The benefits of having a credit card for personal use are obvious, and well discussed by experts on the topic in the Internet. However, there are even more benefits for entrepreneurs when they apply for a credit card under their business’ name.
You see, most entrepreneurs incur huge amounts of debt when they decide to use their personal credit cards to finance their business. It could work perhaps for the first few months of their company, but it definitely will be problematic in the long term.
Here are some of the benefits that you could enjoy out of having a business credit card that’s separate from your personal credit card.
Independent Credit Standing
The credit card is not named after you, which means that it is separate from you and everything that has to do with you credit-wise. Thus, having a business credit card means that your personal credit score and the business credit score are looked at as two different entities.
One advantage of this is that, as you may have already inferred, your personal credit score is not affected just in case the business is not able to keep up with its financial obligations. You could do the best that you can to get your business off the ground, but there are certainly times that the cash flow is not healthy enough to take care of all debts.
Otherwise, if you use your personal line of credit for business transactions, you could get into trouble. Your personal credit will suffer, and you’ll find it more difficult to seek financing for your personal needs.
Higher Credit Limits
Unlike personal cards, carrying a business credit card gives you access to limits that are significantly higher than that of a personal card.
Banks generally do this to allow startups to make the purchases or investments necessary for their foundation and, later on, survival. If you’re doing business abroad, your business credit line can have more power as well because of currency differences.
On the other hand, personal cards are governed by personal credit score, and you have to start at the very bottom of the ladder. This means that using a personal credit line to purchase business-related concerns could make you run out of electronic cash quickly.
Business credit cards can give the holder, typically the chief executive officer, access to exclusive reward programs that are tailored specifically for entrepreneurs and company proprietors.
For instance, most issuers of business credit cards give exclusive bonuses for frequent travelers as well as business purchases of a certain amount. These are perks f that are generally not offered to holders of personal credit cards or, if they are offered, they are available at a lower threshold.
You could take advantage of these offers, especially if your line of business requires you to travel by air frequently, for instance.
If you’re thinking about starting a business, and you’re confident that you can get your endeavor up and running to success, you should put into high priority the application for a business credit card.
Wanting to do business in Thailand? Send us a message to help you.