commercial credit cards

what is a commercial credit card?

A credit card is a form of payment that allows you to borrow money from a bank with the intent to repay later. Your business can access funds immediately as needed and the lending bank makes money off of the interest to accrue.

does the bank make money?

Interest is the added fee you’re charged for not paying off your card’s balance within a set period of time (usually about 30 days). Interest takes the form of a percentage of the amount borrowed and is added to your balance at the end of each pay period. To calculate your total amount owed, you will need to add the interest accrued to your current card balance.

calculating interest

When you shop around for credit cards, one of the first things you need to check is the APR or annual percentage rate of interest for the card. This is the amount of interest that will be accrued over a yearlong period. Often, you’ll want to break this number down into a more relevant figure such as the daily percentage rate or the amount accrued each day you hold debt.

example:

The bank offers you a credit card with an APR of 15%. You can find the daily rate by dividing the 15% among the 365 days within the year.

15% ÷ 365 = 0.041096%

(daily percentage rate)

Once you know your daily rate, you can calculate how much money you will owe in interest at the end of the pay period by compounding your interest each day.  

example:

 You use your card to purchase a $500 computer. Your credit card has a daily interest rate of 0.04%. That means that at the end of the day, an addition 0.04% of that $500 will be added to your balance.

$500 * 0.0004 = $0.20

(daily interest charge)

$500 + $0.20 = $500.20

(new balance with interest)

consumer credit vs. business credit

If you’re looking to apply for a new card, it’s important you know whether you’re looking to set up a personal or business account. While the general functions of both are the same, here are a few key difference you should know about.

credit limits

The purpose of each card differs, so it only makes sense that the credit limits vary, too. Business have big ticket expenses, including equipment, batch material orders, etc., so the credit limit on these cards is often sized to match. If you need the flexibility to spend more, you’ll want to go commercial.

building credit

If you want to get a loan, insurance or good terms on real estate and equipment, building credit is a must. Just like with a personal credit card, ever purchase and repay using a business credit card helps prove you’re a responsible borrower. The only difference is that with a business card, the credit you build will reflect the creditworthiness of your business rather than you as an individual.

rewards

Savvy business owners make the most of their card by using its rewards. In order to appeal to a commercial audience, commercial cards offer relevant bonuses, such as utility discounts or deals on office supplies that you won’t get with a personal card.

consumer protection laws

One big downside of using a business card is that you are not covered under certain protection laws as a business, such as the Credit Card Act of 2009. This act protects consumers against unannounced APR changes and unrestricted fees and penalties. While many banks will still extend this coverage to businesses, they are not legally obligated to.

commercial credit card providers

Whether you’re a small-scale tradesman or a major corporation, there is a card out there for you. Fortunately, there are sites such as Card Ratings, Nerd Wallet and Credit Karma that will help you narrow down your list with side-by-side comparisons. If you’d rather do your own research, here are a few popular cards for you to get started with.

THINKING ABOUT APPLYING FOR A COMMERCIAL CREDIT CARD?

CALL US FIRST.

1-855-674-7787

Many small businesses think they need a commercial credit card - but there may be another way. Fill out the form below to get more info. 

CONEXT® may be your small business solution.

CONEXT® does not offer commercial credit cards, and we also don't run your credit score, require collateral, or charge interest fees. Our small business financial solutions are debt-free and cost one transparent rate - 3%. Click here to learn how CONEXT® can help you run your business without debt. 

Want more info? Call us at 1-855-674-7787 or click here to learn how CONEXT® is the right business solution for you. 

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