5 Things You Didn’t Know About Credit Cards


Image of hands holding credit card and pressing a keys of keyboard

Credit cards are a common sight in wallets and purses, used for nearly a third of all in-person purchases. There’s nothing strange or novel about them.

And yet, despite their ubiquity, there are a lot of misconceptions about how credit cards work and the best way to use them. Should you use them regularly, or only for infrequent, major purchases? Do they help or harm your credit?

Here are five things you may not know about credit cards.

1. There’s No Reason To Carry A Balance If You Don’t Need To

One of the most common bits of conventional wisdom regarding credit cards is just wrong — a lesson I learned all too recently

You’ve probably heard at some point that it’s good to carry a small balance on your card every month, ostensibly to build your credit and keep your credit card company happy. Turns out that’s completely false. Personal credit cards are required to give you a 21-day or more grace period before they can start charging interest on a purchase. Business credit cards don’t have that hard and fast guideline (see below), but they usually do extend a grace period as a courtesy. If you pay your balance off within that time, you won’t owe any interest on your purchase and you’ll still earn whatever reward points your card offers.

But might your credit card company cancel your card if you don’t pay them interest? It’s unlikely. The company still makes money off transaction fees when you swipe your card.

Now, there are times you may find it convenient to put a big purchase on your card and pay it off slowly. There’s nothing wrong with that — just know that you’re not achieving any greater ends by delaying repayment.

2. Your Card May Be Canceled If You Don’t Use It

Since you now know you can safely use your credit card without paying interest, you don’t have to be scared of using it. Which is a good thing!  If you don’t use your card, your credit card company may simply cancel it.

There’s no telling when or if that will happen, but if you haven’t used your card in a couple months, the chances of your card being canceled increase.

If your card is canceled, don’t take it personally. You didn’t do anything “wrong,” you just weren’t making your credit card company any money. It’s often possible to get the decision reversed with a timely phone call.

3. Most Rewards Cards Are Cash Back (Even If They Aren’t Called Cash Back Cards)

Credit card rewards systems can be divided into a number of different categories, but one of the oldest and most popular is the cash back card. It’s a simple reward structure. For every dollar you spend, a small percentage of that payment is returned to you in the form of statement credit, a check, or a gift card.

Turns out most reward cards will let you cash in accumulated reward points for statement credit, even if they aren’t cash back cards. This can be handy when you simply need to shave a few dollars off of your statement for the month.

So why would you ever get a cash back card? Cash back cards tend to reward generic purchases at a higher rate than other reward schemes, which give you a higher return for buying specific types of goods and services (flights, hotel stays, office supplies, etc.). If your purchases are concentrated in a particular area, you may want a rewards card. If there’s not much of a pattern, consider a cash back card.

4. Business Credit Cards Play By A Different Set Of Rules

In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act. The legislation established standards for personal credit cards. These include things like:

  • Giving customers enough time to pay their bills.
  • No retroactive rate increases.
  • Payments are applied to the highest-interest debt first.

They’re great protections for credit card users. And they don’t apply to business credit cards.

Business credit cards are still something of a wild frontier, with terms and rates that can change with little notice. To entice customers into this riskier landscape, credit card companies will usually reserve their best reward programs for business credit cards. If you’re someone who reliably pays off your credit card every month, the risks are small. If you carry balances — and especially if you miss payments — you may find yourself facing very unfavorable terms.

5. You Don’t Have To Own A Business To Get A Business Credit Card

Just like there’s no duck in that packet of duck sauce, there’s no business in business credit cards. Okay, that analogy isn’t great, but the fact remains that (most) business credit cards can be acquired by individuals who don’t actually have businesses.

In fact, even if you do have a business, you have to sign a personal guarantee to get a business credit card. That means you are personally accepting liability for the debt, which essentially waives the financial partition you would otherwise enjoy between your business and yourself if you were incorporated.

On the other hand, if you’re purchasing a high volume of goods and services as an individual and want to cash in on business card rewards and perks, you’re able to do so.

If you want a credit card that respects corporate protections, what you need is a corporate credit card. Just be aware that you’ll have to be doing over $4 million/year in revenue to qualify for most of them.

Final Thoughts

Hopefully, you’ve found one or more of these credit card tidbits illuminating and have some new ideas about how to make the best use of your plastic.

If you’re looking for a card for your business, check out our business and personal credit card comparisons.

The post 5 Things You Didn’t Know About Credit Cards appeared first on Merchant Maverick.

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Choosing An American Express Corporate Card

American Express Website Menu

Unlike their small business counterparts, corporate cards are highly customizable. When it comes to Visa and Mastercard, your corporate card benefits will largely be based on the arrangements you make with your bank. American Express, however, directly issues corporate cards, so you can do more comparing upfront than you otherwise could with a Visa or Mastercard.

How Do Amex Corporate Charge Cards Work?

For the most part, corporate cards are scaled-up versions of Amex’s personal and business credit cards, tailored to meet the needs of a larger business. To get a corporate card, your company will need to be formally incorporated as an LLC, S-Corp, or C-Corp. It will also need to have good credit and do over $4 million in revenue annually.

Be aware that Amex’s rewards system works a little differently for corporate cards. You won’t automatically be enrolled in the Corporate Membership Rewards program. You’ll have to sign up for the program and designate a primary account as the Master Program Administrator (MPA). The MPA can then designate up to five corporate cards for the program, including their own as program administrator (PA). These cardholders will have permission to redeem rewards. Three more cardholders can be designated as offline redeemers; these people can redeem points for certificates, gift cards, statement credit, and pay-with-points through telephone request only.

Up to 98 cards in total can be enrolled in a single Corporate Membership Rewards program. Unlike business and personal cards, there are no reward tiers. You spend $1, you get 1 point. The redemption value of a point varies depending on how you spend your rewards. For example, 20,000 points translate to a $100 statement credit ($0.005 per point).

Now that we know how American Express corporate cards work on a basic level, let’s compare some specific corporate cards.

American Express Corporate Platinum

The prestige charge card of the Amex brand has long been Platinum. Like its personal and business counterparts, the Corporate Platinum card is centered around international travel and resort stays.

American Express Corporate Platinum
Annual Fee $395/card
APR N/A
Corporate Membership Reward Cost Per Card $0
Visit Site

If you like the Amex Platinum perks and have the annual revenue to qualify, the Corporate Platinum card is actually the cheapest version, at least on a per card basis. The personal and business cards come with annual fees of $550 and $450, respectively. Of course, $395 per card can add up pretty quickly, so you probably won’t be handing one of these to every employee in your organization.

Each employee with a Corporate Platinum card will enjoy the following perks:

  • Lounge Access: Access to all locations of The Centurion Lounge. Access to Delta Sky Clubs, Priority Pass Select, and Airspace Lounges.
  • $100 Airline Fee Credit: Amex will reimburse the cardholder up to $100/yr. for incidental flight charges with a qualifying, selected airline.
  • Fine Hotels & Resorts Program: Members who pay in full with their Platinum Card receive complimentary upgrades and services at participating locations, subject to availability. This includes things like in-room Wi-Fi, breakfast amenities, room upgrades, and noon check-ins.
  • Fee Credit For Global Entry Or TSA Prev: Cardholders get one statement credit per four years for an application fee charged to the card.

American Express Corporate Gold

If the Corporate Platinum card is meant to keep the globetrotting, pampered executive in style, the Corporate Gold card is more oriented toward helping workers stay productive on the road.

American Express Corporate Gold
Annual Fee $125/card
APR N/A
Corporate Membership Reward Cost Per Card $90
Visit Site

You can get three Corporate Gold cards for the price of a single Corporate Platinum card, so it’s a good choice for frugal corporations that want to reap Amex travel benefits for a large number of employees without breaking the bank. Unfortunately, you’ll have to pay a surcharge on each card you enroll in the Corporate Membership Reward program. If you also factor in the $100 airline credit you get with the Platinum Card, the savings you’d get from going with the Gold Card evaporate pretty quickly. On the other hand, you may prefer the a la carte approach to your benefits.

Each employee with a Corporate Gold Card will enjoy the following perks:

  • Fee Credit For Global Entry Or TSA Prev: Cardholders get one statement credit per four years for an application fee charged to the card.
  • Boingo American Express Preferred Plan: Complimentary, unlimited Wi-Fi access at Boingo hotspots. You’ll also give five in-flight internet passes each year.

