Five Questions to Ask When Selecting a Credit Card for Your Small Business

Suzanne Kearns is a small business owner and contributor for Money Crashers Personal Finance, an online resource with tips for managing money, starting a small business, and building wealth.There are many reasons to use a small business credit card, including the ability to establish credit in the business' name, have an instant line of credit, simplify your record keeping, and keep your personal and business finances separate - a critical component if you want to claim the tax benefits of a corporation or LLC. But when it comes time to pick a card, there are many options from which to choose.Credit card companies have been courting small business owners for years, and today's offers are much more appealing than those of the past. However, there are still a number of questions to ask yourself when choosing a business credit card:1. What Are Your Spending Habits?Not everyone handles their cash flow the same way, and luckily there is a credit card designed for virtually every type of "financial personality." For instance, if you plan to pay off the balance every month, you might prefer a card that offers cash back, travel rewards, or a longer grace period instead of a lower interest rate.On the other hand, if you intend to carry a balance or want to use a card as a line of credit, the interest rate should be your paramount concern. Be sure to understand the APR and what it adjusts to after the introductory term, as well as any extra fees and late penalties. Of course, you never want to miss a credit card payment, as it can cause significant damage to your credit score.2. Which Types of Rewards Work for You?If you travel frequently for business, a travel rewards card like the American Express Starwood Preferred Guest business credit card is a good option as it can save you money on flights and hotel stays. However, for those who do not travel frequently, a cash back rewards card may be an excellent option.The cash back you receive can be as much as 5% of select purchases, which will add up quickly when you use the credit card as your primary payment method and pay off the balance every month. Other cards offer points toward items such as office supplies, gift cards, car rentals, or discounts to stores and restaurants. Take a good look at your spending habits and determine which type of rewards program will benefit you the most, then compare cards to find the best offer. The Chase Ink Cash business credit card is a good option for cash back rewards.3. Is There an Annual Fee?The presence of an annual fee may cause you to reject a card outright. However, annual fees can actually make sense depending on your situation and the benefits the card offers. For example, if you choose a cash back card and use it for all your monthly expenses, the cash you earn may more than make up for the annual fee. Just be sure to run the numbers before you make a decision.4. Are the Offers Temporary or Permanent?Sure, 0% interest sounds great, but if it rises to 25% in the second year, it may not be a very good deal. Often, credit card providers offer a great promotional deal to reel you in, only to increase it substantially after a year or so. If you're trying to build your business credit, switching credit card providers every year to a lower interest card can hurt your credit. Your score is made up of a number of factors, one of which is the length of time your accounts stay open. If you perpetually close accounts and open new ones, your score will take a hit.A better solution is to look for a card provider that is willing to offer you a low APR on a permanent basis. You may not get 0% interest, but you won't likely be paying astronomical rates in the future either.5. Does It Offer Online Banking?If you're like most business owners, you don't want to spend a lot of time each month paying your bills. Surprisingly, not all business credit cards offer online banking, so if saving time is important to you, you'll need to find one that does. In addition, look for a card provider that will allow you to run quarterly and annual reports during tax time, which will also save you loads of time. Another benefit to banking online is the ability to transfer funds between accounts with the stroke of a key.Final ThoughtsHaving a small business credit card can be beneficial to just about any business owner, but only if you do your homework and find the card that works for you. The best way to get the credit card most suited to your needs is to visit a credit card comparison site, such as the one offered by ChooseWhat.com, to study the offerings and benefits of each card.What are some of the other factors you take into consideration when choosing a credit card for your small business?