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A business credit card, much like a consumer credit card, lets you make purchases on credit. Typically meant for small businesses, these cards give you the ability to build your business credit history. They tend to come with other business-specific perks as well. Unlike a corporate credit card, where a company is liable for the debt, a business card holds the primary cardholder liable for payments.
While business credit cards let you separate your personal and business expenses, they can also improve short-term cash flow and give you access to good financing terms. Besides, you may also expect a higher credit limit than that offered through a consumer card.
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Getting a business credit card might be a good idea if you wish to build business credit history.
A business credit card can help you separate out your personal and business expenses.
Business credit cards tend to come with higher credit limits than consumer credit cards.
Should You Get a Business Credit Card?
If building business credit history is a priority for you, you may benefit by getting a business credit card. Almost all issuers of business cards report payment activity to commercial credit bureaus. And depending on your card’s issuer, you might even be able to keep the card’s activity from affecting your personal credit history.
A small business credit card might also be worth considering if you don’t want to mix your personal and business expenses. This can be particularly helpful when you’re filing your taxes. Several such cards come with various expense management tools. Getting additional cards for your employees is also usually an option.
The best small business credit cards tend to come with cash back, reward points or miles. This can be beneficial for people who wish to earn rewards on their business spending. Moreover, employee cards that are authorized users likely earn rewards too.
However, there are a few notable differences between business and personal cards. These differences include available credit limits, access to expense management tools, the ability to build business credit and the application process. For instance, the information you need to provide when you apply for a business credit card is not the same as consumer cards. In the case of the former, you’ll need to provide the name of your business, its entity type and other relevant details.
To summarize, you may consider getting a business credit card for these cases:
- For building business credit
- To streamline employee spending
- To earn rewards/cash back
- For better expense management
- To deal with short-term cash flow problems during uncertain times
Don’t get a business credit card if either of these apply to you:
- If you plan to use it as revolving credit because you’ll wind up paying steep interest charges
- If you want to build personal credit
Business vs. Personal Credit Card
- Useful in building business credit history
- Tend to offer additional employee cards
- Access to expense management tools
- Requires business-specific information during the application process
- Helps build personal credit history
- Might or might not offer no-fee authorized user cards
- No expense management tools
- Need to provide only personal information when you apply
Best Business Credit Cards
Among the top business credit cards, you'll find ones that don't charge annual fees and ones that do. However, all offer you the opportunity to earn rewards/cash back and may give you access to employee management tools and other perks. However, you must consider your specific requirements and spending patterns to select the one that suits you best.
- American Express Blue Business Plus Credit Card
The no-annual-fee American Express Blue Business Plus Credit Card offers 2X points per dollar on eligible business purchases up to $50,000 every calendar year. Employee cards come with no annual fees. You stand to earn 15,000 American Express Membership Rewards after spending $3,000 on purchases in the first three months of card membership.
- Chase Ink Business Cash Credit Card
With the Chase Ink Business Cash Credit Card, you can earn up to 5% cash back on business purchases through its bonus categories. You can earn a welcome bonus by meeting a spend-based requirement. You pay no annual fees for the primary or additional employee cards.
- Brex Card
This no-annual-fee card offers up to 8X points per dollar through its bonus categories. It does not require a personal guarantee.
- Bank of America Business Advantage Unlimited Cash Rewards Secured Card
The Bank of America Business Advantage Unlimited Cash Rewards Secured Card is suited for people with no or poor credit history. It offers 1.5% cash back on all eligible business purchases. You need to provide a minimum security deposit of $1,000.
- Capital One Spark Miles Card
The Capital One Spark Miles Credit Card offers 5X miles per dollar on hotel and rental car bookings made through Capital One Travel. All other purchases earn 2X miles per dollar. New cardholders can earn 50,000 Capital One miles by spending $4,500 on purchases in the first three months. In addition, the $95 annual fee is waived for the first year. Employee cards come with no annual fee.
- American Express Hilton Honors Business Card
The American Express Hilton Honors Business Card offers 12X Hilton Honors points per dollar on purchases you make directly at Hilton Hotels and Resorts. It earns up to 6X points per dollar through other bonus categories. To get started, you can earn 130,000 Hilton Honors points after you spend $3,000 in the first three months of card membership.
The card has a $95 annual fee and comes with excellent travel-related benefits.
- Amazon Business American Express Card
The Amazon Business American Express Card lets Amazon Prime members earn 5% cash back on U.S. purchases at Amazon Business, Amazon.com, AWS and Whole Foods Market on combined spending of up to $120,000 each year. Purchases across a few other bonus categories come with 2% cash back.
You can earn a quick $100 statement credit by spending $3,000 on purchases in the first three months. Primary and additional employee cards incur no annual or foreign transaction fees.
Business credit cards are a great option for those who have a business, regardless of the scale of the business. Whether it's mowing lawns on the weekend, selling items online or babysitting, any money-making enterprise can qualify for a business credit card.
In fact, in some cases, business credit cards can come with even more benefits and rewards than regular consumer cards. So if you’re running a small business, you should absolutely consider a business credit card — as long as your credit score is up to speed.
— Brett Holzhauer, contributing expert for MoneyGeek
Pros & Cons of a Business Credit Card
Understanding the advantages and disadvantages of credit cards for businesses puts you in a better position to decide if getting one might work well for you. For instance, if you have no or poor credit history, you might want to work on building that first.
Business Credit Cards
- Help build business credit history.
- Typically higher credit limits than consumer cards.
- Short-term cash flow flexibility.
- Easy to monitor employee spending.
- Ability to earn rewards/cash back on business spending.
- Easy to identify business expenses during tax season.
- Improved expense management through various tools.