American Express Corporate Green Card

The Corporate Green Card is marketed toward occasional travelers and core employees. You won’t find a ton of frills here, but the Green Card may align with certain spending strategies.

American Express Corporate Green
Annual Fee $55/card
APR N/A
Corporate Membership Reward Cost Per Card $90
Visit Site

The Corporate Green Card’s benefits are pretty sparse and enrolling in the reward’s program ends up being more expensive than your annual fee, so you’ll probably only be passing these out to streamline your employees’ travel expenses.

Each employee with a Corporate Gold Card will enjoy the following perks:

  • Business Travel Accident Insurance: Covers flights, cruises, train, or bus travel charged on the card
  • Baggage Insurance: Covers lost, stolen, or damaged baggage on flights, cruises, trains, or bus trip charged on the card.

American Express Business Extra Corporate Card

The Business Extra Card is specifically focused on corporations that use American Airlines and its partner carriers.

American Express Business Extra Corporate Card
Annual Fee Up to $55/card
APR N/A
Corporate Membership Reward Cost Per Card N/A
Visit Site

Unlike the other three cards we’ve covered, the Business Extra Corporate Card comes with its own rewards program and is ineligible for the Corporate Membership Reward Program. If you don’t mind sacrificing the flexibility, it offers some nice perks at a low cost.

Each employee with a Corporate Gold Card will enjoy the following perks:

  • American Express Busines Extra Rebate: 1% – 4% rebate on the first $1.5 million spent on qualifying American Airlines flights.
  • Business Extra Reward Program: Your cards will be enrolled in this reward program. You’ll also get four points for every $20 spent on eligible American Airlines flights and one point per $20 spent on other eligible purchases.
  • American Airlines Flight Discounts: $50 discount for every $5,000 of eligible purchases, up to a maximum of $1,000 in discounts each year.

Final Thoughts

American Express’s Corporate Card offerings provide several different ways for large corporations to optimize their travel spending. Since they’re mostly just scaled-up versions of existing cards, smaller businesses that grow into larger corporations may find it easy to transition from business to corporate class cards.

Not big enough for a corporate card? Check out our comparison guides to business credit cards, charge cards, and personal cards that are good for business expenses.

The post Choosing An American Express Corporate Card appeared first on Merchant Maverick.

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A Guide To Choosing The Best Corporate Credit Cards

Man hands over credit cards for payment

It’s not hard to find articles that compare personal or business credit cards. But where are the ones comparing corporate credit cards?

At the corporate scale, you aren’t usually dealing with pre-designed deals and packages. If you’re big enough to qualify for a corporate account, your business likely has complex and very specific needs. The arrangements you make with your issuing financial institution will probably be unique to your company.

As you can imagine, this makes it very difficult to definitively rank corporate cards. Two businesses may get a corporate card from the same bank and have significantly different terms on their card.

Since we can’t tell you which card is the best for your particular situation, we’ll look at the factors that you should keep in mind when you’re evaluating your corporate credit card offer.

What Are Your Responsibilities?

Most corporate credit cards will require your company to meet some prerequisites to obtain and keep a card. These usually include:

  • Earning over $4 million in revenue annually
  • Opening a minimum number of cards on the corporate account
  • Paying any applicable annual fees

You’ll want to evaluate the costs of the annual fee, which typically consists of a base fee and an additional per card fee. While these fees won’t break the bank for a company earning over $4 million, you don’t want to have to pay more than necessary for the perks you receive.

Who Is The Credit Card Provider?

Visa, Mastercard, and American Express all offer corporate credit cards.

As is the case with personal and small business cards, Visa and Mastercard don’t issue the cards directly, instead selling their services to banking institutions, which in turn issue you a corporate card. Some of the benefits offered by your card will be common to all Visa or Mastercard corporate cards. These include things like auto rental coverage and aspects of your customer service. Overall, the banking institution you choose will be a bigger factor for what services you receive than whether your card is serviced by Visa or Mastercard.

American Express, on the other hand, directly issues their cards. Amex corporate offerings will be more familiar to you if you’ve ever perused their personal and business credit cards. In fact, you’ll notice that their corporate cards are largely scaled-up versions of their personal and business credit cards — there’s a corporate Platinum Card, for example.

How Does The Auto Rental Collision Damage Waiver Work?

Commercial vehicle rental coverage is offered with most corporate cards. This is usually offered through the credit card company itself rather than the issuing bank.

These programs will usually cover collision and theft of the vehicle, but not necessarily any contents within the cars. There are restrictions on what types of vehicles are covered and under what circumstances. For example, Visa will cover SUVs, but only so long as they are road-safe.

You’ll also want to know how the coverage works both within the United States and internationally. Again using Visa as an example, your damage waiver will function as primary coverage when you’re out of the country and secondary while you’re within. Secondary insurance policies pick up fees and charges that your primary policy does not.

Look over the fine print of your policy, or better yet, have your accounting team do it so that you’ll be able to create guidelines for how your employees should use their coverage to rent vehicles.

How Is The Rewards Program Set Up?

Though they’re not as big of a selling point for corporate credit cards, rewards programs can still add value to your account by returning a percentage of your expenditures back to you as cash, statement credit, gift cards, flyer miles, or points you can spend through other reward programs.

To get the most out of your reward program, you’ll want to know what types of expenses your employees will be putting on their corporate cards. If they’re concentrated in a particular area — like travel expenses — you’ll want a reward card that reimburses those expenses at a high rate.

Do You Want To Make Individual Or Company Payments?

Because corporate cards are meant to be used by multiple employees, there are two different ways to set up your payment systems. You’ll want to be sure your bank offers the setup of your preference.

One configuration is to have the company directly pay the balance on all of the cards. In this case, you’ll probably want to design a policy to determine what types of expenses the cards can be used for.

The other is to have your employees each be responsible for their own cards and then submit expense reports so the company can reimburse them for qualifying expenses.

In both cases, you can work with your issuer to set spending limits.

Final Thoughts

While you can’t directly compare corporate cards the same way you can compare small business and personal cards, you can approach the negotiations with a firm sense of what features and services you want your issuer to offer. Since you’ll be setting policies for employee usage, you’ll want to be able to clearly define when the cards should or shouldn’t be used.

If your business isn’t up to the corporate scale yet, but you’re still looking for a card, check out our small business, personal credit, and charge card guides.

The post A Guide To Choosing The Best Corporate Credit Cards appeared first on Merchant Maverick.

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Is Invoice Factoring Right For Your Small Business?

invoice factoring small businesses

Invoice factoring — selling unpaid invoices to a factoring company in exchange for immediate cash — is a useful financing tool for certain businesses. If your business, like many others, has slow-paying customers that affect your cash flow, invoice factoring might help you manage your finances. But how, exactly, does invoice factoring work? And should your business use factoring services? Keep reading to find out!

Invoice Factoring Basics

Invoice factoring is essentially a sales transaction in which a business sells their unpaid invoices to a factoring company, at a discount, in exchange for immediate cash. Typically, the factoring company will hold a percentage of the invoice value in reserve; when the customer pays, the company will send you that money, less the factoring fee.

Factoring is generally used to solve cash flow problems caused by slow-paying customers. Instead of waiting 60, 90, or even 180 days for a customer to pay, the business can sell the invoice to a factoring company to get the cash needed to maintain business operations or take on new projects.

A factoring arrangement might look like this: You sell an invoice valued at $5,000 to a factoring company. The factoring company sends you $4,500 (90% of the invoice value) and keeps $500 on reserve. Your factoring fee is 0.06% per week. Your customer pays after 35 days, or 5 weeks, so your fee is $180 ($30 per week). The factor deducts their fee, and sends the remaining reserve, totaling $320, to you.

Invoice Factoring Eligibility

If you run a B2B business and you invoice your customers, chances are you’re a good candidate for invoice factoring.

Unlike with many other types of business financing, your business’s revenue and creditworthiness are not especially large considerations when determining eligibility; invoice factors are more concerned with the creditworthiness of your customers because your customers are the ones paying the bills. So, even if you own a young business without a financial track record, or you don’t make very much money, or you have poor personal credit, you might still be eligible for invoice factoring.

