One of the focus points of every small business owner is looking into the details of money, including budgeting, managing cash flow, and controlling access to it. Operating on a cash-only basis can be risky while starting your own business. If you have a bank account, a small business debit card offers a convenient and simpler way to pay for everyday purchases. Debit cards can be used for almost everything today and are accepted almost everywhere in our increasingly cashless society. In addition, it can reduce the amount of cash you need to keep on hand.
1. Offers Convenience –Today, most merchants accept debit cards. This is why you don’t have to worry about having a backup payment method. Using a business debit card is very simple and it mostly involves only swiping and entering the personal identification number (PIN). The money then gets deducted from your checking or savings account balance. You can also have the added convenience of getting cashback when you need it. This could be either after completing a transaction with a merchant or by using your debit card at an ATM.
2. Allows to Maintain Budget -Unlike a credit card, which lets you borrow and spend money you might not have a debit card limits your spending to what’s in your checking or savings account. Credit cards involve a fee if you overdraw your card account balance. You can avoid high-interest rates and late payment fees by not overspending and making your payments on time. However, instead of this hassle, you can simply opt for a debit card.
3. Easy to Obtain - When you seek a business credit card, you might have to go through an extensive application process which includes a credit check and submission of earning history. Most financial institutions or credit unions, on the other hand, offer a debit card when you open a business checking account, even if you may have questionable credit or no credit history at all. Thus, obtaining a debit card is far easier when compared to a credit card.
4. Higher Security -Banks and other lending institutions are far more vigilant when it comes to debit card security. In case something unusual occurs, such as a large purchase or one occurring in a state other than where you live, most banks tend to put a temporary hold on your card. They also flag purchases until you respond. These heightened security measures may not be applicable to a credit card.
5. No Impact on Credit Score -If you are looking to build your credit then a business debit card may not help. When you borrow money, you build good credit by keeping your debt usage low and making all your payments on time. Since a debit card only allows you access to money you already have it doesn’t impact your credit score. While this may not seem like a disadvantage, you’ll need to find alternate ways of building your credit history to qualify for a business credit card or loan.