In Germany, the credit card is an important means of payment. This applies not only in private life, a credit card also offers some advantages for business expenses – especially for start-ups. However, there are a few things to consider.
Credit card: advantages for start-ups
Anyone founding a new company has to struggle with low income in the first few months. The business first has to establish itself, which can take a little time. Nevertheless, you should apply for a credit card, even if the financial institutions have strict requirements.
The credit card is a safe means of payment and contributes to transparency. Larger amounts of money can be paid quickly and easily by credit card, which is a great advantage, especially abroad. This saves you the exchange in foreign currencies and you are protected against theft. In business practice, as a new company founder , you can pre-finance important purchases without entrusting the entire amount in cash to an employee. For this, you apply for an additional card for your employees, which simplifies the payment processes. You benefit from an interest-free loan until sales are settled. All sales are clearly visible and can be viewed online and make tax returns child’s play. This simplifies your bookkeeping, which ultimately saves costs and time.
Optional insurance packages are advantageous on business trips: Depending on the provider, international health insurance , luggage insurance, travel accident insurance or traffic legal protection insurance may be included. Here you have to weigh up which insurance policies are really necessary.
Prepaid credit card: an option for start-ups?
Classic credit cards have a fixed credit line. Overdrafts are also possible if the situation so requires. The advantage of this is that you maintain your flexibility, but this is a risk for the bank. If the account holder cannot pay his bills and may report personal bankruptcy, he remains at a large part of the costs.
Most of the time, banks expect regular payments, otherwise they refuse to issue a credit card. Often, start-ups cannot provide this proof because they have only just started their business. If the Credit bureau information is negative, the application is even more complicated.
The best alternative is a prepaid credit card for start-ups. You can think of this as a prepaid card for your smartphone: you need to top up your credit before you make a call. If you want to pay an invoice, you must first have the necessary capital. This forces the cardholder to have solid financial planning and is risk-free for the financial institution, which is why you can get a prepaid credit card without any problems.
Checklist: Services and conditions
It makes a big difference which provider you choose. As a business founder, pay attention to the following general conditions when choosing your credit card:
- individual credit line
- Access to sales statistics
- flexible repayment
- Telephone customer service (important for insurance companies)
- Additional cards for employees
- easy expense report
Whether you need a function depends on the type of operation.
Credit card cost structure
Cards are also available for private customers without an annual fee, which is different for business credit cards. In addition, costs for cash withdrawals and fees for international use must be taken into account. Based on these three points alone, a credit card comparison is worthwhile for start-ups!
Tip: The effective annual interest rate is relatively high for some providers. If you want to withdraw money in other EU countries, you have to pay extra fees. In addition, there is no credit interest and transfers are not free of charge. Keep these points in mind when choosing a credit card.
In addition, the integrated additional services are another cost driver. In general, the annual fee is not that bad, because most institutions allow their customers to repay interest-free within a period of around 60 days. This increases your liquidity for certain periods, which gives you financial freedom in the stressful initial phase. A complete overview is an additional plus point: It is important to always keep an eye on the expenses. One item may be too high and therefore needs to be optimized.
Some financial institutions offer a package of two credit cards. This allows you to separate your private expenses from business, as a card is only reserved for business transactions.
Credit card: special features
A business founder has to pay attention to money, which is why bonus programs or other discounts have to be considered. Some banks waive a basic fee in the first year and offer financial incentives in the form of vouchers. The cardholder has access to exclusive events or locations that are suitable for a business meeting. You can also use the affordable Priority Pass and instruct the bank to book the flight. Thanks to the practical online travel service, none of your employees have to worry about it.
Insurance coverage can even include flight delays. If a flight is canceled, the price will be refunded or you can switch to another connection.
Credit card services vary enormously. As a business founder, you should think carefully about whether an additional function is necessary. The initial phase is about effectively increasing sales and avoiding unnecessary expenses.