Is Invoice Factoring Right For My Business?

You may be eligible for invoice factoring, but should you use a factoring service? There are a lot of pros to factoring your invoices, but it’s not a perfect fit for all businesses. To determine whether factoring is right for your situation, ask yourself these questions:

Are my finances suffering due to slow-paying customers?

Slow-paying customers can affect many areas of your business. If you aren’t paid for your work until months after you have completed the job, you might have trouble meeting business expenses, purchasing inventory and supplies, paying employees, or paying for overhead costs. If this is the case, invoice factoring can be a simple way to ensure that you have the working capital you need.

However, invoice factoring is not always cheap, which is why you need to consider this next question:

Can I afford invoice factoring?

In general, factoring fees (called discount rates) range from about 1% – 6% of the invoice value per month, depending on the particulars of your factoring arrangement and how high-risk your client is. If you sell an invoice from a particularly slow-paying client, and you have a high factoring rate, you could wind up paying around 18% of the invoice value in fees for the opportunity to get your money sooner.

Many invoice factors also charge additional fees for factoring services. You might be charged money transfer fees, servicing fees, monthly minimums, or other expenses, which can add up over time. Head over to our explanation of factoring rates and fees to learn about discount rates and other commonly charged fees.

All that said, your fees will depend on a number of components, including the factoring company you are working with, the creditworthiness of your customers, the number and size of the invoices you want to sell, the industry your business is in, and other considerations. You will have to look at your options and decide whether the cost is worth it to your business.

Even if you decide that you need a financial solution, invoice factors most likely aren’t your only option.

Would an alternative financing solution work better?

Now, more than ever, businesses have a plethora of financial solutions available. While invoice factoring might seem like the perfect solution to your cash flow problems, the following might be a better fit:

  • Asset-Backed Lines Of Credit: These credit lines can be backed by unpaid invoices or (occasionally) assets like inventory or other receivables. The amount you are able to borrow depends on the value of your collateral. Asset-backed lines of credit work similarly to invoice factoring, but might offer more flexibility in some ways. These credit lines also tend to have lower rates than financing that isn’t backed by anything, so you might qualify for low rates and fees in comparison to other options.
  • Revolving Lines Of Credit: With a revolving line of credit, the amount you are able to borrow replenishes as you repay your debts. While some revolving lines of credit are backed by collateral, some simply require you to sign a personal guarantee and/or pledge general business assets via a blanket lien. With this type of financing, you’ll always have money available when you need it. And because you repay weekly or monthly, you don’t have to worry about getting fined because your customers forgot to pay their bills. Head over to our article on business lines of credit to learn more about this type of financing, or scan this list of our favorite lines of credit if you’re interested in learning about your options.
  • Business Credit Cards: Business credit cards can be useful if you need cash short-term for business expenses. You can put many purchases on credit cards and repay them on a timetable that works for you. However — especially if you tend to carry a balance — you might want to consider other options, because credit cards have notoriously high rates and fees. If you’re looking for a business credit card, check out some of our favorites.
  • Small Business Loans: If you only need funds one time, or if you need a large sum of money, a small business loan might be a good bet. Some lenders have long application processes, but many, including PayPal Working Capital and OnDeck, can let you know if you’re eligible within a very short time period. Most small business loans come in the form of installment loans or short-term loans. Small business loans can be used for a number of purposes, such as working capital, payroll, inventory purchasing, and other uses.

Final Thoughts

If you’ve decided that invoice factoring is a potential solution for your business, good for you! Invoice factoring can be a very viable way to maintain cash flow for your business, especially if you tend to get bogged down by slow-paying customers.

Interested in learning more? The following resources provide additional information about invoice factoring and may assist you to find the right factor for your business:

  • A Basic Introduction To Invoice Factoring: Invoice factoring basics, including what to look out for, a basic explanation of fees, and alternative services to factoring
  • Understanding Invoice Factoring Rates & Fees: An in-depth look at factoring rates and fees, including the variables that affect your rates, the three most common fee structures and their differences, and other fees you might have to look out for.
  • Spot Factoring vs. Invoice Factoring: A guide to help you determine whether your business should choose a spot factoring service, a high-volume factoring service, or some other alternative service.
  • Merchant Maverick’s comprehensive reviews of invoice factoring services provide honest and thorough assessments of some of the most popular invoice factoring services available.

The post Is Invoice Factoring Right For Your Small Business? appeared first on Merchant Maverick.

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How To Get A Corporate Credit Card

Paying by credit card concept with businessman keeping credit card in his hand isolated on white background

A corporate credit card may sound like a good fit for your situation, but if you’re like many business owners, you probably aren’t sure where to get started.

After all, personal and small business credit cards are ubiquitous, but you’re unlikely to encounter advertisements for corporate credit cards in your casual travels. You also won’t find easy, online sign-up forms for corporate credit cards.

So how do you go about getting one?

Work For A Corporation That Uses One

This sounds a bit like cheating, but it illustrates an important point about corporate credit cards. A company will usually have multiple copies of a corporate card for use by multiple personnel. In fact, one of the big advantages of corporate cards is that they streamline your company’s incidental and travel expenses.

Of course, this advice only applies to people who would be satisfied with simply having access to a corporate credit card. If you own a company and want to open an account, however, there’s a bit more you’re going to have to do.

Incorporate

As obvious as it may sound, you’ll probably need to, you know, incorporate if you have aspirations toward a corporate card.

Regular small business credit cards require you to give the issuing bank your personal guarantee. That means that the bank can come after your personal assets, not just your business assets, should you default on your debt. This isn’t a great deal, but it comes with one major advantage: you don’t actually have to have a business to qualify for a business credit card. Likewise, you can get one if your business is a simple sole proprietorship with no partition between your personal and business identity.

Corporate cards, however, require your business to be formally incorporated as an S-corp, C-corp, or LLC. Your business is solely responsible for corporate credit card debt — the bank cannot come after your personal assets.

Earn Over $4 Million In Annual Revenue

Sadly, there’s no way around this one. Before most banks will issue you a corporate credit card, you’re going to have to demonstrate that your company is raking in some serious cash. Since the issuer will be dedicating premium customer support services to your company–and without even the protection of a personal guarantee–they’re looking for an account with some serious clout.

This can be a blessing in disguise. Corporate cards come with some significant costs that wouldn’t necessarily scale down well to small businesses anyway.

Find A Bank You Want To Work With

Corporate credit cards are issued primarily by large banking institutions, so there are far fewer options than there are with other credit cards. Since you’ll have access to far more customer service than would a personal or small business credit card holder, you’ll want to research those institutions’ corporate customer service policies and reputation.

Most corporate cards come with rewards programs not unlike those of small business credit cards. You’ll still want to factor rewards programs into your calculations, but given the costs of maintaining a corporate credit card, rewards won’t play as significant a role as they do with the lower-tiered cards.

Many issuers will want you to commit to a minimum number of cards and annual spending, so make sure you know what they expect from you.

Once you know what institution you want to get a card from, you’ll need to reach out to them by phone, in person, or submit an inquiry form to begin the process.

Make Sure Your Company’s Credit Score Is Good

Not to beat a dead horse, but you won’t be able to rely on your personal credit score to get a corporate credit card.

You’ll also want to demonstrate good corporate accounting practices. Banks will want to see good cash flow, for example.

Final Thoughts

Corporate credit cards are an elite product for large, stable businesses with numerous employees. Expect a more involved process than you’d get with a personal or small business credit card.

Haven’t hit $4 million yet and still want a card? Consider a small business credit card or even a personal business credit card.

The post How To Get A Corporate Credit Card appeared first on Merchant Maverick.

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Should My Business Get A Credit Card Or A Charge Card?

When you swipe your card (or insert your EMV chip into the reader), you’ll have pretty much the same experience whether you’re using a credit card or a charge card. So why would you choose one over the other?

Turns out there are some important differences to consider before you sign up for a card.

What Is A Credit Card?

When most people think of paying by plastic, they’re thinking of a credit card. If you’re “paying with Visa or Mastercard,” and you’re not paying with debit, you’re probably using a credit card. But while those two companies control the infrastructure for making credit card payments, they’re not actually the ones extending the credit.

