Maybe you’ve been running a small business for a while. You might have a small business card that has served its purpose — but you’re not sure if it’s still what you need. How do you make the call whether or not it’s time to upgrade to a different card?
In this article:
Evaluate your business needs
Before you do anything, evaluate your business needs. Here are some examples of when it’s time to consider upgrading your card:
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- Your current credit card limit isn’t high enough to cover what your business spends each month.
- You’re looking to earn rewards to offset large purchases or fund future travel.
- You’re planning a big purchase and need a 0% interest period to pay it off over time.
- You want more tools and support from your card.
Most card issuers offer different levels of business cards, allowing cardholders to upgrade as their needs grow. “As businesses become more established, their needs change, and it may make sense to switch to another American Express card such as the American Express® Business Gold Card or The Business Platinum® Card from American Express,” said Patrick Jones, a spokesman for American Express.
“The decision to upgrade is unique to every business, but some factors that might come into play may be if a company is pursuing growth opportunities quickly and needs more buying power, if they need assistance in managing spending or if they are hoping to save money and earn rewards over time,” said Jones.
Boost your spending power
As your business grows, you may find that the credit limit you started out with on your small business isn’t high enough to handle everything you need. If that’s the case, you have a couple options — asking for a credit limit increase or applying for another card.
Before you ask for a credit limit increase, make sure you have good payment history. In addition, prepare your financial records so you can demonstrate to the bank that your business is doing well and merits an increase. Finally, if you need to negotiate, it might help to politely mention that you’re considering card offers from competing issuers.
If you’re denied, be persistent.
“That initial rejection doesn’t have to be final,” said Matt Schulz, chief industry analyst for CompareCards. “You’re completely within your rights to call the issuer and make your case to them over the phone. If you do, make sure that you don’t settle for just talking to that first representative. Ask to speak with a manager or someone else with decision power. There’s no guarantee that you’ll get them to reconsider, but as my dad likes to say, ‘It never hurts to ask.’”
If you end up deciding to apply for another card, use this as an opportunity. A card that offers rewards or a card that comes with an introductory 0% APR offer could save your business money.
You should also pay attention to whether or not the card you decide to apply for is likely to affect your personal credit. Because Discover and Capital One business cards report to the credit bureaus, they can be expected to show up on your personal credit history. By contrast, American Express, Wells Fargo, Chase and Citibank generally don’t — unless you fall behind on your payments.
How travel rewards or cash back can add to your bottom line
If you don’t plan on carrying a balance, a card that offers travel rewards or cash back may be the best choice for your business.
“Often, business owners will start with a business credit card that has no annual fee,” said Khary Scott, vice president of business development for Capital One Small Business Card. “This is a great option for many, but if they [spend a lot] on their card, it is worth doing the math to determine if paying an annual fee to upgrade to a card that offers a higher rewards rate would be offset by an increase in rewards earned.”
Some business cards offer rewards based on certain categories of spending, such as gas or office supplies. Others offer a flat rate on all purchases.
For example, the Capital One® Spark® Cash for Business offers 2% cash back for your business on every purchase, everywhere. The annual fee is $0 intro for first year; $95 after that. If you spend at least $4,750 each year (after the first one), you can recoup the cost of the annual fee — and any spending beyond that is net cash back.
If you’re looking for a card to offset and enhance business travel on airlines and hotels, check out our list of best business travel credit cards.
Save interest on a large inventory/equipment purchase
If you need to make a large purchase for your business, and need some time to pay it off without accruing interest charges, a card with a 0% introductory purchase APR offer can help you do that.
Here are a few cards to consider for 0% purchase APR deals:
- The Ink Business Unlimited℠ Credit Card is offering an introductory 0% for 12 months on purchases, then 14.99% – 20.99% variable APR on purchases.
- The Ink Business Cash℠ Credit Card is offering an introductory 0% for 12 months on purchases, then 14.99% – 20.99% variable APR on purchases.
- The Blue Business® Plus Credit Card from American Express is offering an introductory 0% for 12 months on purchases, then 14.74% – 20.74% variable APR on purchases.
- The Capital One® Spark® Cash Select for Business is offering an introductory 0% on purchases for 9 months, then 14.74% – 22.74% (variable) APR on purchases.
- The Capital One® Spark® Miles Select for Business is offering an introductory 0% on purchases for 9 months, then 14.74% – 22.74% (variable) APR on purchases.
- The Discover it® Business Card is offering an introductory 0% for 12 months on purchases, then 14.49% to 22.49% variable APR on purchases.
Get more tools and support from your card
Do you have several employees who need to be able to make purchases on your business card? Or do you want to streamline accounting and not have to reimburse employees for purchases put on their personal cards? If either of these situations is applicable to your business, you may want to see if you can get a card that offers free employee cards.
Read: The Many Benefits of Free Employee Business Credit Cards
You may also want related tools — for example, Capital One small business cards let you set spending limits on employee cards and assign an account manager to make purchases and payments, review transactions and resolve any problems.
If support is a key focus for you, you might benefit from the Discover it® Business Card, which offers 100% U.S.-based customer service.
Finally, many business cards from major issuers have accounting tools to help with financial management — such as spending summaries and the ability to download activity in formats friendly to QuickBooks, Quicken and Microsoft Excel. If it’s important to you to have integration with a particular software, check what a card offers before applying.
The bottom line
When your small business is growing and you think your current business credit card isn’t doing the job, take this as an opportunity. Whether you ask your existing issuer for a credit limit increase or apply for a new card that offers rewards or 0% intro purchase APR, this is a chance to make your card work for you.
“As with a personal credit card, picking the right business card is all about knowing how you’ll use the card and what you want to get from it,” Schulz said. “Many businesses simply want a steady, predictable return from their card. They’re looking for a little extra cash flow that they can put back in the business, so a simple cashback card is often a good choice. However, other companies may prefer to stockpile air miles or hotel points. Others may spend a huge amount of money on one particular item or with one particular merchant. All of that should factor into your decision of which card is right for you.”
This article originally appeared on CompareCards, a media brand owned by LendingTree.