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How Small Biz Owners Should Choose the Right Credit Card

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    ASSOCIATED PRESS

    Many small business owners research the right financing. But once they launch, they tend to forget a key financial topic: choosing the right credit card. Since the correct card can save your business significant funds, it's vital to examine the key factors, which are as follows:

    Personal or business

    Business credit cards aren't covered by the recent credit-card legislation. But if you need a large credit limit, they could be your best option. Keep in mind, however, that you may qualify for rapid credit increases with a personal card if you pay balances off in full every month. Plus, many personal cards offer better cash back rewards. That said, there are risks to personally securing a credit card you'll use for business. Make sure to understand these before you sign on the dotted line.

    Choose the one best suited for your spending

    If your business involves a lot of travel, choose a card with the best travel benefits. For example, the Platinum Delta Sky Miles Business Card from American Express delivers 20,000 bonus miles after your first purchase, 20 percent off in-flight purchases and no blackout dates when booking rewards travel. Remember to check the annual fee on any card you consider to make sure it's still a deal. This one charges $150 per year.

    Your finances

    Will you be paying the balance off in full every month, or do you need extended financing? If it's the latter, make sure your card has an attractive APR. One such card is the Ink Cash Business Card from Chase. It offers a 0 percent APR for the first six months, after which it goes to a variable 13.24 percent. You can also get $250 cash back when you spend $5,000 in the first three months.

    Final thoughts

    When you own a small business, financing can be tough, and a credit card is one way to get money when you can't get loans. But that financing comes at a steep price if you carry debt after a promotional APR expires or if you can't make payments. Use credit to your advantage by getting a card that meets and rewards your needs, and make a plan to pay off your balance. This in addition to everyday cost-cutting measures will help keep your business in the black until the economy recovers.

    David Bakke is a small business owner and contributor for Money Crashers, where he writes about business and personal finance topics.