How does a business credit card work?

A Business credit cards help you manage steady cash flow, spread out costs, take care of short-term expenses, keep track of business and staff spendings. 

With the advancement of technology, it is getting incredibly convenient to avail credit cards online. Knowing more about these cards and the logistics will help you determine which business card you should go for. So, find out about how it works before you apply for a business credit card.

  • Business Expenses

With the help of a business credit card, you can pay for raw materials, repairs, internet, transport or any short-term expenses related to your business within the credit limit. Business credit cards work more or less in the same manner as personal credit cards. These help you secure a cash flow and spread out the costs.

However, it is essential to make sure that you only use your business credit card for business purposes. This assists you to keep a record of your business expenses easily. These records can help you manage spending, savings and analyze your financial strategy. Maintaining records is crucial, especially during tax season.

  • Multiple cards from one account

Since multiple cards can be issued to one account, you can also provide your employees with a business credit card. This makes it easier for you to maintain a record of the company expenses. In addition, you can set a spending limit on each business credit card issued to keep the costs under control. Although, apply for a business credit card exclusively for trusted employees only when necessary so that it is easier to check the records and prevent fraud.  

  • Easy to apply

Business credit cards are comparatively easier to apply for than a small business loan. It requires fewer documents than a loan, and the application process only takes a few minutes. You can also conveniently apply for business credit cards online. However, it is important to note that issuers verify whether you have a good credit score, how old your registered business is, and the industrial risks.

  • Personal Finance Records and Credit Score

Credit card companies generally will request details about your business records which include the monthly income and expenditure. In addition to your business financial records, companies also look into your personal financial records and credit score.

To determine your eligibility for a business credit card and the size of your credit line, companies check your personal income and any debt that you may have. They also go through your personal credit score to evaluate how well you handle your debts. Thus it is essential to ensure that you have decent financial records and a good credit score until you apply for a business credit card.

  • Personal Guarantee

Most companies offering business credit cards require you to sign an agreement or a personal guarantee which holds you legally liable to repay the debt. This means that if your business cannot raise the amount required to pay the debt, the issuer has the authority to claim your personal assets to recover the amount. 

  • Cashback and Rewards

Business Credit Cards, not unlike personal credit cards, come with various perks like a one-time bonus, cashback facilities, and reward points. While choosing a business credit card, find out about the sign-up offer, cashback, and reward points that you will be entitled to. You can redeem the accumulated reward points to get gift cards and discounts for shopping sites, travel expenses, gasoline, or restaurant bills.

Make sure to check the interest rates, annual fees, late fine, credit limit, billing cycle, and other charges before you apply for a business credit card. Having a business credit card increases your company’s credibility and helps you build a good business credit score. This, in turn, will improve your financial records and increase your chances to obtain substantial business loans in the future. 

If you are seeking a good business credit card, check out the Bajaj Finserv RBL Bank SuperCard. It works similarly to a credit card, debit card, loan card, and EMI Network Card. In addition, you can get various other benefits such as offers, rewards points for domestic and international expenses, cashback, and a lot more.

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