Smart Questions for Your Credit Card Company
More than six billion credit card offers jammed mailboxes last year, and competition among business card issuers for new customers is fiercer than ever. Here's what to ask about the fine print so you get the best deal.
- What does the introductory rate cover? It might apply to balance transfers, new purchases, or in the best case, both. Find out when the teaser rate expires, too--it may last only a few months. If the card features a fixed APR on balance transfers for the life of the balance, ask how long you have to make qualified transfers. Time frames vary from 45 days to six months.
- Am I personally liable for charges to the account? If your business defaults on payments, the authorized officer who applied for the card must personally cough up the cash. Some credit card issuers will remove the personal guarantee if your business does at least $2 million in annual revenue, employs 25 or more people, and has a solid credit history. "Use it as a negotiating point when you're shopping for a card," says credit expert Gerri Detweiler.
- Can I pick my payment due date? Not every issuer will let you, so ask until you find one who says yes. It's a good way to manage cash flow.
- Do I earn rewards on all my purchases? Many cards offer discounts, but read the fine print. American Express' Platinum Business Cash Rebate card, for example, gives a 1 percent rebate when you shop at a preferred merchant and 0.5 percent when you shop anywhere else for the first $7,500 spent on the card each year. The rebates jump to 5 percent and 2.5 percent for the next $7,500, then drop back to 2 percent and 1 percent once you hit $15,000.
- Is there a cap on rewards? Understand the rules on how much you can rack up in a year or even a billing cycle. Advanta's Platinum Business card, for example, has a $25 cash-back limit per billing cycle and a $300 annual cap. Limits on frequent-flier miles are common too.
- How are cash-back rewards redeemed? Some issuers automatically cut a check once you've reached a certain minimum. Others do so at the end of the calendar or anniversary year. Or they may skip the check altogether and issue a credit to your account once a year.
- What if an employee skips town and goes on a shopping spree with his business card? Your business is typically responsible for the first $50 in unauthorized purchases. However, if the credit card company issues cards to 10 or more of your staffers, it has the right to put you on the hook for more, says Detweiler. Pay attention to the liability limit and try to negotiate one as low as possible.
- Can I set spending limits on employee cards? Yes. You also should be able to restrict access to ATMs and cash advances. Ask the issuer to alert you by phone or e-mail when an employee makes a purchase over a certain amount or is nearing her credit limit.
- What happens to my rewards if I miss a payment? Kiss them goodbye if you're more than 90 days delinquent. You can get them back if you pay up before then, but you may have to pay a reinstatement fee