Best business credit cards (with no annual fee!)
Reviewed: August 2021
Having a business credit card on hand can be helpful in rewarding you for everyday purchases, and if used in the right way, can also be effective in helping you grow your business. Applying for a business credit card can also be a great way to kickstart your business’s credit history, or to continue building your business credit score. The best way to get your score in the ‘excellent’ range of 80 and beyond is to pay your bills to suppliers and lenders on time, and yes, a credit card counts as a “lender.” With an ‘excellent’ credit score, you may be more likely to obtain larger credit lines at more favorable contract terms.
To begin comparing the best business credit cards, first you need a separate business bank account. You need a separate bank account to apply for a business credit card. This is because lenders need to assess your business’s creditworthiness, which includes its annual revenue. Having a business bank account has another perk as well: it means you do not have to painfully untangle your personal transactions from your business ones. This can definitely make yearly bookkeeping easier, cleaner and more accurate. It also helps ensure that you will not be personally liable for business debts.
However, this then begs the question of fees. One of the most common fees associated with cards that come with perks is an annual fee, which brings us to a common question amongst small business owners - if I don’t want to pay an annual fee, what would be the best business credit card for me?
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Not to worry — there are plenty of great business credit cards that don’t require you to pay an annual fee in order to use them. We took a look at various no-annual fee business credit cards from different issuers to see how they could help you get more out of your business expenses. We also went a step further than simply looking for that $0 annual fee, looking out for credit cards that also came with other perks such as low or no introductory annual purchase rate (APR). As a quick refresher, this is the interest charge that is added monthly to the outstanding balance on your credit card. We’ll also share more about the rewards and perks these business credit cards offer their cardholders such as employee cards or cash back, as well as touch on the credit scores that are most likely to qualify for them.
For small business owners whose expenses do not significantly exceed $500,000.
The American Express Blue Business Cash Card was created specifically for the small business owner who is looking for a fuss-free card. Its biggest appeal is its relatively high cash back rate for a card with no annual fee. Cardholders are able to earn 2% cash back on all eligible purchases of up to $500,000 per calendar year, then 1% for purchases thereafter. This will be automatically credited to your account in the form of a statement credit.
Currently, they have an introductory offer where new card members can earn up to a $500 statement credit. You are able to earn a $250 statement credit after you spend $5,000 in qualifying purchases in your first 6 months. You can then earn an additional $250 statement credit after you spend an additional $10,000 or more in qualifying purchases within the first year.
Furthermore, cardholders will enjoy 0% introductory APR for the first 12 months from the date of account opening. After which, it would be a variable APR between 13.24% to 19.24% depending on your assessed creditworthiness as determined at the time of account opening. Additionally, depending on your use of the card, your payment history, credit record and other factors, the card has an expanded buying power feature which grants you the ability to spend above your credit limit. This could be a useful line of additional credit to tap on in unexpected circumstances.
We recommend this card for small business owners who are looking for a credit card with no annual fee but whose expenses do not significantly exceed $500,000. For those who prefer 2x AMEX Membership Rewards points instead of 2% cash back, American Express Blue Business Plus Credit Card would be a viable option. They have a different introductory offer where new card members can earn 10,000 extra AMEX Membership Rewards points after you spend $3,000 in eligible purchases on the card within the first 3 months of membership. Just note it does require a personal guarantee.
For small business owners who spend a significant amount on office supplies, gas, telecommunications and restaurants every year.
Much like the previous option from American Express, Chase Ink Business Cash Credit Card has no annual fee and a 0% introductory APR on purchases for the first 12 months with a subsequent variable APR of 13.24% to 19.24%.
The most defining perk of this card would be the highly attractive cash back on specific forms of business expenditure. You can earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores or on internet, cable and phone services each account anniversary year. Additionally, you can earn 2% cash back on the first $25,000 spent in combined purchases at gas station and restaurants each account anniversary year. There is a 1% cash back for all other expenses with no cap on how much cash back you can earn.
To add on to the perks, there is also a sign-up bonus. You can earn $750 in bonus cash back after you spend $7,500 on purchases in the first 3 months of account opening.
While the monthly spend on miscellaneous items such as office supplies and telecommunications can seem small compared to other forms of expenditure, this could accumulate into a tidy sum at the end of the year. If this situation sounds familiar to you, then you may want to consider the Ink Business Cash Credit Card.
For founders of digitally-enabled enterprises with strong cash flow but thin credit history or international founders with a US-registered company but no credit history.
The Brex Card stands out amongst the other small business credit cards, primarily for two reasons. First, they do not require applicants to personally guarantee the debt on the card, which is a common requirement for other business credit cards, especially for applicants without a particularly strong credit record. Second, they do not assess creditworthiness based on your FICO or personal credit score. Rather, they determine eligibility and credit limits by evaluating the business’s financial information using your company’s available cash, spending patterns, investors and credit history, among other factors.
