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If you’re a budding business owner, you probably have getting a business credit card on your radar. They’re a great way to get started with building business credit, and help you more easily separate your personal and business finances.
So what kind of business credit card is best for you, and what terms should you look out for when comparing options?
Here are the different categories that business credit cards fall under and what to consider when choosing a card.
Secured business credit cards
A new business owner with a low personal credit score and limited business credit history may find it easiest to get started with a secured business credit card.
Like the name suggests, secured credit cards require a security deposit (aka minimum deposit) to open. Two of the main options include the Business Secured Credit Card from FNBO and Business Secured Credit Card from Bank of America, which require minimum deposits of $2,200 and $1,000, respectively.
Shameless Plug: The Tillful Card is a secured business credit card with a lower minimum deposit of $500. It also boasts 1% rewards and helps you build a full credit profile with the three major credit bureaus.
Unsecured business credit cards
Unsecured business credit cards don’t require a deposit. In the modern era, you don’t necessarily have to have a robust business or personal credit profile to get started.
If you do choose to start with a secured business credit card, you can often graduate to an unsecured option after building your credit score.
The Capital One Spark Classic for Business and American Express Blue Business Cash Card are two popular options for startups. Do note that both of these require personal guarantees, which means that you are personally liable in case your business cannot repay its debts. This also means that they will likely check your personal credit score.
Cash back and rewards cards for business spending
These are usually a category of unsecured credit card, though secured cards increasingly feature cash back or rewards as well.
If you want to earn money on your business purchases, consider a cash back or rewards credit card. Whether you frequent office supply stores, gas stations, airport lounges, or any other place where you make work-related expenses, business credit cards with rewards can be a helpful tool to keep your costs down. You can also find ones that let you apply points as statement credit.
The Chase Ink Business Unlimited Card is a good example because it offers unlimited 1.5% cash back plus a $750 sign-up bonus when you make eligible purchases.
The American Express Business Gold Card is geared towards business travel, with a welcome bonus of 70,000 points (enough for a round-trip domestic flight or international flight upgrade).
Did you know? Visa accounts for nearly half—49.54%—of all credit cards in circulation in the US. They back various credit card issuers, including for business cards.
Charge cards are credit cards that must be paid in full every billing cycle. Many have the perk of “higher” credit limits, but you may have to pay an annual fee and prove eligibility, depending on the card’s specific terms. A lot of charge cards on the market today are also referred to as “corporate cards,” and function as a hybrid between a debit card and a credit card.
For example, Ramp’s unsecured corporate charge cards are an alternative option for new or experienced business owners. No credit checks and no personal guarantees make it an attractive option for SMBs. Jo Youngerman of Ramp says it uses “fully integrated finance automation software that uses AI to analyze where businesses are spending the most money and where they can cut down on unnecessary spending.”
Store cards are a good way to build your business credit in addition to credit cards, and they may even have their own bonus rewards. Sam’s Club, Circle K, and other retailers where you make business purchases may be a good option for existing business needs. Make employees cardholders, too, so fleet operators can fill up on gas, marketing directors can buy event supplies, and more.
Corporate cards and employee cards
Many business credit cards offer employee cards at no additional cost. Some (like Ramp) even let you set spending limits for employee stipend programs (kind of like a gift card, but not limited by store and no expiration). Others define qualifying purchases, like meals or phone services, based on approved spending categories.
Rundown: Factors to consider for a business credit card
|Annual fee||Some are $0. Others cost a flat fee per year.|
|Credit limit||This may increase over time as your revenue or business credit grows.|
|Interest rates||A fixed APR (annual percentage rate) is best because it’s predictable. Variable APR may be fine if you plan on paying your statement balance in full each month.|
|Introductory APR||A low or 0% intro APR during the first year (typically a full calendar year) effectively acts as a loan. (Just read the terms & conditions.)|
|Sign-up bonus||Don’t underestimate account opening offers. Those welcome offers add up.|
|Cash back rewards||A cash back card with a healthy return can boost your cash flow over time.|
|Perks like bonus points, purchase protection, travel rewards, and other rewards programs||Card offers with bonus categories can be a huge plus for your business. Read up on bonus offers, from account anniversary year bonuses to lounge access, before deciding on your card.|
|Foreign transaction fees||If you travel or do business abroad, watch out for fees. Travel credit cards may be your best bet.|
FAQ on business credit cards
- Are small business credit cards a good idea?
Whether you’re a business of one or 100+, it’s a good idea to get a business credit card. At the very least, it helps you easily track expenses and differentiate them from personal purchases. Plus, you can get bonus miles and other business rewards.
- Can I use a personal credit card for business expenses?
Technically yes. But if you’ve already registered your business and gone through the effort of limiting your own liability through an official business entity, why blur the lines? It can cause confusion when tracking expenses, lead you to lose out on rewards, and muddy your business finances.
- Can a small business card impact my personal credit score?
Some business cards can impact your personal credit history. Even completing a business credit card application and opening a new card account sometimes conducts a hard pull, which temporarily impacts your personal finances. However, as you build your business credit, your personal creditworthiness can also thrive.
- Are business cards alone enough to build my business credit score?
Short answer: No.
Long answer: Building a robust business credit profile requires the use of multiple forms of credit. You can also take out a line of credit, open vendor accounts with net-90 terms (or longer), get business funding through a loan, open store cards, and more.
- Should businesses use credit cards for balance transfers?
If you’re an existing business owner and want to consolidate credit card debt to repay faster, balance transfers could be a good option. In the right circumstances. You could even take out business funding to cover your credit card debt in one fell swoop, and focus on repaying your line of credit or loan after the fact.
- Do I need a social security number (SSN) to get a business credit card?
Not necessarily. You could also use an employer identification number (EIN), or an individual taxpayer identification number (ITIN) if you’re a foreign national doing business in the US. However, many credit card issuers do require an SSN for identification and verification purposes, or for a personal guarantee.
Last word on finding the best business credit cards for you
The benefits of business credit cards are multifaceted. They help you manage your cash flow, build excellent credit, and look more attractive to lenders. Plus, they streamline your expense management, allowing your employees to get things done without jumping through hoops.
Rifling through the credit card offers to find one that benefits you most.
Choose a category of business cards to narrow your options, then review the terms of different cards to see what fits best.
And remember…as your business evolves, the way you buy things will change, too. Don’t feel pigeonholed—because growth is always an option.