Every company needs to pay its bills, but what’s the best way to do that? Unfortunately, cash is generally not an option, and personal credit cards can have insanely high interest rates.
Luckily, there are options for businesses to use corporate cards to manage their business expenses. Learn more about the differences between these two and find out which is best for you.
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What Are Corporate Cards?
A corporate card, or business card, is a payment card issued to an employee by the business they work for to use for business expenses. Traditionally, these have been credit cards, like American Express. They’re handy for helping companies manage expenses and make it easier for employees to get reimbursed, as the company generally handles repaying the cards.
These cards are generally only available for businesses that meet certain criteria regarding their annual profits, number of employees, and location, among other things.
What Are The Types of Corporate Cards?
There are two major types of business credit cards: individual liability and corporate liability.
The employee is responsible for getting reimbursed from the business and paying the card with individual liability cards.
Corporate liability, on the other hand, puts the responsibility on the financial office of the business. Generally, the employee will fill out an expense form, and the requested amount of money will then be paid directly to the card company.
There is one more type of business card that isn’t a credit card at all: Business debit cards.
What’s The Difference Between Business Debit Cards and Business Credit Cards?
Like personal debit cards, when a purchase is made from a business debit card, funds are automatically taken from the company’s account. There are also no interest charges, and there’s no need to worry about paying it later, as you can only spend the money you have.
With business credit cards, if the card is not paid off in full every month, the business will be charged interest, and most business cards also charge fees.
What Are The Benefits of Business Debit Cards?
Business debit cards are a much better choice than business credit cards because it helps keep expenses on a budget. In addition, it’s impossible to overspend on a debit card, as the transaction will not go through.
Debit cards are also much more secure than credit cards, and banks are more likely to be vigilant about fraud with debit cards than credit cards.
Another benefit of business debit cards is the cost. As mentioned above, debit cards aren’t subject to interest rates because you will never have a debit balance on the card.
What is a Custom Corporate Card?
One other cool thing that can be done with business debit cards is a custom corporate card.
Some companies, like Bento, offer profiles for business debit cards, which allows the card administrator to essentially change the permissions of the card based on who is using it. For example, one profile can have a per diem amount allocated solely for lunches while on a business trip. Another can be used only for one specific vendor.
Final Thoughts on Custom Corporate Cards
So, what type of corporate cards works best for your business? Debit or credit cards? That’s really up for you to decide! Check out the rest of our blog for more insight.