Part of the reason for this is that the Brex card acts more like a charge card than a credit card, with daily and monthly payback periods available (ie, their credit card paid daily and their credit card paid monthly). This means that the balance is due in full either each day or each month. While the card doesn’t charge APR, this also means you cannot carry debt beyond the day or the month, which may make it difficult for you to finance a large purchase over time as you would need to have sufficient cash in your account for automatic debiting.
Although the website mentions that the monthly plan allows you to qualify for 10-20x higher limits than traditional corporate cards with unsecured limits averaging between $2-3 million, the FAQ section states that the limit would be set at up to 30% of your cash balance.
Despite being a charge card with an alternative application process, your payments are still reported to credit bureaus ensuring that cardholders have a good opportunity to build credit history as well as a stronger business credit profile. And of course, there is no annual fee nor APR associated with their credit cards.
If you use the Brex Card as your exclusive company card, you will qualify for their Exclusive Rewards program and cardholders that make daily payments on their card will be able to earn the highest rewards: 8x on rideshare, 5x on travel, 4x on restaurants, 3x on eligible Apple purchases, 1.5x on ad spend, and 1x on everything else. The Brex Card also comes with partner perks worth over $150,000 and some discounts and deals with companies such as Amazon Web Service, Slack, Google Ads may be appealing for startups.
Though there is no annual fee, the Brex card, like any card, comes with some caveats. First of all, Brex generally requires all cardholders to maintain a minimum cash balance of $25,000 with an additional criteria of a minimum of $50,000 in net monthly revenue for those on the monthly plan. Moreover, Brex monitors your credit risk in real time and should there be failed payments or insufficient cash balance, your credit limit will be reduced to $0. Whether it was a mistakenly blocked payment or if you needed to make a sudden purchase that depletes your cash balance, the implementation of the $0 credit limit could cause a headache, especially if you are using this as your exclusive company card.
In spite of these, we do recommend the Brex card for founders of digitally-enabled enterprises with strong cash flow, but who may have a thin credit history in the United States. We understand that traditional financial institutions’ old school underwriting system often means that start-ups might not qualify for enough credit because digitized businesses own fewer assets to put up for collateral. The Brex card would also suit an international founder with a registered company in the United States who does not have a credit file there. This is because Brex underwrites with an Employee Identification Number (EIN) and not a social security number.
Overall, Brex could be a good starting point as a credit card for your small business. As they partner with Experian and Dun & Bradstreet to report your company’s on-time payment history, this would build up valuable corporate credit history.
Annual fee vs. No annual fee
While it is certainly understandable why most small business owners prefer to find a credit card with no annual fee, you should not dismiss other cards with an annual fee just yet. If you take a look at the varied options available by the different issuers in the market, you would notice that many of the best credit cards do charge an annual fee but they also come with their own snazzy perks. As your business grows and your expenditure increases, it may be worthwhile to take a look at other options.
|Credit Card||Annual Fee||Perks||Cash Back|
|American Express Blue Business Cash Card||No annual fee||2% cashback (up to $50k in annual spend, then 1%)||$1,000 (for $50,000 expense) or $1,500 (for $100,000 expense)|
|Capital One Spark Cash for Business||$0 intro for first year, $95 after that||2% unlimited||$1,000 (for $50,000 expense) or $2,000 (for $100,000 expense)|
Let’s take a look at the above example by comparing the American Express Blue Business Cash Card with no annual fee and the Capital One Spark Cash for Business with a $95 annual fee after the first year. We chose the Capital One Spark Cash for Business as an example because the best credit cards for small businesses tend to charge an annual fee within the $100 range.
If your business has an annual expenditure of $50,000, it would make sense for you to choose the American Express option since the cash back received would be the same between the two. However, if your expenditure grows twofold, you will receive $500 more cash back using the Capital One card which more than pays for the $95 annual fee. A 2% cash back may seem insignificant when you are not spending much, but as your business scales down the road, so does the perk. For instance, if you spend, say, $200,000 a year, you would receive $4,000 in cash back. This is a hefty sum that makes the $95 annual fee pale in comparison.
The best credit card for you may be a different one from another small business owner. Each small business has their own needs and objectives, and each business owner has their own set of priorities as well as personal preferences when looking for a credit card. Whatever it is, do take a look at each card’s terms and conditions so that you do not get caught off guard by the fine print. As your business grows, it is also a good habit to review your business spending patterns every year and reassess if there is a credit card that is a better fit for your business at its current stage. Though a business credit card with no annual fee can seem preferable on the surface (and often is), in some cases, it’s possible that you may end up reaping more rewards out of a card that requires you to pay up.
Be sure to check out our Tillful Guide to Business Credit Cards for more information and resources on finding the best business credit card for growing your business.