Newstricky| Did you know that more than 65% of small businesses in the United States have a credit card, and many use it as their primary method of payment?
Credit and debit cards are wonderful solutions for money management since purchases get tracked and there isn’t any cash.
If you are sick of losing money from fake bills and human error, you should consider getting company cards.
Continue reading to learn about the key differences between using credit cards and debit cards for business!
Protection Coverage
One of the first things to compare credit cards vs debit cards for businesses is the protection coverage.
Many people recommend using credit cards since they are more beneficial for protecting your money. When hackers get access to your info, the money quickly disappears, which can hinder business operations. Since credit card companies have a delayed charge time, it’s easier for them to identify fraud and theft.
Debit cards can still be safe in the workplace, however, if they don’t get left unattended. You should also ensure that staff safely input PINs when others are around.
Access to a Line of Credit
If you prefer to let your employees complete their purchases and come back with a report, you should consider a credit card.
Business credit cards can give you more access to money and as long as you have a reasonable interest rate, they can improve your credit. This also makes it possible to spend more money than what you have on hand at the moment. If you get most of your income at the end of the month, credit cards can be a saving grace.
Opportunity to Earn Rewards
Although some debit cards for business can help you earn rewards, you will reap larger benefits from credit cards.
Business credit cards earn points each time you make a purchase. Depending on your bank, you can get rewarded with a check, a percentage of cashback, or discounts at stores and restaurants. Before signing up for a credit card, check the rewards to ensure that they match your spending habits.
If your spending habits don’t match the card’s reward program, you will miss out on the benefits and a debit card is best.
Money Management
If you are trying to improve your company’s finances, especially if staff carry cards, you should use debit cards.
Debit card purchases can get tracked through Bento and will help you monitor where your money is going. Credit cards are a line of credit, which puts you at risk of spending more money. Although credit cards have statements to view, you will often notice higher interest rates after they occur.
Benefits of credit card
Rewards can be an advantage when using a corporate credit card for your business. If you use your credit card frequently and pay off your balance in full at the end of each month, these rewards can save you money in the future. Also, many credit cards provide statement credit, which can be a huge plus for small business owners. If your business has certain areas that you spend money on, you can choose a rewards card that will help you get more money for that type of spending.
- Higher credit limits: These cards often have credit limits of $50,000 or more, making it much easier to make major company purchases that you could not make with your personal credit card or cash.
- Employee spending control: A business credit card makes it easy to set limits on employee spending.
- Stand-alone business credit: A business credit card is separate, which means that your personal credit rating is not reflected in your transactions. Also, by having a separate credit card for a small business, you no longer have to separate business and personal transactions when it comes time to pay taxes.
Benefits of debit card
Debit cards typically incur lower processing fees at merchants than credit cards or cheques, which can save costs for businesses. Debit card transactions usually require shorter processing times, which means that the merchant actually has faster access to funds.
- It is comfortable
- It is easy to qualify for
- Keeps you within budget
Can You Choose Between Credit Cards vs Debit Cards?
Deciding between credit cards and debit cards can be challenging for a business since they serve different purposes.
Depending on what your company often purchases, you can earn rewards and cashback. These are wonderful incentives that help convince businesses to use credit cards but they also come with some risks. Debit cards are great if your staff maintains consistent purchasing patterns, but make sure nothing goes in the negative.
Don’t be afraid to talk to your financial advisor to determine the best solution for you.
Be sure to check out our blog for more content about running a business and making smart financial decisions!
