Whether you use it to fund your business (which, surprisingly, isn’t a terrible idea) or you use it to buy items you need to keep your business running smoothly, you definitely need at least one business-devoted credit card in your wallet. Yet, no matter how you use it, you probably aren’t using it to its full potential.
Business credit cards are amazingly advantageous: They have low rates, offer various benefits, and keep your business finances in order. However, not every entrepreneur spends sufficiently to warrant a business card, which means many small-business owners rely on regular credit cards to do their business purchasing. As regular cards typically have higher interest rates and worse rewards than business-specific ones, many entrepreneurs could be overpaying and under-receiving. Fortunately, I have a few tricks and tactics that can make any credit cards better to use for business — or anything else.
Research and Transfer
A first credit card with lower rates is not going to show up in your mailbox one fateful afternoon — trust me. You are going to have to work hard to secure the credit card of your dreams, and usually that means going out of your way to understand what credit cards are available to you.
Fortunately, as the recession subsides, credit card companies are becoming more and more competitive, which means there are plenty of outstanding offers for those who are willing to put in some valuable research time. The first step is certainly perusing the low interest options available online and comparing rates. However, a credit card is not just its interest rate; while you research, you must also assess cards’ fees, rewards, and regulations.
Once you find a worthy card free from credit card processing fees, you should investigate what it takes to reassign your current balance to a different piece of plastic. Most companies will charge balance transfer fees that can range in size from minute to substantial, which means they should factor into your final decision. Here are some tips to help you transfer to a new card with the smallest headache possible:
- Provide the accurate amount of debt you wish to transfer on your new card application to ensure the process is fast and smooth.
- Make sure your low interest rate doesn’t expire, and if it does, try to pay off your existing balance before a higher rate begins.
- Get a new card before taking out a big loan; if you need a bank loan for your business, home, or car, apply for your credit card before the purchase shows up on your credit history.
If you absolutely love your current credit cards but you could do with slightly lower rates, you might try haggling with your provider. Believe it or not, I have been able to lower my rate simply by asking nicely, which means you can, too. As with any negotiation, you must be knowledgeable, firm, and confident, and with the right finagling, you should be able to achieve your goal even though you have zero financial leverage. Here are the best bargaining tactics to use while bargaining for a lower rate.
Use your research. Companies don’t want to see you go, so arming yourself with competitors’ rates gives you an edge.
Call customer service. Customer services is more for lost cards; just dial the number on the back of your card and ask for a lower rate.
Be persistent and polite. You shouldn’t take “no” for an answer — but you shouldn’t be rude, either. Frequent calls will keep your request on their minds, and being pleasant to work with makes them want to keep you around. You would not be rude when visiting your local smoothie franchise. Do not be rude when you are contacting someone who holds power over your finances.
What They Consider
If you are looking to lower your credit card rates with existing cards, there are certain criteria you should know about before you request a decrease. There are several factors that go into the decision whether or not to approve your credit rate decrease request. Credit card issuers will look at how long you have had the card as well as the credit limit you currently have and your corresponding credit utilization rate. Your credit card company will also base the decision on these figures for other credit cards you have. If you have ever made a late payment, this will also factor into their decision making process. Keep these things in mind to help you determine whether or not it will be worth it to request an interest rate decrease.
Practice Good Credit Habits
Credit often seems like a dream come true — you can spend money you don’t have to get nearly any item you want! — but by misusing low interest credit cards, you could be creating a financial nightmare. Anytime you use a credit card, whether it is devoted to business or personal expenses, you must properly maintain it, or else your rates are only doomed to increase. Here are a handful of habits to keep your credit up and your interest down.
Pay on time. This should be second nature to anyone with plastic, but sometimes mistakes occur. To prevent late payments for all time, you can set up automatic payments by linking your credit card and checking accounts.
Keep a low balance. On most cards, you should avoid charging more than about 25 percent of your credit limit to ensure your credit score is safe; for example, if you have a card with a limit of $1,000, you should avoid spending more than $250 every month. A high usage ratio looks bad to credit reporting companies, who punish your score accordingly.
Pay back debt. Nobody wants to pay money for nothing — which is exactly what interest is — and the sooner you get rid of your debt, the sooner you can stop such unnecessary spending. You should have a concrete plan, perhaps gleaned from an online debt reduction calculator, and stick to it like glue until you are living debt-free