As a business owner in New York, you know how important it is to stay ahead of the competition. One way to do this is by getting a business credit card. Here are some reasons why getting a business credit card is a smart move for your New York-based business.
Why Get a Business Credit Card
- Keep Your Business and Personal Expenses Separate
When you use a personal credit card for business expenses, it can become difficult to keep track of your business finances. A business credit card allows you to keep your business expenses separate from your personal expenses, which makes it easier to manage your finances and track your spending.
- Build Your Business Credit
A business credit card can help you establish and build your business credit history. As you use your card responsibly and make on-time payments, you demonstrate to lenders and credit bureaus that you are a responsible borrower. This can help you qualify for better rates and terms on future loans and credit products.
- Earn Rewards and Cash Back
Many business credit cards offer rewards and cash back programs, which can be a great way to earn extra money for your business. Whether you’re earning points for travel, cash back on purchases, or other rewards, a business credit card can help you save money and get more out of your purchases.
- Access Capital When You Need It
In addition to helping you build your credit and earn rewards, a business credit card can also provide you with access to capital when you need it. Whether you’re looking to make a large purchase, invest in your business, or cover unexpected expenses, a business credit card can give you the flexibility and financial support you need to keep your business running smoothly.
As a business owner in New York, you know that staying competitive means making smart financial decisions. A business credit card is one tool that can help you do just that. By keeping your expenses separate, building your credit, earning rewards, and accessing capital when you need it, a business credit card can help you take your New York-based business to the next level.
Business Credit Cards vs. Personal Credit Cards for New York Business Owners
As a business owner in New York, you might be considering whether to use a personal credit card or a business credit card for your business expenses. While both options have their pros and cons, it’s important to understand the differences between them to make an informed decision. In this article, we’ll cover the major differences between business credit cards and personal credit cards, and what New York business owners need to know when making this choice.
The way they’re used
One of the key differences between business credit cards and personal credit cards is how they are used. A personal credit card is used for personal expenses, such as groceries, dining out, or travel. In contrast, a business credit card is specifically designed for business expenses, such as office supplies, travel for work, or equipment purchases. Using a business credit card for personal expenses can cause confusion and make bookkeeping more difficult.
They rely on a personal guarantee
Another important difference between personal and business credit cards is the way they are guaranteed. Personal credit cards are guaranteed by your personal credit, income, and assets. When you apply for a personal credit card, the card issuer looks at your personal credit history and income to determine your creditworthiness. In contrast, business credit cards are guaranteed by your business’s credit, income, and assets. However, most business credit card applications also require a personal guarantee from the business owner, which means that you are personally responsible for the debt if the business cannot pay it back.
Personal credit scores are key to getting approved
When applying for a personal credit card, your personal credit score is the most important factor that determines whether you will be approved or denied. Similarly, when applying for a business credit card, your business credit score and your personal credit score are both important factors. Your business credit score is based on your business’s credit history and financial performance, while your personal credit score is based on your personal credit history.
Which credit bureaus get your information
The credit bureaus that collect and report credit information for personal credit cards are different from the ones that collect and report credit information for business credit cards. The three major credit bureaus that collect personal credit information are Experian, Equifax, and TransUnion. In contrast, the three major credit bureaus that collect business credit information are Dun & Bradstreet, Experian Business, and Equifax Business.
The terms and fees
The terms and fees associated with personal and business credit cards can vary significantly. Business credit cards may have higher credit limits and lower interest rates than personal credit cards, but they may also have higher annual fees and more strict eligibility requirements. In addition, some business credit cards offer rewards or cash back on certain types of purchases, such as office supplies or travel.
How the debt can be collected
Finally, it’s important to understand how the debt associated with personal and business credit cards can be collected. With a personal credit card, you are personally responsible for paying off the debt, and if you default on the debt, your personal credit score can be negatively impacted. With a business credit card, the debt is associated with your business, and if your business cannot pay off the debt, it can impact your business credit score, as well as your personal credit score if you provided a personal guarantee.
As a New York business owner, it’s important to carefully consider whether a personal credit card or a business credit card is the right choice for your business. While personal credit cards may be easier to obtain, they are not specifically designed for business expenses and can cause confusion. On the other hand, business credit cards offer benefits such as higher credit limits and rewards, but also may come with higher annual fees and more strict eligibility requirements. Business owners should carefully consider their options and choose the card that best meets their unique needs and financial situation.
What to Look for When Comparing Business Credit Cards
It’s important to choose the right business credit card to help manage expenses and build credit as a business owner in New York. Here are some factors to consider when comparing business credit cards:
- Credit limit: Consider the credit limit of the card and ensure it’s sufficient for your business needs. Some cards may offer a higher credit limit than others.
