns on Inc, Entrepreneur, HuffPo and more, and her advice can be seen on Yahoo!, Daily Worth, Fox Business, Amex OPEN, Intuit, the SBA and many more.