In fact, “extending credit” is the operative phrase when it comes to credit cards. When a bank issues you a credit card, what they’re effectively doing is proffering a revolving line of credit. Unlike a loan, a line of credit can be tapped at any time, for any amount (up to a set credit limit). The “revolving” part means that, as you pay off your balance, that amount becomes available for you to use again.

Like loans, lines of credit (and credit card balances) accumulate interest over time. Credit cards do, however, have grace periods during which the balance can be paid off without accumulating interest. These can be set by law, as is the case for personal credit cards, or extended as a courtesy, as they are for business credit cards. Just be aware that business credit cards can, and often will, change the terms on you with little notice. And many business credit cards will charge an annual fee.

What Is A Charge Card?

Charge cards are a little different. Unlike credit cards, charge cards are not bank-issued. The “lender” in this case is the same as the card company. With rare exceptions, most charge cards these days are issued by American Express.

Charge cards aren’t lines of credit. Instead, you’re paying an annual fee in exchange to be able to defer your payment for 30 days. Your entire balance is due on your statement date, except in cases where you’ve made special arrangements with the issuer. If you miss a payment, you’ll face a punishing wall of fees and possibly cancellation.

The major selling point of charge cards is that they have no credit limit. Conventional wisdom would dictate that you can put as much on your card in any given month as you want, but that isn’t exactly true.

American Express has a policy called No Pre-Set Spending Limit. What this means is that Amex makes a calculation based on your payment history, credit record, and estimated resources and may put a cap on monthly spending. The company estimates that about 10 percent of their customers have a cap at any given time.

How Else Do Credit Cards and Charge Cards Differ?

The remaining differences tend to be more quantitative than qualitative. Both types of cards offer reward programs. Charge cards traditionally had an edge here, but business credit cards have recently caught up, offering comparable reward programs to all but the most elite charge cards.

Because charge cards can’t rely on interest to earn money, they tend to have higher annual fees than similar business credit cards.

When To Choose A Charge Card

No matter which type of card you choose, you should try to pay off the entirety of your balance each month. Since a charge card doesn’t easily let you carry a balance from month-to-month, you’re encouraged to maintain more disciplined spending habits than you might have with a business credit card. If you miss a charge card payment, you’ll feel the consequences right away. This is an important concept when you’re dealing with rewards cards as interest payments can easily neutralize any financial advantage you might get from the rewards.

Additionally, your payment terms will be clearer and less subject to sudden change. There’s less fine print to keep track of. You’ll always have the same number of days to pay of your balance.

Though the ability to buy as much as you want with a credit limit is overstated, you may prefer the softer limits on your spending habits.

Finally, if you like American Express’s rewards programs and perks, you’ll probably want to consider a charge card.

When To Choose A Credit Card

One of the biggest advantages offered by credit cards is that they’re accepted at far more businesses than charge cards, so if you plan to use a card as a primary means of payment, keep that in mind.

The credit card industry is more diverse, with tons of lending institutions offering their own cards and reward programs. While American Express does offer variations on its rewards programs, you won’t find the same level of diversity with charge cards as you will with credit cards.

Of course, credit cards do allow you to carry a balance, which provides a lot of flexibility in when you pay off your balance. This can be as much of a curse as a blessing, however, as it’s easy to let balances linger and accrue interest.

You should generally aim to pay your balance off during your interest-free grace period (as you would with a charge card) to get the most out of your credit card. It’s worth noting that this is easier to do with personal credit cards than with business ones as the latter can change your terms with no notice. Unfortunately, business credit cards also tend to have the better reward programs.

Final Thoughts

Both credit cards and charge cards are convenient ways to pay for expenses without carrying wads of cash or taking out complicated loans. Before you sign up for one kind or the other, take some time to analyze your spending habits and determine what type of card is best for your business.

Not sure where to start looking? Check out our personal and business credit card comparisons, as well as our charge card comparisons.

The post Should My Business Get A Credit Card Or A Charge Card? appeared first on Merchant Maverick.

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Personal VS Business Credit Cards

personal vs business credit cards

Let’s say you’re about to take a running leap into the great unknown and launch that business you’ve been thinking about for years. Congratulations! You’re about to join a class of people who receive more performative displays of respect (if nothing else) from the powers that be than anybody this side of The Troops and Olympic gold medalists: small business owners.

As you begin your journey amidst the peril and the pitfalls, you might be tempted to get a business credit card. It’s what you’re supposed to do, right? They wouldn’t put “business” in the name otherwise, would they?

As it happens, a business card may well be a sensible option for you. Or it might not be! A personal credit card may well fit your enterprise just fine. It all depends on the nature of your business, how you plan to use your credit card, and how you weigh the relative risks. Let’s go through some of the ways personal and business credit cards differ from one another.

Personal Credit Cards Have Stronger Consumer Protections

One difference that isn’t widely recognized is the fact that the Credit CARD Act of 2009 gives users of personal credit cards legal protections that do not apply to users of business credit cards. Among other reforms, the Act mandates that credit card companies give cardholders at least 45 days notice of a rate increase, that consumers get at least 21 days to pay their bill, that low introductory rates be offered for at least 6 months, and that payments are applied to the consumer’s highest interest rate balances first.

Now, if you have a business card, that doesn’t necessarily mean that your credit card company is going to engage in all the practices outlawed by the Credit CARD Act. In fact, many issuers of business cards extend most of these protections to consumers as a courtesy. However, not all credit card companies offer such protections, and the majority may not offer all of the protections listed above. For instance, your business card issuer may apply your payment to your lowest interest rate balance so they can leech more in interest charges. What’s more, history and experience suggest that big financial companies aren’t the most meticulous institutions when it comes to protecting consumers’ interests in the absence of legal mandates (and even then, their record is spotty, to put it mildly).

If you plan to sign up for a business credit card, read the fine print on the agreement before pulling the trigger. You should also closely monitor your charges and your monthly statements. Of course, you’re no dummy — you probably knew to do that already!

Personal CCs & Business CCs Tailor Their Rewards Programs Differently

Here’s one difference that shouldn’t come as a surprise: Business credit cards often have rewards programs that offer perks tailored towards the kinds of purchases typically made by businesses, such as office supplies and phone services. Meanwhile, the rewards programs offered by personal credit card issuers normally focus on categories average consumers spend on.

Naturally, many business owners and entrepreneurs will be attracted to business credit cards on this basis. But what if you don’t spend much on typical business categories in your particular enterprise? You might be running your business from home and have little use for, say, rewards programs geared toward office supplies. Suffice it to say, you should pay attention to the rewards categories offered by the credit card company in question (whether it be a personal or business credit card) and think long and hard about whether said rewards make sense for you and your business.

Business Credit Limits Are Often Higher

Businesses tend to spend more money than consumers. Therefore, it shouldn’t come as a surprise that those applying for business credit cards normally qualify for a higher credit limit than those applying for personal credit cards.

This means that with a business credit card, not only will you be able to spend more and not hit your limit, but this higher credit limit can boost your credit score as well. Business credit-reporting bureaus Equifax and Experian (not Dun & Bradstreet) use your credit utilization to determine your business credit score. A higher credit limit can therefore boost your standing, as you’ll be using less of your total available credit when your high credit limit kicks in.

A Business Credit Card Builds Your Business Credit

One advantage of using a business credit card is that it establishes and helps build your business credit; you cannot build credit for your business by charging business expenses to a personal credit card. Your business credit score can determine whether or not your business qualifies for loans, credit lines, and other financial products. It can also affect the price you’ll pay for business insurance.

If you’re an entrepreneur with no business credit history to your name, a business card can be an essential tool for building credit.

Business Cards Can Affect Your Personal Credit Too

When considering which type of card to use, know that how you use your business credit card can affect your personal credit as well as your business credit.

Getting a business credit card usually involves a personal guarantee, making you personally liable for your business’s debts if your business misses payments, so your business card issuer will likely consider your personal credit score when determining how much credit to extend to you. In addition, some business card issuers, like American Express and Capital One, report your business card activity to both business and personal credit bureaus. Others, like Chase, report your activity to business credit bureaus only. So while using your business card can definitely affect your personal credit, the exact mechanisms by and the degree to which it will do so can differ. Do your due diligence!

