As the owner of a startup or small business, you may have considered offering some employees business credit cards as a way to pay for routine expenses. Certainly, using credit cards for business makes more sense than just handing employees cash or forcing them to buy supplies and wait for reimbursement. At the same time, some small business owners might weigh the advantages of using prepaid business credit cards instead of running the risk of adding more debt or losing control over the way the card gets used.

Pros and cons of business credit cards

You can find cards that offer low introductory rates and a number of enticing perks. At the same time, you would be prudent to check the interest rates after the introductory period ends because they average over 15 percent. In addition, many of the cards with the most attractive perks often charge fees of hundreds of dollars a year. You also need to ask yourself if the shopping discounts or access to VIP lounges at airports is really worth the cost for your kind of business.

Because of this, some business owners play the game of opening and closing their credit cards for business every time the introductory period ends. If this kind of credit management tactic doesn’t appeal to you, you might consider using prepaid business cards instead of business credit cards.

Why are prepaid business credit cards better for many small businesses?

Prepaid business credit cards often have the same logos as regular business credit cards. For instance, a prepaid MasterCard will work just like a traditional MasterCard to make purchases. However, instead of using it to accumulate debt like you do with credit cards, you simply fund it in advance by transferring money online from a business checking account.

Also, you may have some control over employee spending with business credit cards. Some issuers will allow you to set spending limits for each employee and monitor the card’s use online. However, you still have to take a lot of responsibility for your employees’ spending habits and even for misuse. The Association of Fraud Examiners found that illegitimate expenses from employees cause an average of $30,000 in annual losses for U.S. companies.

By choosing the right prepaid cards instead of typical business credit cards, you can set preset spending limits and even limit the kinds of businesses that your employees can use their card at. For instance, you may allow your plumbers to use their cards at plumbing supply stores or gas stations but not to book airline tickets or to dine with their families. You can use an online or mobile app to view the purchases each employee makes and get an alert if the card is ever declined for misuse.

Are prepaid business cards a better alternative to credit cards for business?

You’ve probably had plenty of experience using credit cards for personal or business purchases. If you have never had a chance to explore the features of a Bento prepaid MasterCard, you can get many of your questions answered on the FAQ page. After that, you may choose to request a free, 60-minute Bento demo or simply to enroll online to begin your free trial.