Small business owners have the overwhelming task of managing all aspects of their business. Deciding how to pay bills is essential to managing your cash flow and maintaining your company’s financial health. Business debit cards and business credit cards are frequently the preferred payment methods for small business owners. Despite their appearance, credit and debit cards are not the same thing.
Getting a business credit card could be beneficial. If you are financially disciplined and already have a stable business. Furthermore, you may gain access to rewards programs, which may help your company save money on future costs. If you’re unsure you can control your spending, start with a debit visa card. You will not incur debt if you do this instead of using a business credit card.
Debit cards allow you to spend money from your bank account. Business credit cards give you access to a credit line that you can use to make purchases.
We are going to ruin the ending for you right now. The majority of the time, a business credit card is the better option. It’s not that debit cards won’t do you any good in your business; it’s just that credit cards can support the business in many ways that debit cards can’t.
Here are why you should use your business credit card for purchases and keep your company debit card for personal use.
Credit cards and debit cards are both vulnerable to fraud as payment methods. However, the main distinction between the two card types is not their vulnerability but the liability you risk if your card is compromised. In the case of credit card purchases, on the other hand, you may be able to limit your liability if your small business credit card is used without your permission.
Every business owner intends to buy equipment, machinery, or even software to make their company more competitive and grow. However, given how much paperwork, time, and effort it requires, getting a business loan for every need is not a reasonable solution. In such cases, entrepreneurs can conveniently rely on their business credit cards. In addition to having a higher credit limit, these cards also provide features like a cash advance and an interest-free period, making big purchases more doable. It also creates a line of credit for you, which the debit cards can’t.
While making standard business purchases like shipping, travel, business expenses, or online advertising, many business credit cards offer rewards. For example, many business credit cards offer attractive sign-up bonuses and standard rewards to entice new customers. These sign-up bonuses could be cash back or bonus points that can be redeemed for travel or other benefits.
The primary perk of using a credit card for your business over a debit card is the chance to establish credit. When you get a business credit card and adequately manage it by making on-time payments and keeping credit utilization low, you may be able to build better business credit scores over time. With a solid business credit score, you can get more financing and save money by negotiating lower interest rates and better terms with lenders.