Credit card selection may seem like a low-priority, low-consequence decision for a small business owner or independent contractor. However, selecting the correct credit card is actually a very important financial decision that can improve your business’s finances. There is no one-size-fits-all answer in determining what credit card is best suited for each business. Just as businesses are unique, there are different and unique credit cards. Consider the options available and select the credit card best suited for you.
Low Interest Rate Credit Cards
A major consideration in selecting the appropriate credit card is the cost. When it comes to credit cards, the biggest cost is usually the interest you pay from carrying a balance on the credit card. The interest rate varies significantly from card to card. While each credit card company bases your interest rate on your credit rating and other individual characteristics, interest rates can still vary from card to card, and there are specific, low interest rate credit cards available. If you will be carrying a balance on your credit cards, a low interest rate credit card is a smart decision. Shop around for a card that offers low interest rates. If you won’t be carrying a balance on your credit card for your small business or your independent contracting work, this characteristic is of little significance.
Travel Rewards Cards
Travel rewards cards are popular for individual cardholders, but they are also a great option if your small business will be sending you or your employees on business trips. Travel rewards cards work under the basic premise of offering travel rewards for airline tickets – and in some cases, hotels – depending on the amount of money that you charge on the credit card. These are popular credit cards, and there are many different characteristics. Some offer higher rewards for money spent on actual flights or goods on flights. The benefit of this type of card is that the money that you spend to run the business and that you charge on the credit card can be used to fund future business travel, which can lower your business expenses.
Cash-Back Credit Cards
Cash-back credit cards offer a reward that can benefit pretty much any small business or independent contractor using the credit card. As the name implies, cash-back credit cards offer cash back on purchases. Usually the rewards are around 1 to 2 percent, but in some cases the cash-back reward can be higher. Many cash-back credit cards offer a different amount of cash back depending on what you purchase. For example, a credit card could offer 5 percent cash back on gasoline and 1 percent cash back on groceries. If your business’s operations involve transportation or a great deal of travel in business vehicles, the large amount of cash back on gasoline would make a cash-back rewards card appealing.