Business Charge Card vs Credit Card: Which Is Best for You

The primary difference between a business charge card vs credit card is that you can’t carry a balance on charge cards while you can on credit cards. Additionally, charge cards typically have no preset spending limit while credit cards do. Rewards programs and the ability to issue employee cards are common with both.

If you’re looking for a business credit card that offers strong introductory and ongoing rewards, consider the Chase Ink Business Cash^SM. It offers a $500 introductory bonus after spending $3,000 within the first three months. You’ll also earn ongoing rewards of up to 5% cash back. You can apply online in a matter of minutes.

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Business Charge Card vs Credit Card at a Glance

When to Use Business Charge Cards

Business charge cards are best used by business owners with mature companies that have good monthly cash flow. They are designed for business owners who are well-qualified and who can afford to pay off their balance in full every month. With no preset spending limit, they are typically a good way to make large business-related purchases.

Some instances when you should use a business charge card are:

• When you can afford to pay off your balance in full monthly: Compared to a business credit card, charge cards are required to be paid off in full monthly. If you can’t meet this repayment schedule, you will be charged a penalty late fee. However, there are some charge cards that allow you to pay a balance over time with interest.
• To finance large business-related purchases: Generally, business charge cards come with no preset spending limit because you must repay them every month. This can help you make large purchases if you know you can repay the full amount at the end of the month.
• If you’re a well-qualified business owner: Business charge cards require you to have a good to excellent personal credit score of at least 670 for approval. If your personal credit score is below 670, a good option would be a business credit card for fair credit.
• To earn rewards and access additional travel perks: Charge cards are ideal if you want to earn points to redeem for travel. Plus, the best business charge cards may offer several robust additional card features, including travel perks and insurances.
• To issue additional employee cards: Business charge cards allow you to issue up to 99 additional employee cards for business-related expenses. Employee cards are an excellent way to monitor employee expenses and keep their spending under your control.

American Express is the only major credit card issuer that provides business charge cards. Not all American Express business charge cards let you pay over time with interest, but some of the best do. The ones that do usually allow you to pay your balance over a period of 60 days with interest.

When to Use Small Business Credit Cards

Business credit cards are designed for everyday business-related purchases, cash back and points rewards, and monitoring employee expenses. With the ability to issue employee cards, they’re a handy way to get company funds in the hands of your employees.

Some instances when you should use a small business credit card are:

• For business-related purchases: Most small business credit cards offer credit limits up to $50,000. They’re best used for financing business-related purchases, including office supplies and travel expenses.
• To float business expenses: Unlike charge cards, business credit cards allow you to carry balances from one billing period to the next. This is an excellent way to finance larger purchases or pay off your balance over time with interest.
• To earn cash back or points rewards: The best small business credit cards typically offer either cash-back rewards or point rewards for different business spending categories. These rewards can serve as a “discount” and help save money on your purchases. Conversely, business charge cards only offer points rewards.
• To monitor employee expenses: Business credit cards allow you to issue employee credit cards, which is a great way to get business funds in the hands of your employees. Plus, you can set and control employee expenses for each individual card.

Keep in mind that if you carry a balance, it will accrue interest over time. However, there are 0% APR business credit cards that are best if you know you’ll need to carry a balance. If a no-interest credit card is not best for you, you can also shop and compare the best credit cards through our credit card marketplace.

When to Use an Alternative to a Business Charge Card or Credit Card

An alternative, like a business prepaid card, is a good choice if you don’t meet the personal credit score requirements. Prepaid cards are also good if you want to give employees access to company funds or want to preload funds onto cards instead of borrowing money from the bank.

Some instances when you should use a prepaid business card are:

• When you don’t meet the personal credit score requirements: Business prepaid cards are generally best for business owners who don’t meet personal credit score requirements for business charge cards or credit cards.
• If you want to give employees access to company funds: Similar to business charge cards and credit cards, business prepaid cards allow you to issue individual cards to your employees. You can set spending restrictions and control individual cards through an online portal.
• If you’d rather preload funds instead of borrowing money from the bank: Unlike business credit cards, business prepaid cards don’t have credit limits. Instead, you must preload money on your account before using the card. This allows you to keep company spending completely under your control.

Business prepaid cards are best used by business owners who have a sufficient amount of cash on hand to preload funds on their accounts. Plus, they’re a good option for owners who want to limit the risk of theft and avoid a credit check. Since you can only spend the money you place in your account, you will not have to offer a personal guarantee to repay.

How Business Charge Cards Work

Business charge cards can be used as employee cards, but they must be paid off in full monthly. Rather than receiving a credit limit from the bank, you’ll have no preset spending limit. This means you could make a purchases without having to worry about hitting your credit limit.

Compared to business credit cards, a business charge card is best for business owners with good to excellent personal credit scores. Since there is usually no preset spending limit, you’ll typically need a personal credit score of 670 or more. If you’re approved, you’ll receive your card in seven to 10 days.

Additionally, American Express is the only major credit card provider that offers business charge cards. This means business charge cards can only be used in stores that accept American Express. Once you use your card in-store or online, you’ll be required to repay your entire balance every month. If you know you can’t afford to meet this requirement, consider a 0% APR business credit card.