Final Thoughts

This is admittedly a familiar refrain at this point, but do your homework and examine the terms and conditions closely when applying for a credit card, whether it be personal or business. As for which one to choose when you’re starting a business, that all depends on your expected spending habits and your priorities.

If your goal is to establish business credit and your business expenses jibe with the reward categories offered by most business cards, a business credit card may be the way to go. If, on the other hand, you’re a sole proprietor who doesn’t anticipate spending much on the reward categories of business cards and building business credit isn’t your priority, you could definitely get by with a personal credit card.

Just remember that credit card issuers are in the game for profit, not public service. Trust your investigative ability, not the purity of their motives.

The post Personal VS Business Credit Cards appeared first on Merchant Maverick.

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8 Ways To Finance Your Small Business

Business financing is often a necessary part of growing a business, but when it comes to finding capital, it can be difficult to know where to start. Should you get a credit card? What about a loan from your local bank? Is there useful financing out there that you haven’t even heard of?

Read on, and we’ll point you in the right direction. This article discusses the most common (and some less common) ways of getting financing for your business. And, if you find the right type of financing for your business, we’ll give you the next steps to continue your search.

Want help finding a business loan? Apply now to Merchant Maverick’s Community of Lenders. We’ve partnered with banks, credit unions, and other financiers across the country to bring you fast and easy business financing.

1. Business Loans

As you might expect, business loans are one of the most popular and versatile ways of financing your business. Most businesses will qualify for a business loan of one sort or another, and they can be used for many business purposes, from working capital to business expansion to refinancing.

Business loans come from many different places. While everybody knows that you can get a business loan from a bank, you might not be aware that other financial institutions offer business loans. Many offer loans that are easier to qualify for and have faster applications than bank loans. Here are places that commonly offer business loans:

  • Banks and credit unions offer business loans and other types of financing.
  • Nonprofits, not-for-profit institutions, and microlenders offer small business loans and other types of financing to create jobs and fuel community growth.
  • The Small Business Administration partners with financial institutions to offer business loans. Read more about SBA loans in our guide to their programs.
  • Online lenders, also called “alternative lenders,” offer business loans and other types of financing with fast, semi- or fully-automated application processes.

Loans come in many different forms. The most common are installment loans, in which the money is granted to the business in one lump sum and then repaid via incremental, fixed, payments. However, some loans might have special fee and repayment structures — you might find loans with fixed fees (like short-term loans), loans that have repayment rates based on the percentage of money you make every day or month, or other arrangements. In other words, with a little looking, most merchants will be able to find something that is suited to the needs of their business.

For more information on small business loans, check out our free Beginner’s Guide to Small Business Loans. Or, to read reviews of individual lenders, head over to our small business loans review category.

2. Business Lines Of Credit

Business lines of credit are a sort of hybrid between business loans and credit cards. Like business loans, with a line of credit, you can borrow a sum of money which is (normally) repaid along with interest in installments over a set period of time. Like credit cards, you can request funds at any time, up to your available credit limit.

If you occasionally need funds to make ends meet or grow your business, or you simply want a safety net in case of emergencies, a line of credit is an excellent tool at your disposal.

Credit lines can be especially useful to businesses on a timeline because you don’t need to apply every time you need to borrow funds. When you are approved for a credit line, you’re granted access to a certain amount of money from which you can draw at any time. If you have a revolving line of credit, the amount you can borrow will replenish as you repay outstanding debts.

Some credit lines, such as asset-backed lines of credit, can work a little differently. If you have access to a credit line secured by unpaid invoices, inventory, or other assets, the amount you can draw at any given time will depend on the value of the assets you have outstanding. These credit lines are normally best for B2B businesses.

Credit lines carry a few drawbacks — most credit lines have variable interest rates, which mean that your rates might change without notice. And, if you aren’t very good at managing money, you might find that you don’t have emergency funds when you need them. However, lines of credit are useful tools for many businesses.

In the past, it was difficult for all but the most well-established and prosperous businesses to get credit lines. With the advent of online loans, it’s becoming easier for businesses of all sizes to access this useful financing tool. Check out our guide to business lines of credit for more information, or, if you’re interested in procuring one, take a look at our favorite line of credit services.

3. Business Credit Cards

There are many reasons to get a business credit card for your business.

For starters, most credit card issuers offer rewards and benefits to merchants who have signed on with their services. By using the card, you could be earning savings in the form of cash back points (that can be redeemed for travel or other expenses). These rewards add up in the long run, and you might be able to save your business quite a bit of money. Additionally, many credit card issuers offer benefits to cardholders, such as extended warranty, price protection, roadside assistance, and other perks.

Credit cards are also convenient ways to keep track of expenses and smooth out cash flow. If you put all your purchases on your credit card, you can easily see what you’ve been spending money on and where you might be able to cut costs. Because the money isn’t coming out of your own account right away, you can defer payments until a more convenient date. You don’t have to struggle to come up with money for expenses if you don’t have it at the moment, or it would be more convenient to pay later.

Of course, credit cards do have some downsides: the APRs can be expensive, so if you don’t pay your bills in time you could wind up with hefty fees that can be difficult to pay off. Additionally, some credit cards carry extra fees, like annual fees and balance transfer fees, which could eat into the money you save by using the card in the first place. However, if you are good at managing money, and spend time choosing a card that will maximize your savings based on how much you plan to utilize the card, credit cards can be excellent tools for many businesses.

Interested in getting a business credit card? Check out a list of our favorite business credit cards. Or, if you are starting a business, you might be interested in our favorite personal credit cards that can be used for business.

4. Merchant Cash Advances

If you need a one-time amount of funds, it might be worth considering a merchant cash advance. This type of financing can be useful for B2C businesses with strong daily sales.

In practice, merchant cash advances are similar to business loans, with the exception of how they’re repaid. Cash advances are repaid by deducting a small percentage of your daily sales; the amount you are repaying each day will vary along with your cash flow. These financial products don’t have a set repayment date, but are normally repaid in a year or less.

Merchant cash advances are an excellent tool for B2C businesses that need a small infusion of cash for working capital, business growth, or other reasons. Know, however, that cash advances have a few downsides: they can be very expensive, and the cost might not be immediately apparent because the fee structure is different than a traditional loan. Instead of interest, cash advance fees are calculated using a factor rate, which can obscure the true cost of the advance.

Head over to our comprehensive article on merchant cash advances for more information, or take a look at our reviews of merchant cash advance providers if you’re interested in finding an advance.

5. Personal Loans

While business loans are based on the credibility and strength of your business, personal loans are based on your personal creditworthiness and financial health. For this reason, these loans can be useful for entrepreneurs, startups, and other businesses that don’t yet have a credit history. You’ll want to give this option a pass if you have separated your business and personal finances, but if you’re not there yet, a personal loan can help you get your business up and going.

Personal loans are normally available from banks, credit unions, and online lenders. You’ll have to have a steady source of income, a solid debt-to-income ratio, and fair credit to qualify for reasonable rates.

Take a look at our guide to personal loans for business for more information, or check out our startup business loan reviews for reviews on personal lenders.

6. Crowdfunding

Rising to prominence due to the internet and some changes in legislature, crowdfunding allows you to finance your business via a network of your peers.

Crowdfunding is normally used by entrepreneurs to get a startup off the ground, or by creators who need money to fund a product. In a crowdfunding arrangement, the entrepreneur creates a campaign, which usually includes a description of their business or product, information about the founders and their partners, a rough timeline, potential problems, and other frequently asked questions.

Perhaps the most well-known type of crowdfunding, popularized by services such as Kickstarter (read our review) and Indiegogo (read our review), is rewards crowdfunding. You may not be aware that there are actually quite a few different type of crowdfunding available:

  • Rewards crowdfunding, from services like Kickstarter and Indiegogo, allows contributors to receive products in exchange for backing the business or project.
  • Donation crowdfunding, on sites like Razoo (read our review), involves funds that are donated to your cause. This type of crowdfunding is typically only used for nonprofits or other charitable projects.
  • Debt crowdfunding, from services such as Kiva U.S. (read our review), works similarly to a business loan — backers contribute money with the expectation that it will be paid back, normally with interest.
  • Equity crowdfunding, from company’s like Fundable (read our review), works when backers contribute money in exchange for equity in your business.

