Your business credit card should be a profit center, not an expense

A few weeks ago, we wrote about how credit cards are a key tool for any financially healthy law firm. But with so many options for credits cards out there, how does a firm know which card to choose? Today, we’re reviewing some of the most popular that we’ve had up close and personal experience with.

The Capital One Spark Card

Spark: This one is my current favorite because the cash back (2% on everything) is good, it’s super easy to manage users online, and in my experience it’s easy to connect to a real person. I find they handle issues quickly and easily without obscene wait times (even during COVID) or god-awful phone menus. Their app is good, with useful tools to manage charges and spending, and their fraud screens are quite good without being overzealous, blocking legitimate transactions. All of my businesses, and about half my clients, are satisfied with this card. At 17%, the interest rate isn’t great, but it could be worse, making it a good fit for law firms who can pay the balance in full monthly.

The Citibank Costco Visa

Costco: Although not as easy to work with as Spark when it comes to support and getting real humans on the phone, they’re also not the worst. The rate is decent at roughly 15%, BUT, the cash back percentages are only above average (although Costco gas earns up to 4%) when you’re making purchases at Costco. Many law firms use the Costco Citi card for Costco purchases and use another card for purchases elsewhere.

The Amazon Signature Visa

Amazon Signature Visa: This one is great for Amazon purchases, but again, for those other, everyday purchases, it’s lackluster. It’s a Chase card (see warning below), which is not a bonus at all. The interest rate is between 15% and 23%, so there’s interest advantage, but be warned. It’s actually higher. The fine print says if you don’t pay off your entire balance, they charge you interest on ALL your purchases, even the new purchases since your last statement, which is very different from most other cards. Not cool.

Chase Ink Cards

And another word of warning about Chase: I’m not a fan of the Chase Ink card because the cash back isn’t great (1.5%), and Chase is a beast to deal with when issues arise. I’m actually not even sure they actually employ humans. Their interest rate is a ridiculous 30% for many of our clients. Consider abandoning that card, and going with Spark instead (full disclosure: affiliate link. It’s that good.)

Wells Fargo Credit Cards

Wells Fargo: They offer some cards with decent rewards, so if you do your research on these, you might find a gem that works for you. But, like Chase, they don’t seem to employ actual humans, so if a problem ever comes up, don’t count on being able to get a hold of someone knowledgeable who can help you.

Alaska Airlines Visa

Alaska Visa: This one is popular for firms based in the Seattle area, where Alaska Airlines’ main hub is. So depending on your flight habits, this might be a great choice for you. But, it’s a Bank of America card, and like the other big banks, humans are hard to come by when help is needed. What’s more, when you do get a human on the line, our experience with Bank of America is that they’re far less willing to offer one-time fee waivers and other courtesy concessions than other banks.

How To Sort It All Out?

Got questions about credit for your law firm? We’re here to help. Just schedule a call and we can help you on your way to that perfect world where credit cards save your firm time, money, and headache, rather than generating chaos, cashflow problems, and extra expense.

Cash may be king, but your law firm still needs a credit card.

The truth is, your law firm needs a credit card. Your debit card just isn’t good enough. Not only can a credit card boost your credit score, which is crucial when your business requires a loan down the road, but there are countless benefits available to you when the balance is paid in full each month. Here are just a few:

Dispute transactions – Vendors who don’t deliver or haven’t earned their pay don’t need to be your responsibility. Although it might be tempting to manage your cash flow and expenses using your business checkbook, only a credit card offers protection from transactions that aren’t totally above board.

Lighten your load – As an attorney, you don’t need one more thing to do. By allowing your finance department to take care of bill payments, you can still maintain tight accountability with employee spending limits and expenses without handing over the checkbook.

Transparency – Concerned about an expense? Want to know whether a vendor was paid on time? Log in to online banking and see exactly who is spending what and with which vendors in real-time.

Act quickly – When you see a spending problem, react in real-time by turning off an employee card or disputing a transaction.

Manage Cashflow – Cash flow can make or break a law firm. A credit card gives you 30 days of breathing room to manage unexpected cash flow events, before they turn into cash flow problems.

Although a business credit card can make cash flow smooth and easy, it’s vital that spending is managed in the same way you would a debit card. To ensure maximum benefit, be sure to always do the following:

Pay in full monthly – Your business credit card should be used for revolving credit, not as a long-term loan. All law firms should have a LOC (line of credit) available to be used to carry longer-term balances when necessary. Payment terms and interest rates are far more favorable on LOCs than credit cards. Don’t get sucked into easy money. It doesn’t pay.

Set up auto-pay – Don’t trust yourself or even your finance department to pay your credit card bill on time. There’s just no reason to risk carrying a balance. Auto-pay is one of the few things our computer overlords have perfected. Take advantage of it. Every credit card offers the ability to set up auto-payments that absolutely guarantee you will never incur a late fee. You can set them up to pay the minimum balance or the balance in full. Paying the full balance every single month is always better, but some firms have cashflow that’s variable enough that the autopay for the minimum balance is a safer bet.

Now that you know the basics of establish credit for your law firm, you’re ready to make sure your business credit card is truly a profit center and not an expense. But don’t be fooled, not just any card will do. Selecting a company that offers the terms, conditions, and benefits that fit your business is strategic. Thankfully, we have loads to share on that topic as well. Sign up for our email list to make sure you don’t miss our insider tips on how to choose the right credit card for your firm.

Got questions about credit for your law firm? We’re here to help. Schedule your 15-minute consultation today.

Category Archives: Credit Cards

Choosing the Right Credit Card For Your Law Firm