Business Lines of Credit vs Business Credit Cards
Pamela Williams
The two most common ways of financing a business is by getting a business line of credit or a business credit card. For some people, thereﾒs not much difference with these two methods but is this true?
Their Similarities
First, letﾒs talk about the similarities between these two. In both methods, the borrower is given a revolving credit and a pre-set credit limit. In both methods, the borrower is also charged with the interest only on outstanding balances.
In both cases, a personﾒs credit rating will determine whether or not he will qualify without the need to submit a security or collateral. If youﾒre still establishing your business credit, both options will also help you build your business credit.
Whether you have a business credit card or a business line of credit, it is crucial to keep up with your payments on time. Missing or delaying a single payment can cost you a big amount on the interest alone. Untimely payments can also cause your business credit damage. Regardless of what you take, you need to be responsible with your obligations.
These similarities may be the reason why others think of them as the same. But the fact is, they do have differences. What are the differences between a business line of credit and a business credit card?
Their Differences
Business credit cards are generally more convenient because they allow the account holder to charge purchases or expenses on the credit card at the exact moment when they need to. With a business line of credit, the account holder must first notify his bank about his financial needs before the funds can be transferred to his checking account.
Business credit card holders are also given quarterly and yearly account statements and account holders have the option to access their bank records online at any time. A business line of credit doesnﾒt give the account holder this option.
Add to this, business credit cards are often customized to match the specific needs of a business. For instance, rewards credit cards are categorized according to the different rewards they offer- cash-back program, gas rewards program or a travel miles program. By getting a business credit card with the appropriate reward program, you can benefit more from your expenses Other perks and privileges of being a business credit card holder are travel insurance, discounts, fraud protection, etc.
But what about a business line of credit? Although it doesnﾒt come with perks and reward programs, there are also advantages to having a line of credit. First of all, they have lower interest rates if compared to business credit cards. It also gives the borrower a larger credit limit and more flexibility when it comes to repayment options.
Which one should you get?
Both business credit cards and a business line of credit are recommended only for short term financial needs of a business. Still, if youﾒre after convenience, business credit card undoubtedly give you more options and flexibility. If youﾒre seeking for a long-term help, it is still advised to apply for a business loan.
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About The Author
Pamela Williams is a Loan Consultant, Internet Marketer, Writer and owner of BusinessCreditCardSite.com, a finance company Las Vegas Nevada providing support for businesses all across the US particularly with obtaining business credit cards. Visit www.BusinessCreditCardSite.com
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