Choosing the Right Credit Card for Your Business

Running a business is difficult enough without confusing your personal expenses and your practice expenses. Having a separate credit card specifically for your practice will give you a better ongoing understanding of your spending habits and save a lot of time come tax season.

But with so many credit cards out there, how do you choose the one that’s best for your clinic? To answer this question, it is important to first understand 3 basic components of credit cards.

Fees

Many credit cards charge a fee that allows you to use the card and receive its benefits. These “access” fees usually range from $90 to $200 and are paid on an annual basis.

The first question to answer when looking at credit card options is whether you are willing to pay a fee, or if you would rather go fee-free. Typically, a higher annual fee equates to better rewards. However, don’t get fooled into thinking that just because the fee is high the rewards will be great, too. You’ll need to do your research.

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Rewards

Rewards are the most flexible aspect of credit cards and can easily be tailored to your preferences and needs as a business owner and veterinarian. Make sure you ultimately choose a card with some sort of rewards system. The main reward categories are cash back and points.

Cash back is exactly what it sounds like: You get cash back from all purchases you make, usually somewhere between 1% and 5% of the charge. Points, also earned through purchases, can be used for free flights, hotels, travel upgrades, or cash back. Many cards have points systems set up specifically for travel rewards.

Annual Percentage Rate

The APR, or annual percentage rate, is the amount of interest paid on any balance carried on a credit card from month to month. After you’ve made purchases on your card, if you don’t pay the balance, you will still owe what’s left over the following month. APR will then be added to this balance, and you will end up paying more. Different credit cards offer different APRs, usually between 10% and 25+%.

If you typically carry a large balance, choose a card with a low APR. On the other hand, if you’re quick to pay off your balance you don’t need to worry too much about APR. Carrying a balance will cause you eventually to pay much more through APR and it can hurt your credit score.

With these 3 things in mind, if you do your research tailor your selection to your practice’s needs a business credit card can be a powerful and rewarding tool.

Keeping in mind that credit card interest rates, fees, and terms change frequently, here are a few cards whose current offerings may be of interest:

• Best credit card for points: Chase Ink Business Preferred (APR 17%-22%). The card has a $95 annual fee, which is waived the first year, and includes points for every purchase. New cardholders receive 80,000 points if they spend $5,000 in the first 3 months using the card.
• Best card for cash back: Chase Ink Business Cash (APR 17%-22%). There is no annual fee for this card and you earn 1% to 5% cash back on every purchase with a bonus of $500 if you spend $3,000 in your first 3 months.
• Best low-APR card: Bank of America Advantage Cash Rewards (APR as low as 13%). This credit card has no annual fee and offers 1% to 3% cash back on purchases.

Nate Hendrikse is the founder of Navigator Bookkeeping, which provides bookkeeping services for veterinarians. You can learn more at navigatingyourbooks.com, or email him at nate@navigatingyourbooks.com.