Between all the different types available, most entrepreneurs should be able to find a type of crowdfunding that will suit their business or project. Some less-than-sexy businesses, however, might find that they have trouble appealing to casual investors. While debt and equity crowdfunding — which tends to attract more serious backers — might solve that problem, some businesses might still need to look at other financing options.

Crowdfunding also tends to take a long time. Typically, the entrepreneur has to create a campaign and enter into a one- to three-month funding period. The funding period might require a fair amount of marketing, networking, communicating with current and potential backers, and other work to get your project funded.

Interested in crowdfunding? Head over to our startup business loans review category to read reviews of crowdfunding services.

7. Invoice Factoring

Invoice factoring is a financial solution for B2B businesses that invoice their customers. If you have cash flow struggles due to slow-paying customers, invoice factoring is a potential solution. Factoring is commonly used in industries such as construction, manufacturing, printing, and other B2B businesses.

Invoice factors purchase your unpaid invoices at a discount. While you’ll have to take a bit of a loss, invoice factoring can get you the money you need, when you need it, to keep your business going.

When you sell an invoice to a factoring company, you will receive most of the money up-front, and the factor will place a small amount on reserve. Then, when your customer pays the invoice, the funds are diverted to the factoring company, and you will receive the rest of the money in the reserve, minus the invoice factor’s fee.

There are many invoice factoring arrangements, depending on the factoring company and the needs of your business. You can find factors that require you to sell a lot of invoices or ones that let you pick and choose more carefully. Some factors require that your customers know about the arrangement, while others will keep it a secret, and so on.

Invoice factoring has gotten a bad rap in the past because some factoring companies employed poor practices, such as failing to disclose extra fees, requiring long-term contracts and monthly minimums, and other reasons. However, if you do your due diligence, you will be able to find an invoice factor that suits your business’s needs without employing poor tactics. Check out our Basic Introduction To Invoice Factoring to learn what to look for, and take a look at our comprehensive invoice factoring reviews to learn about individual factors.

8. Equipment Financing

If you run a business that relies on computers, manufacturing equipment, restaurant equipment, vehicles, or other equipment that might be difficult to pay for out of your business’s own pocket, equipment financing might be right for you.

Equipment financing covers two types of financing: equipment loans and equipment leases.

Equipment loans are similar to traditional business loans, but the equipment is generally used as collateral. In a typical equipment loan arrangement, the lender will cover 80% to 90% of the equipment, and you will be responsible for paying the other 10% to 20%.

Equipment leases are arrangements in which you rent the equipment for a certain period of time. In practice, some lease arrangements are similar to loans, because you have the opportunity to buy the equipment at the end of the leading period, but other arrangements are designed so that you can return or trade in the equipment after a certain period of time. Because you don’t have to purchase the equipment, leases can be a good option for businesses that only need equipment for a short time, or frequently need to upgrade expensive equipment (like computers) due to changes in technology.

Equipment financing, especially equipment loans, will most likely be more expensive in the long run than purchasing the equipment outright. However, if you can’t afford what you need, an equipment loan or lease is an excellent way to get financing.

Head over to What Is Equipment Financing? to learn more about this type of financing, or our equipment financing review category to learn about individual financiers.

Final Thoughts

Business owners have many financing tools at their disposal, but finding the right tool for the job can take some work. The above resources will point you in the right direction.

Need some more help? Merchant Maverick’s Community of Lenders is there for you. We’ve teamed up with banks, credit unions, and other financiers across the country to provide our readers with fast and easy business financing. With one short application, you can check your eligibility for all participating financial institutions. Read more about the service, including a step-by-step guide through the application process, in Mirador Finance & Merchant Maverick: Making Small Business Loans Easier.

The post 8 Ways To Finance Your Small Business appeared first on Merchant Maverick.

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The Best Charge Cards For Small Businesses

You may have heard the terms used interchangeably in casual conversation, but charge cards and credit cards aren’t the same thing. While small businesses can make great use of both types of cards, charge cards come with a unique set of risks and rewards.

A credit card is a revolving line of credit. A bank extends you a credit line, and you can spend up to your limit, paying interest on any balance you carry beyond the first month. When you pay off your debt, the full line of credit becomes available to you once more.

A charge card, on the other hand, doesn’t come with a credit limit. Instead, it may have a limit that can vary month to month based on a variety of factors ranging from your payment history to prevailing economic conditions. The catch? You need to pay off your entire balance every month. If you don’t, you’ll be hit with fees and interest rates that usually far exceed anything you’d see with a credit card. You will likely forfeit your reward points as well. In some cases, you may be able to spread out your payment on certain purchases through programs like American Express’s Extended Payment Option. Because they’re less likely to earn money on carried balances, charge card companies tend to have higher annual fees.

Note that charge cards aren’t quite as widely accepted as credit cards, so it’s best to have another payment method as a backup.

Think a charge card is right for your business? Here are some of our favorite options.

American Express Platinum

Charge cards are American Express’s wheelhouse, and its Platinum Card is one of the most well-known and prestigious charge cards around. With extremely generous reward tiers and a laundry list of benefits, it’s quite a powerful little piece of plastic for travelers. Be prepared for some sticker shock when you look at the annual fee, however.

American Express Platinum
Annual Fee $550
APR N/A
Signup Bonus 60,000 points
Rewards 5 pts./$1 on flights and hotels through Amex Travel; 2 pts./$1 on other travel
1 pt./$1 on all other purchases
Visit Site

A glance at Amex Platinum will tell you that it’s a card heavily weighted toward people on the go. The 5x reward tier offers an insane return on travel expenses, as long as you can make them through Amex’s first party system. The 2x return on expenses that you don’t book through Amex isn’t too shabby either. Points can be transferred to participating reward programs at variable rates. They can also be used as statement credit as long as you have at least 1,000 points.

The $550 annual fee is pretty brutal, but if you make strategic use of the card’s other perks, it’s not quite as bad as it looks. You’ll get:

  • $15 worth of Uber rides/mo, plus $20 in December
  • $200 airline fee credit
  • Hotel and resort benefits/upgrades
  • $100 TSA fee credit for global entry

If you aren’t a heavy traveler, however, this card is probably not a great investment. Businesses that are less focused on travel and more focused on large purchases may want to consider the business version of the platinum card. It replaces the 2 point tier with a 1.5 point tier for qualifying purchases. You’ll lose the Uber credits and some of the other perks, however. On the bright side, the Platinum Business Card is $100 cheaper per year.

American Express OPEN Business Gold Rewards

If the Platinum Card sounds too expensive and travel focused, Amex also offers more general-purpose charge cards. Amex OPEN Business Gold may not come with the incredible 5x reward tier of Platinum, but it’s cheaper and extends a 3x reward tier to a broader variety of purchases.

American Express OPEN Business Gold Rewards
Annual Fee $175 ($0 first year)
APR N/A
Signup Bonus 50,000 points
Rewards 3 pts./$1 for the first $100,000 spent on a category of your choice–airfare, advertising, shipping, gas stations, or computer hardware and software; 2 pts./$1 for the first $100,000 spent on the other four categories.
 1 pt./$1 on all other purchase
Visit Site

The American Express OPEN Business Gold Rewards card is one of the more interesting pieces of business plastic on the market. Rather than coming out of the box with a set reward tier structure, it lets you choose one of five different categories to be your 3x reward tier. You don’t even have to worry too much about buyer’s remorse, because the other four categories will still be rewarded at 2x. It gives the card a modular, customizable feel that can be fitted to most types of business.

The $175 annual price tag is still on the steep side, though Amex waives the fee for the first year. Note that you’ll have to spend at least $5,000 during the first month to qualify for the 50,000 point signup bonus, so plan your purchases accordingly if you decide to go with this card.

Overall, Amex OPEN Business Gold provides a pretty good value–and more versatility–at a lower annual price than some of their elite cards. The trade-off is that you won’t be getting the 5x reward tiers, statement credits, and some of the perks that come with a card like Amex Platinum.

American Express Premier Rewards Gold Card

If the Platinum Card looks like overkill and the OPEN Business Rewards Gold Card too unfocused, you may want to consider the Premier Rewards Gold. Like Platinum, it’s oriented around travel, but it comes in at a more affordable annual fee.

