The credit card industry is intensely competitive, and it seems like the next great card is always just around the corner. New cards can offer incredible sign-up bonuses, outstanding rewards, and more compelling benefits than the card you might be using today.
But if you’re a small business owner, how can you take advantage of these compelling offers without throwing your company into disarray? Here are six steps that you can take to break up with your current card and start using a better one.
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1. Find the right new card for your needs.
Before you apply for the next new card that you see, take some time to consider all of your options. For example, you could choose a rewards card that offers you cash back, or one that offers travel rewards in the form of points or miles. Airline miles and other travel rewards can be tempting, but you have take the time to see how easy these rewards will be to redeem. You also need to consider the rates and fees charged by the new card.
2. Consider a product change.
If the best new card you find is offered by the same issuer of one of your existing cards, then you may be able to switch cards without applying for a new one. You can contact your card issuer to request a product change, which is where you retain your existing account by receiving the terms of a different card. The advantage of a product change is that your account information is unaffected, including your current balance, automatic payment information, and payment due dates. You also avoid having to apply for a new card and order new cards for employees. But unfortunately, you won’t receive a sign-up bonus when you make a product change.
3. Apply for the new card.
If a product change doesn’t make sense for your needs, then you’ll need to apply for your new credit card. When you apply for a small business credit card, you’ll need your Employer Identification Number (EIN), or you can use your Social Security Number if you are a sole proprietor. The application will ask you to supply financial information about both your business and your personal finances, as small business credit cards rely on your personal credit.
4. Request employee credit cards.
If you have added employees as additional authorized users to your old account, then you’ll probably want to do so with your new credit card. In addition, some credit card issuers allow you to enable notifications of employee spending, or even configure limits. Giving out new credit cards to your employees is also a great opportunity to reiterate the company’s policies on their use, preferably in writing.
5. Consider a balance transfer.
If you have been using your small business credit card as a means of financing purchases, then you might consider transferring your balance to the new card. For example, if your new card has a 0% APR promotional financing offer, or just a lower standard interest rate, then you should consider transferring your old balance to the new card. Just be sure to take into account any balance transfer fees before you decide.
6. Decide what to do with your old card.
Once you’ve set up a new account, you have several options for your old card. First, you could keep the account open and utilize any benefits it has that your new card doesn’t. You have to weigh this option against the cost of any annual fee, but there’s no reason to decide until your next annual fee is due. And if the card’s annual fee is the main reason you want to cancel it, then you can ask the card issuer to waive it. You can also request a product change to a similar card with no annual fee.
But if you are ready to close the account altogether, make sure to find out what will happen to your rewards. Airline miles or hotel points will not be affected by closing a credit card account, but it’s possible to lose points in a rewards program that’s operated by the bank. Nevertheless, you could still retain the points if you also have another business or personal card that is part of the same rewards program. For example, you will retain your American Express Membership Rewards points if you close one card, but still have another card that earns those points. And with the Chase Ultimate Rewards program, you can transfer points between credit cards accounts, including those of your spouse or domestic partner.