Business Credit Card Management Guide for Maximum Value

Credit cards can be a great way to earn rewards and save money on interest, but managing them can be a challenge. While they are a necessary part of doing business, they can also be a major source of financial stress.

This guide will provide you with tips on how to manage credit cards for maximum value and how to avoid common mistakes. By following these tips, you can make credit card management easy and ensure that your business gets the most out of its spending.

Why Would You Need a Business Credit Card?

There are a few reasons why you might need a business credit card.

If you run a small business, you may not have the cash flow to cover all your expenses. A credit card can help you keep your business running by covering short-term costs.

You may also need a business credit card to build your credit history. This can be important if you want to get a business loan in the future.

A business credit card also lets you take advantage of rewards programs. Many cards offer cash back or points that can be used for travel, merchandise, or gift cards.

What Can You Put On a Business Credit Card?

Generally, expenses that are considered to be for personal use or that would not be considered a business expense are not allowed. For example, you cannot put your rent or mortgage payment on it.

Here are other examples of what you can and cannot put on a business credit card.

• You CAN use your business credit card for business expenses. This includes office supplies, business travel, and corporate entertainment.
• You CANNOT use your business credit card for personal expenses. This includes things like groceries and clothing.
• You CAN use your business credit card to make purchases on behalf of your company. This includes inventory, software, and services.
• You CANNOT use your business credit card to make cash advances. This includes using your credit card at an ATM or getting a cash advance from a bank.
• You CANNOT use your business credit card to make personal loans. This includes taking out a loan to consolidate debt or finance a large purchase.

7 Best Practices For Managing Credit Cards

It’s important to have a clear understanding of what business credit cards are before using them. Here are seven business credit cards tips:

1. Keep business and personal expenses separate.

One of the most important things you can do when managing credit cards is to keep your business and personal expenses separate. This will help you stay organized and make it easier to track your spending. Additionally, it will help you avoid accidentally using your business credit card for personal expenses.

2. Always pay your bill on time.

Paying your credit card bill on time is crucial to maintaining a good credit score. Late payments can damage your credit score and lead to late fees and higher interest rates. To avoid this, set up automatic payments or reminders, so you never miss a payment.

3. Don’t max out your credit card.

Maxing out your credit card can damage your credit score and make it difficult to get approved for new lines of credit. To avoid this, keep your balance below 30% of your credit limit.

4. Monitor your account regularly.

Monitoring your account regularly is a good way to catch fraudulent charges and spot errors. Additionally, it will help you keep track of your spending and ensure that you are staying within your budget.

5. Pay off your balance in full each month.

Paying off your balance in full each month is the best way to avoid interest charges. If you can’t pay off your balance in full, try to pay more than the minimum payment.

6. Avoid cash advances.

Cash advances are expensive and can damage your credit score. To avoid this, only use your business credit card for purchases and not for cash advances.

7. Keep track of your spending.

Monitoring where the money goes helps you stay within your budget and avoid overspending. There are a variety of ways to do this, including using a budgeting app or setting up alerts for when you reach certain spending thresholds.

Avoid These Costly Mistakes When Managing Credit Cards

Credit cards can be a helpful tool for businesses, but only if they are managed correctly. Below are some of the most common mistakes card owners make and how to avoid them:

• Don’t carry a balance. If you carry a balance on your credit card, you will be charged interest. To avoid this, pay off your balance in full each month.
• Don’t get a non-reputable credit card. It seems obvious, but when business owners are pressed for revenue or excited about a new opportunity, they occasionally turn to shady credit cards. It isn’t worth the potential damage to your credit in the long run. 
• Don’t allow multiple people access to your credit cards. Some employees may need access to the business credit card; however, you should limit access when possible for security and revenue tracking purposes. 

Contact LendThrive For All Your Business Financing Needs

At LendThrive, we are dedicated to helping businesses grow and succeed. We offer fixed rate business loans of up to $150,000; apply now online and find out if you qualify within minutes.