Small businesses who are currently looking for loans or forms of financing that may help them with purchases have also begun to consider small business credit cards as this particular type of financing opportunity could be of help for certain companies, particularly if a company is going to need financing to make certain purchases throughout the year or if they are simply looking for a way to improve their credit standing so that opportunities like small business loans may be available at a more affordable rate in the future. However, it’s important for small businesses to make sure they look at what current small business credit card options are available for their specific situation and exactly what the cost will be when this particular type of credit card is used.
Currently, many business credit cards are offering average rates of anywhere from 12% to around 20%, but as with consumer credit cards, this particular rate will depend on the financial position that a business happens to be in. If a company is relatively well-established and has a good business model, this could open up more opportunities for certain types of business credit cards and offer lower interest rates to the business owner, but new companies that may be looking for a small business credit card will want to be cautious as some cards may come with a higher rate and this could potentially be problematic if the balance is carried on these cards for an extended period of time.
Most cardholders know that if a small business or consumer keeps a balance on a credit card they will be meeting higher overall costs when interest rates come into play, as these charges are usually what hurt some cardholders when they’ve never paid down their balance in full but rather continue to charge and only meet minimum payments. Interest rates may also increase in some cases and this would obviously be a hindrance to a business owner if they are dependent upon their small business credit card to make certain purchases but may not be in a position to pay off the totality of their credit card in a relatively fast period of time.
Yet, there are businesses who are seeing options made available from certain credit card lenders that may offer cash back opportunities or other rewards that could potentially be beneficial for their specific situation. Airline travel benefits, these cash back rewards, or other perks that may come along with certain business credit cards have, in the past, been helpful to some companies, particularly those who may have multiple business locations in a certain region and whose business owner may need to fly from one establishment to the next, as an example, but these rewards are not going to be beneficial for everyone.
What many financial advisers want business owners to remember is that there are a wide range of business credit cards available that will offer certain benefits or rewards, and it’s important to take the time and explore not only what a card can do for business but what the overall costs may be when a business owner implements their desired use of this card, as making purchases that will carry a balance and cause interest rate costs to be higher over time need to be factored into a borrower’s equation, as relying solely on one of these credit cards may not be helpful in the long run, but in the past have been able to help some businesses if they use this card properly and make sure they select the right card for their specific needs.