Question

Smart business people carefully consider their use of credit. They evaluate who they lend to, and how they finance their own operations. They know that getting overextended on credit can destroy their business.

Suppose that you start up Yellow Submarine Sandwich Shop. You invested your savings of $25,000 and borrowed $65,000 from relatives. Although sales in the first few months are good, you see that you may not have sufficient cash to pay expenses and maintain your inventory at acceptable levels in the short-term. You decide that you may need to use one or more credit cards to fund the possible cash shortfall.

In your post, discuss three features that are important to you in selecting a credit card for your business, including why they are important. Also include a cite to online information about how to compare credit card terms.

Answer 1

Following are the three important features which are to be considered while selecting a credit card:

1. Interest Rate: It is considered to be the first step while selecting a business credit card. This takes into consideration the habits of business spending. Low interest rates must be prioritized since they accumulate the costs in the long run of business period. If the business plan to use the credit usually, the low interest rate must be selected specifically.

2. Personal Guarantee: In case of established businesses,there is always an extensive history which in turn have developed their credit score. While in case of startups or new businesses,there isn't any such history. Therefore,the issuance of credit card is mostly based on the personal guarantee of the owners.It plays a huge role in application of a new business card. The importance of this feature is that,in case there is no personal guarantee allowed,The new businesses will face trouble seeking a new credit card for startups.

3. Rewards and benefits: Mostly every credit card provides some or the other kind of rewards to the users. This mostly is ignored by the users. But in long run,rewards must be considerd as one of the important factor for consideration. Specifically in case of business credit cards the point of importance is that 1% or 2% in cumulative effect provides a lot of benefits in long run to a business.