How Do I Choose a Business Credit Card?

Men working at home selling online in small business

As a small business owner, you have plenty to worry about—getting new customers, finding good employees and, of course, paying the bills. A business credit card can take at least one of those concerns off your mind by simplifying purchasing, tracking spending and making it easier to manage your business finances. To pick the right business credit card, you'll need to consider your company's specific needs. Here's what to look for when choosing a small business credit card.

Learn How Business Credit Cards Work

Small business credit cards are similar to personal credit cards in many ways, but there are some important differences to be aware of. Because they're intended for business use, these cards have features that can help companies better manage their finances, such as the ability to track and categorize expenses, prepare taxes and generate spending reports.

You don't have to have employees, be incorporated or even operate under a DBA to qualify for a business credit card. Even if you're a freelancer, self-employed sole proprietor or gig worker, a business credit card can help you keep your business expenses separate from your personal expenses, which is important at tax time.

Many business credit cards also offer rewards or discounts for buying products and services businesses frequently need. While a consumer credit card might offer rewards for buying groceries, for example, business credit cards typically allow you to earn rewards for business-related purchases such as travel, phone services, advertising or office supplies.

Because business credit cards are exempt from many of the consumer protection provisions of the Credit CARD Act of 2009, they offer fewer protections than personal credit cards. However, many card issuers opt to have their small business cards comply with most of the laws affecting personal credit cards. Read the terms of your business credit card agreement carefully to see what protections are included.

As you look for business credit cards, you may also run across business charge cards. Both let you make purchases without using cash, but that's where much of the similarity ends. With a credit card, you can choose whether to pay your balance in full by the end of month or carry a balance to the next one. If your cash flow is down to a trickle one month, you could make the minimum payment on your credit card and avoid a late fee. With a charge card, you must pay your balance in full every month or be charged a fee. Charge cards don't charge interest because it's assumed you'll never carry a balance, nor do they have preset spending limits.

If you have employees who travel, entertain clients or make other purchases for your business, getting employee credit cards for them can simplify the payment process. Most business credit cards offer free employee cards. The employee essentially becomes an authorized user on the account, and can use their card to cover work-related expenses. You'll be responsible for all charges your employees make; however, you'll also get all the perks, such as rewards points or airline miles.

Know Where Your Personal Credit Stands

Corporate credit cards, which large companies use for their employees, are issued based on the business's credit, and the business is responsible for charges. When you apply for a small business credit card, however, you must personally guarantee responsibility for all charges made on the account, and the card issuer will look at your personal credit score rather than your business credit score when deciding whether to approve you.

Check your personal credit report and credit score before you start researching business credit cards. If your credit score isn't quite high enough to qualify for the business credit card you want, take steps to improve your score before you apply.

Once you get your business credit card, keep in mind that how you use it will affect your personal credit score. Most small business credit cards report your payment history and balance to the major consumer credit bureaus (Experian, TransUnion and Equifax). Some also report to the major business credit bureaus, which can help build your business credit score.

Figure Out How You Will Use Your Business Credit Card

Reviewing where your business does the most spending will help you choose a business rewards credit card that works best for your needs. For instance:

  • Do you and your employees travel often? If so, consider the Business Platinum Card® from American Express, whose raft of travel perks could make the high annual fee worth it. However, unlike a typical credit card, the Business Platinum Card® from American Express allows you to carry a balance for some charges, but not all.
  • Do you need to finance a big purchase in the near future? The U.S. Bank Business Platinum Card offers an introductory 0% APR on purchases and balance transfers for a generous 20 billing cycles before a variable rate of 9.99% to 17.99% APR applies.
  • Do you want to earn cash back without worrying about a bunch of spending categories? The Spark® Cash from Capital One card keeps it simple.

Estimating how much your business spends per month on average will help you figure out whether you'll spend enough to earn rewards points and potential intro bonuses. Intro bonuses, which typically reward you with cash back or points, generally require a certain level of spending within a few months of being approved for the card. If you're planning to make a big purchase, such as new computers for your business, using your new business credit card for that purpose can help you get the sign-up bonus.

Look at the Costs and Fees

There are several costs and fees you should consider when choosing a business credit card. Here's a closer look.

Annual fee: Business credit cards may have annual fees ranging from under $100 to $500 and up. High-fee cards generally offer premium rewards, such as luxury travel or dining perks, access to concierge services, statement credits and membership programs. To decide if a card with a high fee is worth it, assess how much and where you're likely to use the card, and whether the rewards you'd earn would surpass the annual fee. (Keep in mind that your annual fee is generally tax deductible as a business expense.)

