Can business credit cards help you beat the credit crunch?
The credit crunch is affecting every aspect of financial life. Nearly every financial service provider is increasing fees, cutting back on credit limits and generally tightening application selection processes. At present business credit cards appear to be fairly stable in their rates and benefit packages. In fact the signs are that many SMEs are turning to credit cards to help them sail through the stormy seas ahead. If this is something that your business is considering it may be worth making it a priority as business credit cards can provide a useful “buffer”, if managed carefully.
One major reason why you may look into applying for a new business credit card is to take advantage of the 0% balance transfer offers. If you already have business cards, transferring balances can be a great way to save money, as you won’t have to pay interest for a period. The average 0% balance period at the moment is around a year. If this is something that you are considering doing, many financial experts recommend that you do it sooner rather than later. If there are problems being accepted for cards now who know what it will be like a few months down the line?
APRs on business credit cards are currently relatively unchanged, but this may change. The average APR for a business card is around 15.9%. Some cards are offering lower APRs, such as 14.9%, and some higher, perhaps 17.9%. These rates are fairly reasonable for this type of card. Some financial advisors will recommend cards with higher APRs because of added features that the card has to offer. Also some cards have yearly fees which may or may not be good value for money when compared to what is on offer.
If you are currently using cheques to make purchases then getting a business credit card may also help cut costs. Cheques may incur handling charges that can be an added expense for a struggling small business. Also some cheques have admin costs - yet another expense. Card transactions are instantaneous which means that you won’t be caught out by a cheque clearing when you least expect it.
Many cards come with benefits that can also save your business a good deal of money. It is important to examine what your company spends its money on so that you can apply for the right card and maximise the potential savings offered by a business credit card. Some cards offer free Airmiles or travel insurance, for example, while others offer discounts on goods and services. Some cards on the market even allow you to select your own benefits packages which can be extremely helpful. If you are unsure as to what is on offer then you can always look online or phone the company in question.
Although business credit cards may seem a risky solution to the credit crunch, they can be extremely helpful for short-term financial issues and come with guarantees to protect you against fraud or theft. The majority of credit cards come with fantastic security features such as theft insurance and online fraud guarantees, with all credit card accounts now being monitored by ‘intelligent’ software for any sign of fraudulent activity. If there is any suspicious activity on your account then a financial advisor will give you a call and let you know. Knowing that your money is safe is going to ease some of stress that will no doubt come with the crunch-times ahead.