The Karat Card presents itself as an influencer credit card — a product made to serve creators. Fortunately, content creators can consider the many business credit cards on the market to serve their needs, making Karat one option among many.
If Karat’s less common rewards categories and redemption options appeal to you, the card may be worth a try, but be sure to do a thorough card comparison first.
What Are the Karat Card’s Potential Benefits?
Content creators might be drawn to the card’s flashy appearance, but you shouldn’t choose a credit card based on looks. Fortunately, there are some real potential perks to weigh.
Flexible Rewards Earning Options
Karat has 16 rewards categories to choose from, including traditional ones, such as travel, dining and gas. Options tailored toward content creators include ad spend, camera equipment and cosmetics.
You’ll get to choose three rewards categories. According to Karat, most categories earn three points per dollar spent, while some only earn one to 1.5 points. You can change categories as often as every six months.
[Read: Best Rewards Credit Cards.]
Unique Redemption Options
Again, Karat mixes traditional with tailored when it comes to rewards redemption. You can redeem points for cash back, but you can also use them to get featured on a Karat Times Square billboard, get access to creator events or develop merchandise.
How valuable you find these creator-targeted options will depend on how you run your business. If you already budget to attend creator events or don’t expect to gain much audience from a billboard, you may prefer cash rewards.
Social Media-Aware Credit Limit Process
Karat uses your social media follower count to help inform your credit limit — which could give you just what you need to help expand your career.
“For a creator whose brand is their work, those metrics can serve as proof of potential revenue, sometimes more so than a traditional W?2. That said, there are risks,” says Taylor Price, founder of Priceless Tay, a six-week “broke-to-rich” transformation program. “Social followings fluctuate with algorithm changes or just audience drop-offs. If your credit limit hinges on something volatile like follower count, you could be setting yourself up for surprises.” Karat also takes into account your cash flow, so you’ll also want to be careful to consider that.
“Just because you have the following — how fast does that money come in from Point A to Point B?” asks Ralph Bender, certified financial planner and founder of Enduring Wealth Advisors.
Doesn’t Charge Fees
The Karat Card is a charge card, so you have to pay your bill in full each month. This means you won’t be charged interest. The Karat card also doesn’t charge an annual fee, late fee or foreign transaction fee.
Offers a Concierge Service
With a concierge service, cardholders can contact real humans (not chatbots) for assistance between 9 a.m. and 8 p.m. Eastern Time. A concierge can assist with changing rewards categories or handling suspicious activity on your card.
[Read: Best Credit Cards with High Credit Limits.]
What Are the Karat Card’s Potential Downsides?
Depending on your financial needs and desire for robust online information, this card may not be a match.
Charge Card Structure
The card is a charge card, so cardholders aren’t allowed to carry a balance from month to month. At the same time, the card does set a credit limit, which isn’t always the case with charge cards.
Avoiding a balance will mean avoiding credit card interest charges. At the same time, the charge card structure could be suboptimal if you do experience a cash flow issue.
Lack of Rewards Flexibility
The fact that you can choose your rewards categories at all is helpful. That said, you can only change your selected rewards categories every six months.
Other cards that offer customized rewards may offer more flexibility. For example, the Bank of America® Business Advantage Customized Cash Rewards Credit Card allows cardholders to swap their choice rewards category each month.
Some Unclear Terms
You may have to do some digging on Karat’s website — or contact the company — to find all the details about card rewards and terms. You’ll want to make sure you understand the card’s offerings before you apply.
[Read: Best Credit Cards.]
Should You Open the Karat Card?
The Karat Card’s nontraditional credit limit and rewards structure could be tempting for content creators looking for a new financial tool. But the best practices for using cards responsibly still apply.
“It’s cool that they’re recognizing creator income in nontraditional ways, but don’t let social stats become your credit strategy,” Price says. “Know your cash flow, separate business and personal expenses, pay in full if you can, and don’t chase points you don’t need.”
A side-by-side comparison of multiple business credit cards can serve you well as you make this choice. If you spend a lot on travel, a business credit card that offers travel perks and earns bonus rewards on travel could be a better fit, for instance.
You should also work to build a business credit score, no matter which type of card you choose. A business credit card can help you in this endeavor and, more broadly, to establish the business as its own entity.
“The sooner you do that, the sooner you can get out from underneath the need to do personal guarantees and that sort of thing for the business,” says Bender.
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