How to Use a Business Credit Card Effectively

Whether you are a small business owner on a budget, or an employee who pays for his or her own business expenses until reimbursed, a business credit card can be an important tool. To make the most of it, however, you need to be smart about how you use it.

Difficulty: Easy

Instructions

1. Apply for a separate card.
   
   It can be tempting to use a single card for both business and personal expenses, but it's much more clean and efficient to separate the two. This is especially true if you are using a business credit card for a small business. Either way when it's time to submit your expenses for reimbursement or prepare your taxes, having the accounts separated will be a big benefit.

2. Choose a rewards card.
   
   Just because you'll be using the credit card for business purchases and expenses doesn't mean you shouldn't earn rewards from it too. A cash back credit card is always a good choice. Alternatively, you can choose a card that gives you rewards that you can use in your business like airline miles or hotel points for business travel.

3. Evaluate terms, fees and interest rates.
   
   Just as you would for any other card, evaluate the interest rate and terms on the business credit card you'll be using. Only agree to an annual fee if it makes sense with the rewards you'll be receiving. And while you should never carry a balance, make sure you know what the grace period is and what the interest rate is should you be unable to pay.

4. Pay off the balance each month.
   
   Just because the interest expense might be tax deductible is not a reason to carry a balance. If you are running a small business, keep your spending in check just as you would for your household. If you are an employee on an expense account, submit your receipts in a timely and regular manner so you won't be left carrying a balance at statement time.