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When to change credit cards if your business is growing

Business growth is a clear measure of success. It shows your company is moving to the next level. Expansion can also be a signal that it’s time to upgrade your plastic. After all, the right business credit cards can provide the borrowing power you need and the perks to make your life easier. They can also lower your expenses with a targeted rewards program.

But, how do you know it’s time to upgrade your business credit account — and what should you be looking for? Here’s when you should consider opening a new business credit card to meet your company’s emerging needs:

Your cards don’t have business-friendly features

If you launched a casual venture with a personal credit card but now it’s transitioning into a more serious company, a credit card developed for small businesses is almost certainly in order. While you can charge business expenses with your personal card, it won’t do everything a business card does.

Zoe Newman, U.S. managing director for Capital On Tap, says the best small business credit cards have embedded tools not offered on personal cards, and they can ease growing pains — especially book-keeping, invoicing and accounting.

“A great feature of a lot of business cards are the integrations,” says Newman. “For example, many include QuickBooks, a tool for small businesses to track expenses and for accounting. The information from the credit card is automatically fed into the software program. It streamlines the process, and that will save you a lot of time in the long run.”

Such integrated software also runs accounting reports, which can help you manage cash flow and project for upcoming costs. If accounting tasks are getting too complicated for you to do on your own, look for a business credit card that offers this integration, such as Capital One Spark Cash Select, so you won’t have to buy it separately.

You’re ready to build business credit

All personal credit cards and some small business cards only report to the consumer credit bureaus, so when you use them responsibly they will positively affect your consumer credit scores. Yet establishing a business credit history will be important as your company grows.

The major business credit reporting bureaus are Dun & Bradstreet, Experian Business, Equifax Business and Small Business Financial Exchange. Creating a credit history with them will show banks and vendors what kind of credit risk you are.

Look for a business credit card that reports your account activity to at least one of the business reporting bureaus, such as The Blue Business® Plus Card from American Express. It furnishes account activity to both Dun & Bradstreet and Small Business Financial Exchange.

Although the credit scoring systems for business credit are different from consumer credit formulas, some common principles apply. For instance, pay your business credit cards bills on time and keep the revolving debt to a minimum.

“You want that positive data to be recognized,” says Newman, explaining that it will help when applying for business loans.

You want to give your business a bonus

If you are about to spend a large sum for your expansion, why not capitalize on the process? Even if your current batch cards have excellent rewards programs, you only get an intro bonus once.

Some business credit cards offer exceptionally high intro bonuses, so are perfect for growth-stage businesses. Since you’ll be spending a lot, the bonus can offer relief. The Capital on Tap Business Card, for example, gives $1,200 after you spend $50,000 in the first six months of opening the account. You can use that windfall for essential business expenses when cash is tight.

Review the different business credit card offers and focus on the intro bonus as well as the different features it offers. If the new card looks like it will be beneficial in the short and long-term, grab it. As long as you don’t fall into debt trying to meet the minimum spend, the extra money from the bonus will be worth it.

You want employees to have their own cards

When your business is booming, you may also be hiring. In that case, you may want your sales team to have their own cards so they can attend conferences and meet with clients without having to invoice you for reimbursement. Or maybe you want a supervisor to start buying products because you simply don’t have the time anymore.

Your current credit card may not be ideal for employees, so identify one that is. The Ink Business Preferred® Credit Card, for instance, does not charge a fee for employee cards. Additionally, the employees you make as authorized users will get the account’s perks, such as cell phone and purchase protection, travel insurance and extended warranty. You, however, get the elevated rewards with all that extra spending.

You want to finance your expansion at the lowest cost

One feature of a new card that you may want to take advantage of as your business is growing: no interest for a specific time period.

Zero percent APR business credit cards can be perfect right now. You can charge what you need for your expansion requirements, and carry over a balance without interest being added. You can save a tremendous amount of money.

For example, say you need to purchase a $50,000 oven for your second restaurant. If you charged it to a credit card with an 18 percent APR and paid it off in 18 months, the financing fees would be $7,425, according to Bankrate’s credit card payoff calculator. But if you used a 0 percent APR card and paid it off within that time frame, you wouldn’t have to pay anything in financing fees.

Some of these products have particularly long intro periods, too, such as the U.S. Bank Business Platinum Card, which has an introductory 0% APR offer for the first 20 billing cycles. After that it’s a variable APR of 14.24 percent to 23.24 percent. This offer applies to both purchases and balance transfers, so if you have existing debt that you want to refinance, that can also be helpful.

The key is to manage these time-sensitive products effectively, with an eye toward the future.

“After the initial 0 percent introductory period, the APR on a business credit card can increase substantially,” says Rohit Arora, CEO and co-founder of Biz2Credit, who advises small business owners about the value of business credit cards. “The average business credit card APR is 17.30 percent. Thus, you have to adjust to the new conditions after the 0 percent intro period is over.”

You or your employees will be traveling

If your business growth depends on you for your employees traveling either domestically or internationally and you don’t have a business travel card yet, now is the time to look for one.

Maybe you will be attending conventions and sales conferences or traveling back-and-forth to your new locations. Your credit card should match those needs.

If you’ll be flying a lot and tend to use the same airlines, consider a business credit card that’s affiliated with that company, such as the Delta SkyMiles® Gold Business American Express Card. It enables you to enjoy perks like priority boarding, free checked bags and an annual $100 Delta flight credit after spending $10,000 in purchases.

Seeking luxury travel? The Business Platinum Card® from American Express can be attractive. Among plenty of other perks, it gives you access to the best airport lounges. While the $695 annual fee is steep, you get up to $830 of new annual credits alone for a combined benefit value of up to $3,508 per year.

With regular spending, the points and miles can add up fast, too. “Many small business owners don’t realize the potential of using credit cards,” says Connor Ondriska, co-founder of SpanishVIP, a growing language education company. “With enough expenses, entrepreneurs are sometimes able to completely cover the cost of business travel through reward programs. Personally, I recently paid for a flight from Toronto to Asia with credit card points.”

Your operating costs are higher

As your business expands, so will your operating costs. That means you must have sufficient purchasing ability to buy what you need before your clients or customers pay you.

If your current credit card has a low limit, you can ask for a larger one. Or, says Newman, ask that same credit card issuer if you are eligible for a business card upgrade. It’s a good first step because they already know you.

Also check out the different credit cards on the market, and fill in any rewards gaps. If you don’t have a great business cash back card, for example, look for one where you can earn money when charging on the types of expenses you’re now purchasing more often. The Bank of America® Business Advantage Customized Cash Rewards Mastercard®, for example, offers 3 percent cash back in your choice of categories (such as office supply stores, computer services and business consulting), then between 2 and 1 percent cash back on other purchases.

What should you do with your original credit cards?

In general, it makes sense to keep the cards you were using for your business active. Closing credit cards that you’ve had for a long time can negatively impact your consumer credit scores, but it’s also wise to ensure your charging options remain open. You never know what the future holds, so being prepared with an additional card or two is prudent.

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