- Rewards: Look for a credit card that offers rewards that align with your business expenses. For example, if you travel frequently for business, a card that offers rewards for airline or hotel expenses may be a good fit.
- Annual fee: Some business credit cards may come with an annual fee. Consider whether the fee is worth the benefits offered by the card.
- Interest rates: Check the interest rate of the card, as well as any introductory offers or promotional rates. Be aware that interest rates for business credit cards may be higher than those for personal credit cards.
- Fees: In addition to an annual fee, there may be other fees associated with the card, such as balance transfer fees or cash advance fees. Be sure to review the fees carefully before choosing a card.
- Business type: Some business credit cards may be better suited for certain types of businesses. For example, a card that offers rewards for office supplies may be more beneficial for a business that regularly purchases office supplies.
- Credit score: Consider the credit score required for the card. Some cards may require a higher credit score than others, so it’s important to choose a card that you are likely to qualify for.
By considering these factors when comparing business credit cards, New York business owners can choose the card that best fits their needs and helps build their business credit.
How to Apply for a Small Business Credit Card
Small business credit cards can be a valuable tool for managing your business finances and building your business credit. However, before you can start using a business credit card, you’ll need to apply for one. Here’s how to apply for a small business credit card in New York.
- Check Your Credit Score
Before you start applying for a business credit card, it’s important to check your credit reports. Your credit score will play a big role in determining whether you’re approved for a card and what kind of terms you’ll be offered. You can check your credit score for free once a year at AnnualCreditReport.com.
- Research Business Credit Cards
Once you know your credit score, you can start researching business credit cards that you might be eligible for. Look for cards that offer rewards or cashback on purchases that are relevant to your business. Consider the fees and interest rates associated with each card, as well as any other perks or benefits that might be available.
- Gather Your Business Information
When you apply for a business credit card, you’ll need to provide information about your business, such as your business name, address, and tax ID number. You also may need to provide information about your personal income and credit history, since most business credit cards require a personal guarantee.
- Apply for the Card
Once you’ve chosen a business credit card to apply for, you can start the application process. You can usually apply for a business credit card online, by phone, or by mail. Make sure you read the terms and conditions carefully before you submit your application.
- Wait for Approval
After you submit your application, you’ll often need to wait for approval. This can take anywhere from a few minutes to a few weeks, depending on the card issuer and the complexity of your application. If you’re approved, you’ll receive your card in the mail within a few days.
Applying for a small business credit card in New York can be a straightforward process if you do your research and gather all the necessary information beforehand. Make sure you choose a card that fits your business needs and budget, and always pay your bills on time to build your credit and avoid costly fees and interest charges.
How to Use a Business Credit Card
As a business owner in New York, having a business credit card can be a powerful tool for managing your company’s finances. However, using a business credit card comes with its own set of best practices to ensure that you’re maximizing its benefits and minimizing its risks. In this section, we’ll cover some tips on how to use a business credit card effectively.
- Keep Business and Personal Expenses Separate: One of the most important things to remember when using a business credit card is to keep your business and personal expenses separate. Using your business credit card for personal expenses can not only lead to confusion when it comes to tracking your expenses but can also violate the rules of the agreement with your credit card provider.
- Stick to Your Credit Limit: It’s important to spend only within your credit limit for your business credit card to avoid overage fees, and keep your spending reasonable and aligns with your company’s financial goals. This will help you avoid overspending and accruing interest and fees that can hurt your bottom line.
- Monitor Your Credit Utilization: Similar to personal credit cards, using too much of your business credit card’s credit limit can negatively impact your credit score. To avoid this, make sure to monitor your credit utilization and aim to keep it below 30% of your credit limit.
- Pay on Time and in Full: To avoid unnecessary interest and fees, make sure to pay your business credit card balance on time and in full every month. This will not only help you avoid late fees but will also show lenders that you’re a responsible borrower.
- Utilize Rewards: Many business credit cards offer rewards programs that can help you save money on business expenses. These rewards can include cash back, points, and travel rewards. Make sure to take advantage of these programs and choose a card that aligns with your business’s needs and goals.
By following these tips, you can make the most out of your business credit card and improve your company’s financial management. Remember to choose a card that fits your business’s needs and goals, apply and use it responsibly, and track your expenses and rewards to ensure that you’re getting the most out of it.
How Nav Helps New York Small Business Owners
If you’re a small business owner in New York looking for ways to manage your expenses, build credit, and earn rewards, look no further than Nav! Our financial health platform allows you to connect your business data and compare business credit cards from our trusted partners based on your qualifying credit score, rewards, APR, annual fee, and sign-up bonus. With Nav, you can rest assured that you’re making informed decisions about your business finances and maximizing the benefits of your business credit card. Take control of your small business finances with Nav.
This article was originally written on April 7, 2023 and updated on May 17, 2023.