When it comes to running a business, expenses are an inevitable part of the equation. In some circumstances, low fee business credit cards may be a cost-effective solution, and an alternative to other types of business loans, for covering business expenses while maintaining a steady cash flow.
A low fee credit card offers reduced annual fees and lower interest rates compared to other cards on the market.
What are the Benefits for Your Business?
There are a few reasons choosing a low fee credit card could be a good move for your business expenses.
With reduced annual fees, a low fee credit card helps you cut down on expenses.
Every dollar saved can be allocated towards growing your business, whether it’s investing in marketing initiatives, upgrading equipment, or expanding your product line.
Some low fee credit card providers will even refund the cost of account fees if a minimum spend is met.
For small businesses just starting out or those struggling with the current rise in inflation, even the smallest savings can add up and help keep your business finances on track.
Lower Interest Rates
One of the key advantages of a low fee credit card is the lower interest rate.
This means you make savings on interest payments when carrying a balance on your card; which is often the case when you’re running a business.
If you make big-ticket purchases, like laptops or machinery for example, searching for the lowest interest rate makes sense. However, these cards often have smaller spending limits (more on that in a moment) so keep this in mind.
A lower interest rate helps you minimise overall costs over time. In particular, for businesses operating on a tight budget, these interest savings can contribute to greater financial control and stability.
Potential Trade-Offs of Low Fee Credit Cards: What to Consider
While low fee credit cards offer advantages, there are some trade-offs to consider. Keep these in mind when deciding if a low fee credit card is right for your business.
Limited Rewards and Perks
Compared to premium cards, low fee credit cards generally offer fewer rewards and perks. If having access to high-value rewards like cashback and travel benefits is a priority for you, a low fee credit card may not make the grade.
Lower credit limits
Some low fee credit cards come with lower credit limits compared to premium cards, which can impact your ability to make large purchases or pay unexpected expenses. If you plan to make big business purchases regularly, a low fee credit card may not be the optimal choice.
Limited balance transfer options
A drawback of low fee credit cards is they don’t usually offer attractive balance transfer promotions. Are you planning to consolidate existing credit card debt onto a single card? A low fee credit card may not be the best option; compare credit cards with balance transfer options instead.
Tips to Keep on Top of Your Business Credit Card
Here are some tips for using your business credit card wisely:
Build your business credit by responsibly using your card.
Set spending limits for employees to control expenses.
Use your card statements as a reference for business deductions, such as travel expenses.
Take advantage of introductory periods to finance major purchases.
Responsibly use your card to maintain cash flow during payment delays.
Deduct interest and annual fees from your business taxes.
Compare Low Fee Business Credit Cards
A low fee card may offer an expense management option for monthly bills