Interest rate (APR): If you carry a balance on your business credit card rather than paying it off every month, you'll be charged interest on the balance. Interest on credit cards is expressed as the annual percentage rate (APR). Comparing APRs across different credit card offers can be tricky because most offers express the APR as a range. Once you're approved, you'll be assigned an APR within that range based on your credit. If you have good credit, you may qualify for the lowest APR a card offers, but if your credit is fair or poor, you will probably be charged a higher APR—so take that into account when comparing cards.

There are also different types of APRs. The purchase APR applies to purchases you make with the card, but many business credit cards charge different interest rates on balance transfers and cash advances. In addition, a card may offer an introductory 0% APR on purchases, balance transfers or both for a limited time (after which the standard APR will apply). Finally, if you miss a payment, you might face a penalty APR that can be close to 30%.

Transaction fees: You may have to pay fees for certain transactions. For example, many credit cards charge a fee if you get a cash advance or do a balance transfer. Some credit cards also charge foreign transaction fees on purchases made outside the U.S. In most cases, these fees are either a percentage of the advance, transfer or purchase, or a flat fee, whichever is greater. If you often travel outside the U.S. for business, you'll want to avoid cards with foreign transaction fees.

Penalty fees: If your payment is late or your check is returned, many credit cards impose a late payment fee or returned payment fee.

All rates and fees for a business credit card must be clearly stated in what's called a "Schumer box." The Schumer box can usually be found by clicking on links from the card's dedicated webpage that say "pricing and terms," "rates and fees," "terms and conditions" or something similar.

Best Business Credit Cards

Here are a few of the best business credit cards to consider, depending on your needs.

Best for Financing a Big Purchase: U.S. Bank Business Platinum Card
Finance a big purchase or transfer a balance from a high-interest business credit card and take advantage of an introductory 0% APR on purchases and balance transfers for 20 billing cycles. Even after the intro period ends, the variable APR of 9.99% to 17.99% is quite low compared with that of many business credit cards. There are no rewards with this card, but there's no annual fee either. So if you have a big business expense coming up and want to repay it over time while enjoying a low APR after the intro period ends, the U.S. Bank Business Platinum Card could be the one for you.

Best for Frequent Business Travelers: Business Platinum Card® from American Express
Is business travel a way of life for you and your employees? If so, this card's $595 annual fee could be worth it for the luxury perks you'll enjoy. Earn 75,000 Membership Rewards points when you spend $15,000 on eligible purchases within the first 3 months of card membership. You'll earn 1 point for each dollar spent on eligible purchases, 1.5 points on every eligible purchase of $5,000 or more, and 5 points per dollar for flights and hotel stays purchased at amextravel.com. Use points to pay for all or part of an eligible fare and get 35% of those points back. Get up to $200 in baggage and other incidental fee credits annually for one airline you select (you can change to another airline later if you'd like), and fee credits for Global Entry or TSA Precheck. There are no foreign transaction fees. Terms apply.

To make your trips easier, you'll have access to over 1,200 airport lounges in 130 countries once you enroll in Priority Pass Select. Concierge services provide complimentary assistance arranging lunch meetings, getting event tickets to entertain clients and more.

Best for Cash Back: Spark® Cash from Capital One®
Small businesses know cash is king, and the Spark® Cash from Capital One® card offers a straightforward way to earn cash back on almost everything. Get 2% unlimited cash back on all purchases and redeem your rewards as a statement credit or check at any time. Spend $4,500 within 3 months of enrolling in rewards membership and get a $500 bonus. There are no foreign transaction fees, and the $95 annual fee is waived for the first year; however, the 20.99% variable APR on purchases is a bit steep.

Making the Most of Your Business Credit Card

Checking your personal credit report and credit score before you apply for a business credit card will boost your chances of getting approved. Once you have your business credit card, make sure you understand the terms of any rewards programs so you can get the most from your card.

Remember, as the primary account holder, you'll see the effects on your personal credit score if you miss a payment or let your business credit card balance get out of hand. To prevent any problems, use the card's reporting features to stay on top of due dates, employee usage and overall spending. Used wisely, a business credit card is a valuable tool to help your small business manage its money more effectively—and earn rewards in the process.

All information about the U.S. Bank Business Platinum Card, Business Platinum Card® from American Express, and Spark® Cash from Capital One® has been collected independently by Experian and has not been reviewed or provided by the issuer of the card.

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