- Typically need good or excellent credit to qualify.
- Can lead to debt that you have trouble repaying.
- Not paying balances off in full each month may result in steep interest charges.
- Need to provide business details to apply.
Benefits of Getting a Business Credit Card
If you use your business credit card responsibly, you can benefit in several ways. Plus, many of the leading credit card issuers in the U.S. provide cards for business owners, so you will have several options to choose from.
Build business credit history
If you have no or poor business credit history, you may want to consider building it by getting a business credit card. To do this, you need to make all your payments on time and maintain a low credit utilization ratio. The credit utilization ratio refers to the amount of credit you've used from your total available credit and should ideally be under 30%.
Short-term cash flow flexibility
Access to adequate liquid capital means your business can remain flexible when faced with unexpected hiccups. However, it’s important not to look at credit cards as a solution for meeting long-term cash-flow needs.
Monitor employee spending
Getting additional employee cards typically comes with no added annual fees. You often can receive detailed statements for all employee cards, so monitoring their spending is relatively straightforward. You might even be able to set individual spending limits.
Earn rewards/cash back
Depending on the card you get, you might earn cash back, reward points or miles. With some cards, you can earn rewards faster when you spend on bonus categories such as travel, dining, gas and office supplies.
Simpler to file taxes
When you keep your individual and business expenses separate, filing your taxes is often simpler. You won't have to spend time reviewing your personal credit card or bank account statements and identifying the specific transactions you made on behalf of your business.
Improved expense management
Detailed quarterly and year-end summaries help break down expenses into specific categories. This can be particularly useful in tracking expenses and creating budgets. The top business credit cards also let you integrate account activity with software such as QuickBooks and Quicken.
Disadvantages of Getting a Business Credit Card
Even the best small business credit cards may have negative consequences if you don’t use them properly. It’s always recommended you choose your card based on your specific needs and situation to ensure you're capitalizing on your spending and getting the most out of a card’s benefits.
Effect on personal credit score
When you apply for a business credit card, the card issuer will typically look at your personal creditworthiness to make a decision. If they conduct a hard credit inquiry, that may cause your personal credit score to temporarily drop by a few points. But once approved for the card, most issuers don't report business credit card activity to consumer credit bureaus — unless it’s negative.
It doesn’t make sense to get a business credit card if you’re not responsible with your finances. While buying things on credit might seem tempting, racking up debt that you have trouble repaying can result in long-term financial problems.
If you don’t pay off your balances in full each month, you’ll need to pay interest charges, which, in the case of credit cards, can be unusually high.
Need to provide business details
Applying for a business credit card requires that you provide personal information, and you need to provide details about your business as well. This typically includes the name of the business, its address and phone number, the industry it belongs to, its legal structure, its EIN or your SSN, and its annual revenue.
Need good creditworthiness
Finding a consumer credit card with poor or average credit is fairly easy, but this is not the case with business credit cards. Most issuers require that you have good or excellent credit to qualify. However, there are a few secured business credit cards out there that can help you to build or rebuild your business credit score.
How to Apply for a Business Credit Card
Getting a business credit card is often a relatively straightforward process. But you will want to do your research to make sure you choose a card that works for you and your business.
Create a list of potential cards
Look at your credit score and create a short list of cards based on what you may qualify for and your spending habits.
Compare the cards for their benefits and features
Compare your options across parameters such as rewards/cash back, welcome bonuses, intro low APR offers, regular APRs, annual fees and added perks. Also determine if the card you select requires a personal guarantee (most business cards do).
Submit your application
You will need to provide your business name, the type of business, its phone number, its addresses (physical and mailing), its EIN or your Tax Identification Number (TIN), the number of years it has been operational, and its revenue.
Wait for the decision
You may receive a decision right away. But your credit issuer may take up to 10 business days to make a determination.
Consider how quickly you need the physical card
Upon approval, determine if you wish to opt for expedited delivery (if your card's issuer offers it).
While you may apply for a business credit card as a sole proprietor, you may also qualify for one as a freelancer or an independent contractor. One of the main criteria to get a business card is that you must show that you earn income independently. For example, you could be a driver for a ridesharing app, an online seller, a tutor, an entertainer, a yoga instructor or a fitness trainer.
Quick Tips on Using Business Credit Cards Responsibly
- Try to pay off your balances in full each month.
- If that's not possible, keep your credit utilization ratio below 30%.
- Take advantage of interest-free payment plans to make large purchases, and pay them off in time.
- Earn welcome bonuses by meeting spend-based requirements.
- Determine if the welcome bonus and rewards are worth the cost of the card.
- If you opted for a card with an annual fee, make sure you earn adequate rewards and use the card's benefits well enough to offset that fee.
Other Questions You May Have About Business Credit Cards
Looking at answers to other commonly asked questions about how business credit cards work and how you may get one might help you determine which path to take.
Now that you know the pros and cons of business credit cards, determine if getting one might work well for you. If you decide to move forward, compare your options based on factors such as annual fees, rewards, welcome bonuses and intro 0% APR offers.
Compare & Review Credit Cards
Credit card experts at MoneyGeek analyze business spending trends using data from the Bureau of Labor Statistics (BLS). As of this writing, they have compared 545 business credit cards and subjected them to MoneyGeek's unique ranking methodology to arrive at the best. They've looked at aspects such as rewards, welcome offers and fees so you can easily select a card that works well for you.
Learn More About Business Credit Cards
Our team of experts endeavors to answer all reader questions quickly and accurately. We make it a point to keep up with the latest trends and industry-related news so you can easily find the information you're looking for.
About Rajiv Baniwal
- Brex. "What is my social security number used for in the application?." Accessed September 14, 2022.
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