Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article, we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. [youmaylike] As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue. Number of employees. Length of time in business. Estimated monthly expenses. If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision on the business credit card you choose will have larger ramifications than your choice of a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.
How to Prevent Credit Card Fraud
There are few worse feelings than knowing someone has stolen from you. It doesn’t matter if they broke into your garage, house, or car, or if they used technology to do it. It still feels terrible.
The good news is the more physical forms of theft are decreasing, and the trend seems to be going in a positive direction. The bad news is it appears that these folks are just using new tactics and reallocating their resources, as other forms of theft — like credit card fraud and identify theft — are up. This strategy makes sense for the bad guys; after all, nobody wants to be confronted by an angry homeowner while rifling through a jewelry box.
This article will take a closer look at one of the most common types of theft present in America today, credit card fraud. We’ll cover what exactly credit card fraud is, how it happens, how to prevent credit card fraud and what you need to do if you’ve been a victim.
What Is Credit Card Fraud?
Credit card fraud is when somebody uses your credit card without your express permission. It’s not quite as direct as taking cash from your wallet, but it’s still a serious crime.
It can take on many forms, ranging from a simple scam to elaborate schemes that involve identify theft, card scanners and other sophisticated ways to make an illegal profit.
How Does It Happen?
There are dozens of different strategies criminals can use to get access to your credit card. Some of these methods are quite clever, so you need to be aware of common schemes and suspicious activity.
Let’s start with some of the simple methods. Somebody takes your card and goes on a shopping spree. It takes a few hours for you to notice, so our thief has made out with a few hundred dollars in ill-gotten goods. Some will want to avoid shopping at local stores — they have cameras, after all — so they’ll go online and shop there.
Another common scam is that someone will get access to your card, copy down all your information and then go and buy stuff online at their leisure at some point in the future. This delay makes it more likely that they’ll get away with the crime. You’ll have no reason to suspect them.
What people really worry about are the scams that use technology. Card skimmers — which a fraudster can easily connect to an ATM or some out-of-the-way self-pay option (like at a gas station) — steal your credit card’s information and transmit it electronically to some computer a long way away.
Thieves can also get your credit card information by hacking into the back end of a website where you’ve purchased something. The goal of such a raid is to get in and out without the website’s owners ever finding out, which happens more often than you’d think.
Sometimes scammers even have access to technology that can steal your card’s information while it’s sitting in your wallet.
How Can You Prevent Credit Card Fraud?
The first lines of defense are the credit card companies themselves. They spend billions of dollars each year on various technologies that are designed to identify fraud. This means your issuer has a pretty good chance of detecting fraud right as it’s happening.
Just about everybody with a credit card has gotten a call from their card issuer, asking if a recent transaction was really them, or if it was someone else. Banking apps have made this even easier; the call has been replaced by a simple notification to your phone.
However, you shouldn’t solely rely on your credit card company to identify potential fraud and deal with scammers. Many of these thieves know exactly how credit card companies think, and their frauds are specifically designed to look natural. If unchecked, a fraudster can use your card for months and not create any suspicion.
The most effective way you can guard against credit card fraud is by checking your statement each month. Take a few minutes and go through your purchases, making sure you’ve made each one. If any look suspicious, it’s time to call the card company.
Next, be smart when using your card. Be mindful of where you take cash out of ATMs. Maybe avoid the gas station self-pay in favor of going inside and talking to an actual person. Stick to large, trusted and secure websites when shopping online.
And finally, don’t give your credit card to anyone else to use. I’m constantly amazed at how often I’ll see people give their card to someone they hardly know to make a quick trip to the store or to take care of an online purchase for them.
Also, be extremely vigilant and cautious when giving out your credit card information. Many scammers pretend to be legitimate business, banks or even government agencies, and they can use a variety of tactics to get you to verify your card information. Never give out your credit card information over the phone, by text, or through email; most legitimate businesses and government agencies do not collect information this way. If you are not sure, contact the business or agency through official channels you know are secure to verify.
What to Do if Your Card Has Been Compromised
If you even suspect your credit card has been stolen, the first step is to call your card issuer and sort out the problem with a representative of the company.
If the theft is someone physically taking your card, the card issuer will immediately cancel that card and issue you a new one. You’ll be without a card for a few days, but that’s a small price to pay. Even if you’ve just lost your card and nobody has made any fraudulent charges on it, the best thing you can do is call and get the old card cancelled.
If nobody has physical possession of your card, all fraudulent charges applied to your account will be dropped. If somebody steals your actual card and you don’t let the credit card company know right away, you may have to end up paying for those charges. The onus is on you to let the card company know, not the other way around.
The next step should be to check your credit report and make sure nobody has stolen your identity. Quite often, someone with credit card information only intends to make purchases or transfer payments to a fraudulent business or account. But sometimes, it’s all part of a much larger scheme to steal your identity. It’s best to check your credit report for anomalies, just in case.
If you even suspect identity theft, a smart move to make is to freeze your credit. You’ll have to manually unfreeze it whenever applying for new credit, but that doesn’t happen very often. And it’s an effective way to catch somebody who’s trying to get credit out in your name.
The Bottom Line
Usually, credit card scammers are small-time criminals who rip off a whole bunch of people in small amounts. This kind of scam can be easily caught by the card issuer or by a careful review of your monthly statement. This is nothing more than a minor inconvenience, and there are many simple strategies you can use to identify and prevent credit card fraud.
But sometimes, it can be a much more serious situation. This means you’ll likely want to take precautions if your card info has been compromised. After all, it’s better to be safe than sorry.