Opting for the correct business credit card can help immensely in boosting cash flows, strengthening the company’s financial discipline and organising expenses. With lending institutions continuously upgrading their technology-driven product features and services.
Here are simple yet effective steps to help upcoming entrepreneurs make informed business credit card decisions:
1. Identify your business spending pattern
Acknowledge and understand where your funds are going every month. This means understanding the foundational pattern of spending. This is the fundamental of selecting the most appropriate credit card for yourself. Some basic questions aspiring credit card applicants should ask themselves are:
- Do you spend more on utilities, travel and digital advertising?
- Are fuel costs a significant part of your monthly expenses?
- How significant are vendor payments for your firm?
Understanding and mapping these distinct categories according to monthly expenses can help you in shortlisting credit cards that reward your primary expenses. Holistically, such an approach can also help boost your credit score.
2. Compare fees, rewards and cashback
Prominent credit card issuing institutions such as HDFC Bank, ICICI Bank, SBI, etc., offer customers a mix of cashback, rewards and travel-oriented business credit cards. That is why to make the best possible choice, you should.
- Evaluate tangible benefits in comparison with the real annual fee.
- Check out bonus categories that match your spending patterns.
- If the business credit card you are opting for offers higher value, then a higher fee is fair.
- In case the credit card is unable to offer lucrative services, then it must be reconsidered.
- In case of doubts, you should have a discussion with the certified customer support executive of your credit card company.
3. Check credit limits and flexibility
A strong credit limit is crucial for small and medium-sized enterprises that face fluctuating and erratic monthly expense requirements. To combat such a situation, you should:
4. Assess expense management tools
When aiming to run a flourishing modern business, efficiency is crucial. For the same you should aim to use expense management tools that provide services such as:
- Real-time spending dashboards.
- Add-on credit card services for employees, along with distinct card offers and adjustable limits.
- GST-compliant and updated statements to assist with tax filing.
Such tools and services reduce the total manual work and support proper management of company finances. It also assists with healthy employee relationship building.
5. Review protection, insurance and partner benefits
From travel insurance to fraud protection and deals on accounting software, value-added benefits can make a noticeable difference. Insurance documentation should be recent and updated to protect the overall financial health of the company.
Note: The above credit cards, annual fees and features are for illustrative purposes only. For more details, please refer to the official website of the respective credit card-issuing financial institution.
Risks of using business credit cards
A well-chosen business credit card is more than a payment tool. It is a financial instrument that supports growth, control and efficiency. Still, it is critical to keep in mind that business credit cards come with several inherent risks. Some of these risks are discussed briefly below:
In conclusion, by following these steps and understanding the associated risks of business credit cards, entrepreneurs in the country running new-age and upcoming businesses can select a card that aligns with both their present needs and future ambitions.
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Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with risks such as high interest rates and hidden charges. We advise investors to discuss with certified experts before taking any credit.
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