Between rising interest rates and a looming recession, you may be thinking a lot more about your lines of credit as a small business owner right now.
And if you’re not – you should be!
Before we head into 2023, it’s a good idea to review your business credit cards in order to get the most out of your credit lines for your small business. Follow these steps to revamp your company credit card for the new year.
Make a list of your business needs
So it’s time to revamp your company credit card for the new year. But why do you even need to do that?
The very first step to this year end task is figuring out what your small business needs.
One of the most common reasons for revamping your company credit card: your operating costs are getting higher.
You may need a larger line of credit in order to cover the normal day-to-day expenses for your service-based business.
After all, a growing business grows in both profit and expenses!
Here are some questions to ask yourself when thinking about switching up your service-based business’s credit card:
- Do you use all or most of your current credit card’s perks and features?
- Are you looking to improve your small business credit?
- Are you earning good points and bonuses with your current credit card?
- Have you hired a few employees who need their own cards?
Assess your current debts
Whether you have credit card debt or other kinds of debt, taking a look at what your small business owes before year end is a very good idea.
If you’re someone who stresses out when looking at debts, this task will actually be beneficial to your anxiety even though it sounds counter intuitive. Not only will it give you a picture of how your service-based business is doing, it’ll help give you peace of mind. Facing your anxieties is one of the first steps in overcoming them!
So make a list of all your current debts, their interest rates, and their current balances. Come up with a rough gameplan of how you intend to pay them down to see what kinds of new credit you need lined up to further grow your small business.
Compare new card rates & perks
Now that you have an idea of your business needs and your current rates, it’s time to shop around for a new card!
And who doesn’t love a good shopping trip?
Year end is a great time to do this. When looking to revamp your company credit card for the new year, you’ll want to look at a few key factors.
Your credit card’s APR is its annual percentage rate. When signing up for a new card, it’s common to see three different APRs mentioned: Purchase Intro, Transfer Intro, and Regular APR.
A purchase intro APR is the promotional APR offered for a specific number of months for new credit card accounts. A common purchase Intro APR is 0% for 12 months – this is what you want! Any purchases made on your credit card during the promotional period will not incur any interest as long as its paid off within the promo period.
The transfer intro APR is the rate that will be applied to any existing credit card debt you move to your new card through a balance transfer. If you are planning on ditching your old credit card but have a bit of debt racked up still, a new card with a 0% APR period for balance transfers is essential. Pay the debt you transferred within the months allotted and boom – no interest paid!
Finally, the regular APR is probably what you think it is – the interest rate for purchases after any promo periods have ended. Rates can reach as high as 40% for some cards. Avoid those! A normal range for regular APRs is 16% to 26%. The lower the rate, the better.
The annual fee charged by credit card companies is usually billed to offset the cool perks and benefits the card offers the card holder. Some credit companies don’t charge an annual fee, but others can get quite high. When looking at annual fees, always make sure to look at the benefits you’ll be taking advantage of to see if the fee is worth it.
A great thing about business credit cards, though, is that their annual fees are tax deductible! Most fees associated with using the card for your service-based business are deductible in fact: annual fees, late fees, monthly fees, etc.
These are going to be the points you accumulate for each of your purchases. Each card has different point rates for different kinds of purchases. Some offers extra points for purchases on gas, hotels, travel, etc.
When looking to revamp your company credit card for the new year, pick the card with the best points for the purchases you’ll be making the most. If you aren’t doing any travel for your business, earning double points on airfare won’t do much for you!
Bonuses & Benefits
Finally, check out what bonuses and benefits each card offers. Some cards offer more travel rewards, while others give you cash back. A lot of cards offer cash bonuses for spending a certain amount of money within a set period of time upon opening the new account.
Get the best bang for your buck!
Pick the card that works best for you and then use it! Putting all of your business purchases on your credit card and then immediately paying them off is the best way to build credit for your small business while earning cash back, points, and bonuses. Be sure to use the time sensitive benefits before year end.
I hope this guide on how to revamp your company credit card for the new year proves helpful for your small business. For any questions on this topic, reach out to me!