How Do Business Credit Cards Work?

Business credit cards are a popular financial option for many entrepreneurs and business owners to help keep their businesses running smoothly. Many financial institutions offer credit cards specifically designed for businesses, which can help spread your business-related purchases over time and may offer some perks. Besides the perks and purchasing ability, what are the other functions of business credit cards and how do they work?

How do business credit cards work at Clark County Credit Union in Las Vegas, Nevada

What is a business credit card?

A business credit card is a revolving line of credit that allows you to spend up to your credit limit on business expenses. This card often comes with benefits and rewards tailored to the needs of your business, like cash back on supplies or travel expenses. By using the credit card responsibly and making payments on time, your business can build a positive credit history and improve its credit score.

What are the benefits of business credit cards?

  • Build business credit – one of the great benefits of obtaining a business credit card is it can help businesses build credit, which is important when you plan to take out bigger loans in the future.
  • Higher credit limits – business credit cards often have higher credit limits than any personal credit cards.
  • Purchase supplies or equipment – business owners understand the need to spend money on their business to stay current and relevant, which can be hard to do without a business credit card. A business credit card can help you make those purchases and stay ahead of your business needs.

How does a business credit card impact your credit?

The process of getting approved for a business credit card is similar to obtaining a personal credit card. To qualify, the financial institution will look into your personal credit history and score. Since you will be taking responsibility for making payments, the information you provide will determine how creditworthy you are.

Most financial institutions may also require you to make a personal guarantee on the business credit card. Essentially, it means that if your business is unable to make payments, the issuer can take your personal assets to pay the debts owed by your business.

Before signing the credit card agreement, it is important to understand the implications of signing a personal guarantee as it can have serious financial consequences for you and the business.

The bottom line

Overall, a business credit card can be a valuable financial tool for your business if you use it responsibly. CCCU offers business credit cards and other types of business loans that can help grow a successful business. Visit our Commercial Loans webpage to learn more about business credit cards or call us at 702-228-2228.

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