A business credit card offers a variety of benefits to business owners. However, high interest rates can reduce the effectiveness of the card. The business credit card user can keep interest rates as low as possible by creating the best credit history and score possible, choosing the right card, paying on time and staying in the credit limit, and carefully monitoring the card's use.

Create a Strong Credit Report

Businesses, just like individuals, have a credit history and score that affects the interest rates lenders offer. The higher the credit score, the better the lending terms the business can expect.

Before applying for a business credit card, take steps to make the business credit report as strong as it can be. First, examine it carefully. If there are mistakes on it, work with the lender who made the mistake to get it rectified. If there are negative activities reported, and they are about to reach the three-year time limit, let them fall off the report before applying.

The stronger a business’s credit report, the lower the interest rates it can qualify for.

Choose the Right Card

Do not accept a business credit card with a high rate of interest if the business can qualify for a lower rate. The creditor is under no obligation to offer the lowest rate for which the applicant qualifies. If in doubt about this, ask.

Many business credit card issuers offer low introductory rates. A business can get a lower interest rate with one of these cards. Be certain to know what the permanent rate rises to after the introductory period. Do not, however, plan to constantly shift from one introductory card to another. Multiple applications for credit will lower the applicant’s credit score.

If a business has a relationship with a bank, it is possible to get a permanently lower interest rate for a business credit card.

Explore all options for a business credit card with the lowest interest rate for which the business can qualify. Do not accept the first offer made to the business.

Pay on Time

The terms and conditions on the business credit card application spell out what will happen in the event of late payments. There usually is a late fee assessed. In addition, however, as a penalty for even one late payment, the interest rate on the business credit card often increases dramatically.

Always pay on time. Keep the amount borrowed as low as possible, too. Although a business might qualify for a certain credit limit, having too much borrowing capacity also can negatively affect the credit score.

Stay Within Limits

Every business credit card is issued with a credit limit. By applying for and being granted the card, the business is agreeing to the limit. Do not attempt to charge over the limit, as this will result in a fee and a penalty of a higher interest rate.

Carefully monitor business credit card usage, particularly if more than one person in the business has access to the card.

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