American Express Premier Rewards Gold Card
Annual Fee $195 ($0 first year)
APR N/A
Signup Bonus 25,000 point
Rewards 3 pts./$1 on directly booked flights; 2 pts/$1 at supermarkets, gas stations, and restaurants in the U.S.
 1 pt./$1 for all other purchases
Visit Site

If the Platinum card caters to the well-heeled, international jet-setter, Gold Premier is for the business owner whose work takes them around the US. You’ll still get some nice airline-related perks, so long as you book those flights directly; no Kayak or Priceline bookings. You’ll also get a smaller version of the Platinum card’s airline credit, giving you $100/yr. in statement credits for things like baggage fees, which can offset more than half of the significant annual fee.

Rather than rewarding you for fancy resort spending, the Premier card’s 2x tier is focused on more pragmatic expenses you’re likely to encounter during your domestic travels.

As is usually the case, you’ll need to spend a minimum amount of money in the first three months to get the signup bonus ($2,000 in this case).

As is the case for all Amex charge cards, remember that they’re not as widely accepted as Visa or Mastercard credit/debit, so be sure to have a plan B in your wallet.

American Express Plum Card

If the reward programs outlined above sound like more trouble than they’re worth, or if your spending habits and cash flow would make those cards hard to use, there’s another option. Enter American Express’s Plum Card, a charge card that sacrifices lavish words for flexibility.

American Express Plum Card
Annual Fee $250 ($0 the first year)
APR N/A
Signup Bonus None
Rewards 1.5% early payment discount
Visit Site

If a charge card could be “controversial,” the American Express Plum card would be a top contender for that title. Why is that?

While the Plum Card is a technically a charge card, it functions almost more like a cash back credit card. For starters, you’re given 60 days to pay off your balance without incurring a late fee. Pretty neat, right?

Well, there’s a catch. If you pay off your card early, within 10 days of your statement closing date, you’ll get a 1.5% discount on your bill. This is comparable to the 1.5% return you’ll see with most business credit cards that offer cash back, but with a little less leeway for earning your rewards. If you want that type of reward system in a charge card, however, the Plum Card can accommodate you.

Final Thoughts

Charge cards fill an increasingly small but still popular niche, offering some distinct advantages and drawbacks to the businesses that use them. Though business credit cards have been rapidly closing the gap, charge cards still offer some of the highest rewards tiers, albeit with high annual fees.

Looking for other options? Check out our business credit card and personal credit card comparisons.

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The Best Personal Credit Cards For Business Expenses

credit cards for startups

If you’re launching a new business, you may naturally be attracted to the idea of getting a business credit card to use for your business expenses. And why not? “Business” is right there in the name.

However, there are a number of reasons why you might want to go with a personal credit card instead, especially when getting your startup off the ground. For one thing, the CARD Act of 2009 regulates personal credit cards. By law, personal credit card providers can’t jack up your APR overnight or charge excessive fees for minor infractions. While most credit card companies extend these safeguards to business credit card holders as a courtesy, many do not. Similarly, introductory rates associated with personal credit cards must be offered for the first six months. Not so with business cards.

What’s more, the incentive programs associated with personal credit cards may be more fitting for your needs than the rewards associated with business credit cards. Your startup likely does not yet need a large office, for example, so a business card that offers discounts on office supplies probably doesn’t hold any special appeal.

Let’s take a look at the best personal credit cards for entrepreneurs.

General Cash Back Cards

Most embryonic businesses will want to select a personal credit card with a solid, all-purpose rewards program. The following cards can help you maximize your profits on the everyday purchases you make for your budding business, whether you’re spending on gas for your car, paint for your office, printer paper, or new-client lunches.

Chase Freedom Unlimited

For entrepreneurs who require flexibility in a credit card, the Chase Freedom Unlimited card is an ideal choice. It’s a flat-rate cash-back card, so there are no bonus categories — you get cash back on all purchases, and you are allowed great flexibility in how you redeem your rewards.

Chase Freedom Unlimited
credit cards for startups
Annual Fee $0
APR Variable, 16.24% – 24.99%
Signup Bonus $150 if you spend $500 in the first three months
Rewards Automatic 1.5% cash back on all purchases
Can use your rewards to book travel with Chase
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The Chase Freedom Unlimited card has no annual fee, and you also get an introductory 0% APR for the first 15 months. (Unfortunately, there is a 3% foreign transaction fee.)

When you’re starting a new business, you may find yourself making all manners of unexpected purchases. To this end, the Chase Freedom Unlimited credit card automatically gives you 1.5% cash back on all purchases. You won’t have to keep track of the categories your purchases fall into; everything is covered. And you can redeem for cash back in any amount you wish — there’s no minimum redemption.

Your redemption options continue from there. Beyond getting a statement credit or a direct deposit to your checking or savings accounts, you can also redeem your rewards by booking trips through Chase’s travel portal, which is great if your startup has you shuttling around. And if you use the Chase Freedom mobile app, you can redeem your rewards at certain participating stores.

If you have other Chase cards, you can also transfer rewards to them to take advantage of their particular redemption options.

All in all, Chase Freedom Unlimited is a very versatile card.

US Bank Cash+ Visa Signature

This is another card with versatility up the wazoo. Want to pick your own bonus categories to fit your startup? The US Bank Cash+ Visa Signature card might be the one for you.

US Bank Cash+ Visa Signature
credit cards for startups
Annual Fee $0
APR Variable, 15.24% – 24.24%
Signup Bonus $150 if you spend $500 in the first 90 days
Rewards 5% cash back on two categories of your choice ($2,000 purchase limit per quarter)
Unlimited 2% cash back on an everyday category of your choice (gas, groceries, restaurants, etc)
1% cash back on all other net purchases
Visit Site

The US Bank Cash+ Visa Signature card has no annual fee, though the introductory 0% APR for the first 12 months only applies to balances transferred within 60 days of opening the card.

Here’s where the versatility comes in: You’ll get 5% cash back on the first $2,000 worth of purchases per quarter in two categories of your choosing. According to US Bank, category options are subject to change on a quarterly basis, but as of January 2018, these categories are:

  • Ground Transportation
  • Select Clothing Stores
  • Cell Phones
  • Electronics Stores
  • Car Rentals
  • Gyms/Fitness Centers
  • Bookstores
  • Fast Food
  • Sporting Goods Stores
  • Department Stores
  • Furniture Stores
  • Movie Theaters

Furthermore, you’ll get unlimited 2% cash back on one “everyday” category of your choosing:

  • Gas Stations
  • Groceries
  • Restaurants

Lastly, all other eligible net purchases earn 1% cash back.

Unfortunately, you’ll have to remember to log in to choose new bonus categories every quarter. Also, the cash rewards expire after three years, you can’t transfer the cash to other rewards programs, and there is a 3% foreign transaction fee. The credit score requirements are pretty steep as well. On the plus side, there are no limits on the total amount of cash back you can earn and no minimum redemption amount.

Capital One Quicksilver

The Capital One Quicksilver Cash Rewards card is a good option for the new business owner whose expenses don’t fit neatly into approved categories.

Capital One Quicksilver Cash Rewards
credit cards for entrepreneurs
Annual Fee $0
APR Variable, 14.24%-24.24%
Signup Bonus $150 if you spend $500 in the first three months
Rewards Automatic 1.5% cash back on all purchases
50% back as a statement credit on your monthly Spotify Premium subscription (runs through April 2018)
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The Capital One Quicksilver Cash Rewards card bears some similarities to the Chase Freedom Unlimited card. There’s no annual fee, and you’ll get a 0% intro APR for 9 months. It’s a shorter 0% APR period than that provided by some other cards, however.

This is another card for those who can’t be bothered keeping track of rotating categories of rewards-eligible purchases. The Capital One Quicksilver will see you earning unlimited 1.5% cash back on all purchases, with no caps on how much you earn and no minimum redemption thresholds.

If you like to have music on while in the office (whether that office is an actual office space or your living room), you’re in luck. From now through April 2018, you’ll get 50% back as a statement credit on your Spotify Premium subscription. Keep on rockin’ in the fee world!

(See what I did there? Do you think that was tweet-worthy?)

One advantage this card has over Chase Freedom Unlimited is that Capital One Quicksilver has no foreign transaction fee. On the downside: the card carries a 3% balance transfer fee.

Discover it – Cashback Match

Let’s say you’re an entrepreneur who makes a lot of purchases through Amazon or wholesale clubs. You might want to consider the Discover it – Cashback Match card.

Discover it – Cashback Match
credit cards for startups
Annual Fee $0
APR Variable, 12.24% – 24.24%
Signup Bonus Discover will match all the cash back you earn at the end of your first year
Rewards 5% cash back on rotating bonus categories, changing quarterly
1% cash back on all other purchases
Rewards are usable at the Amazon.com checkout
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In addition to the above, you’ll get an introductory 0% APR on both purchases and balance transfers for the first 14 months.

With this card, you can get 5% cash back on rotating bonus categories on your first $1,500 spent per quarter. Discover’s bonus categories for 2018 are:

  • Q1 2018: Gas stations and wholesale clubs
  • Q2 2018: Grocery stores
  • Q3 2018: Restaurants
  • Q4 2018: Amazon.com and wholesale clubs

With Discover matching all the rewards you earn over the first year, you should accumulate a healthy supply of cash back. You can put that cash back to use in the following ways:

  • Pay with rewards at the Amazon.com checkout
  • Gift cards with at least $5 added to each
  • Deposit to your bank account or apply to your Discover credit card bill
  • Make a charitable donation

It’s not a spectacular card for the frequent flyer (though there is no foreign transaction fee), but for the land-bound entrepreneur who doesn’t mind keeping track of the rotating categories, the Discover it – Cashback Match card provides plenty of value.

Travel Cards

Not all entrepreneurs need to travel for business, but for those who do, a travel rewards program can be a godsend. The following personal credit cards can help you maximize your current travel spending and earn valuable points towards any future hotel stays, flights, and car rentals you’ll book as your business continues to grow.

American Express Premier Rewards Gold Card

Here’s a great card for the entrepreneur who travels a lot: the AmEx Premier Rewards Gold card.

AmEx Premier Rewards Gold
credit cards for entrepreneurs
Annual Fee $0 for the first year, $195 subsequently
APR N/A (charge card)
Signup Bonus Make $2,000 in purchases within the first 3 months and get 25,000 rewards points
Rewards $100 annual airline fee credit for incidental fees
3 reward points per dollar when you book a flight directly with an airline
2 points per dollar at gas stations, supermarkets and restaurants in the US
1 point per dollar on all other purchases
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Keep in mind that this is a charge card, not a traditional credit card. In other words, you’ll have to pay the entire balance every month.

If your startup has you going to and fro, you’re in luck, because this card’s rewards are tailored to the frequent traveler and will easily offset the $195 annual fee that kicks in the second year. First off, there’s a juicy signup bonus: you’ll earn 25,000 rewards points if you make $2,000 in purchases within the first three months of signing up (terms apply).

The big rewards come when you book flights. You get three reward points per dollar when booking a flight — the only drawback is that you’ll have to book the flight directly with the airline, and airline websites suck (the prices are higher, too). You’ll get a further two points per dollar at US gas stations, supermarkets and restaurants, and one point per dollar on all other purchases.

Another factor for the frequent-flying entrepreneur to consider is that the Premier Rewards Gold has no foreign transaction fee. Of course, American Express is less accepted internationally than Visa and Mastercard, so you’ll want to carry a backup card when traveling.

Capital One Venture Rewards

Here’s another card from Capital One — this one’s a versatile travel card for the entrepreneur on the go.

Capital One Venture Rewards
credit cards for startups
Annual Fee $0 for the first year, $95 subsequently
APR Variable, 14.24% – 24.24%
Signup Bonus Earn 50,000 miles once you spend $3,000 on purchases within the first three months (equal to $500 in travel)
Rewards Earn two miles per dollar on every purchase
Use your miles to fly any airline and stay at any hotel
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The Venture card is designed to immediately reward the frequent traveler. Earn the equivalent of $500 for travel after spending $3,000 on purchases in the first three months. After that point, you’ll earn unlimited 2x miles per dollar on all purchases. This means that if you rack up $500 in charges on your card in a given month, you’ll get 1,000 miles that month. Not too shabby!

The Venture gives you a great deal of flexibility in how you use your travel rewards. You can either book flights, hotels, and rental cars directly through Capital One or you can book these things anywhere you like and use the company’s Purchase Eraser tool to get a statement credit for what you spent. This way, you won’t be locked into using a particular airline or hotel chain or booking site.

Unfortunately, if you want to redeem your miles for cash back or non-travel purchases, they will be worth half of what they would be worth if applied to travel purchases. Thankfully, the card has no international transaction fees. Plus, there are no blackout dates, no expiration dates, and no limits on the number of miles you can accrue.

Chase Sapphire Preferred Card

Here’s a travel-oriented card that might be even more flexible than the Venture: the Chase Sapphire Preferred card.

Chase Sapphire Preferred
credit cards for entrepreneurs
Annual Fee $0 for the first year, $95 subsequently
APR Variable, 17.24% – 24.24%
Signup Bonus Get 50,000 bonus points after spending $4,000 on purchases in the first three months ($625 when redeemed through Chase Ultimate Rewards)
Rewards Two points per dollar on travel and restaurants
One point per dollar on all other purchases
Get 25% more value for your points when making travel purchases through Chase Ultimate Rewards
Transfer your points to leading airline and hotel loyalty programs on a 1:1 basis
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The Chase Sapphire Preferred card comes with some sweet bonuses. Not only will you get 50,000 bonus points after spending $4,000 on purchases in the first three months, but you’ll also get another 5,000 bonus points if you add an authorized user in those first three months and they make a purchase.

With this card, not only do you get two points per dollar when spending on travel and restaurants and one point per dollar on all other purchases, but you can transfer your points — on a 1:1 basis — to the following airline and hotel loyalty programs:

Airlines

  • Air France/KLM
  • British Airways
  • Korean Air
  • Singapore KrisFlyer
  • Southwest
  • United
  • Virgin Atlantic

Hotels

  • Hyatt
  • Marriott
  • Priority Club/InterContinental Hotels Group
  • Ritz-Carlton

What’s more, your points will be worth $0.0125 apiece if you redeem them for travel booked through Chase Ultimate Rewards. There’s no foreign transaction fee, either. You will have to pay a $95 annual fee after the first year, though.

Citi/AAdvantage Executive World Elite Mastercard

This next card isn’t for everyone, but the well-heeled flight-hopping entrepreneur with something to prove should enjoy the Citi/AAdvantage Executive World Elite Mastercard.

Citi / AAdvantage Executive World Elite Mastercard
credit cards for entrepreneurs
Annual Fee $450
APR Variable, 16.99% – 24.99%
Signup Bonus Get 50,000 American Airlines AAdvantage bonus miles after you spend $5,000 in purchases in the first three months
Rewards Admirals Club membership for you and your guests
Earn 10,000 AAdvantage Elite Qualifying Miles after you spend $40,000 in purchases within the year
Earn two AAdvantage miles for every dollar spent on eligible American Airlines purchases and one AAdvantage mile for every dollar spent on other purchases
First checked bag is free on domestic AA flights for you and eight companions
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For the entrepreneur with the means to get around in style, the Citi/AAdvantage Executive World Elite Mastercard has quite the bag of perks. From the 50,000 AAdvantage bonus miles if you spend $5,000 within the first three months to the automatic Admirals Club membership (a $550/year value) to the AAdvantage miles you’ll be racking up, this card brings significant value the table. However, that value doesn’t come cheap — note the eye-popping $450 annual fee! If you really want that Admirals Club membership, however, it’s a cost-effective way of getting it.

For this card to be worth it for you, you have to be a frequent American Airlines flyer with a burning desire to hang out in AA Admirals Club lounges. If you spend a big chunk of your life in airports and want to get away from the hoi polloi, this card gives you the opportunity to pay for that privilege. You’ll also get 25% savings on in-flight purchases, a $100 credit for the TSA PreCheck program every 5 years, and the absence of a foreign transaction fee.

Final Thoughts

Entrepreneurs deserve a credit card that fits their particular needs. For many, a personal credit card can do the job just fine, and with greater legal protections. If it’s a business card you’re after, check out our piece on the best business credit cards for 2018.

The post The Best Personal Credit Cards For Business Expenses appeared first on Merchant Maverick.

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