How Business Credit Cards Work

Once approved, business credit cards allow you to finance business-related purchases and issue additional employee cards. Once employees receive their cards, they can use them in stores that accept the specific card brand (e.g., Visa or American Express) or online by entering their card information. Each transaction they make will be added to your credit card statement.

You can sometimes earn cash back or travel rewards for purchases made by your employees. If you earn rewards, you may receive them as a statement credit at the end of your billing period. You’ll receive your bill every 30 days, which is expected to be repaid. However, you’re only required to pay the monthly minimum payment. Business credit cards can work very similarly to charge cards if you pay them in full every month.

If you decide to only make the minimum monthly payment, any unpaid balances will begin to accrue interest. Those balances will continue to accrue interest until you complete pay them off. After you pay your bill, the process starts over.

Business Charge Card vs Credit Card: Costs

When comparing the costs of business charge cards vs credit cards, the primary difference is that business credit cards carry an ongoing APR of 14% to 25%. Business charge cards carry no APRs because you must repay the entire balance at the end of every month. If you fail to repay the balance on your charge card, your account will be hit with a late fee.

Business Charge Card Costs

You’ll never pay interest with a business charge card because you must pay your balance in full each month. If you fail to meet this requirement, you’ll have to pay a late fee of at least $38. Additionally, business charge cards have annual fees between $95 and $500 or more. Conversely, there are some business credit cards with no annual fees.

The costs of business charge cards are:

• Expected APR: None, because the balance is due in full monthly
• Annual fee: $95 to $500 or more
• Late fees: $38 or higher

Although the annual fee seems high, business charge cards that have higher annual fees usually offer more robust rewards and additional card features. For example, the American Express Business Platinum Card® carries a high annual fee, but offers maximum travel points on flights, hotels, and airport perks like access to lounges.

Business Credit Card Costs

Business credit cards usually carry ongoing APRs between 14% and 25% and annual fees up to $450. Similar to business charge cards, business credit cards with higher annual fees usually offer various rewards and additional card perks.

The costs of small business credit cards are:

• Expected APR: APR 14% to 25%
• Annual fee: $0 to $450
• Late fees: $35 or higher

There are some business credit cards that offer no annual fee and an introductory 0% APR period. If you want a card with these features, consider the Chase Ink Business Cash^SM. It offers no annual fee and has an introductory 0% APR period. There are other business credit cards for new businesses that also offer low fees and the opportunity to build credit.

Business Charge Card vs Credit Card: Rewards

Some of the best business charge cards and credit cards for small businesses offers cash back or points rewards for business-related purchases. These ongoing rewards can be up to 5% cash back or 5x points on specific spending categories. They can serve as a discount, which can help your business save money on its purchases.

Business Charge Card Rewards

Some of the best business charge cards from American Express allow you to earn money on what you spend. They typically offer various points rewards for your everyday business-related purchases. In comparison, some, but not all, business credit cards offer cash back or points rewards for specific spending categories.

The types of rewards some business charge cards offer are:

• Introductory rewards: Possible one-time rewards of $750 or more for meeting a minimum spending requirement in the first several months
• Ongoing rewards: Possible points rewards up to 5x points for specific spending categories

Business charge cards that offer introductory and ongoing rewards will carry an annual fee. However, the rewards you earn can offset this fee easily if you’re using your business charge card for your everyday business-related purchases.

Business Credit Card Rewards

Some of the best business credit cards offer introductory and ongoing rewards for your business-related purchases. Similar to business charge cards, business credit cards that offer rewards will usually carry an annual fee. It’s common for a strong rewards structure to result in a higher annual fee.

The types of rewards some small business credit cards offer are:

• Introductory rewards: Possible one-time rewards of $500 or more for meeting a minimum spending requirement in the first several months
• Ongoing rewards: Possible cash-back rewards up to 5% for specific spending categories

If you want to maximize your rewards, it’s best to find a card that offers rewards for the spending categories where you spend the most. For example, if your business has a large office supply budget, then it’s best to find a card that offers top rewards for office supply stores. You can use the Fit Small Business Credit Card Marketplace to help find a rewards credit card that’ll benefit your company.

Business Charge Card vs Credit Card: Repayment Terms

One major difference between charge cards and credit cards is the monthly repayment terms. A business charge card is required to be paid off in full every month or else you will be penalized with a late fee. Conversely, a business credit card only requires a monthly minimum payment. Business credit cards allow you to carry a balance to the next billing cycle, unlike charge cards.

Business Charge Card Repayment Terms

With a business charge card, you’re required to repay your entire balance at the end of each billing cycle (every 30 days). Any unpaid balance will result in a late fee until you repay the balance. Since the balance is due in full, it’s important to know if you can afford to pay off your card every month before applying for a business charge card.

The repayment terms of a business charge card are:

• Type of credit: Non-revolving
• Repayment terms: Paid in full every month
• Monthly minimum payment: Full balance

It might be a good practice to set up auto-repayment for your business charge cards to ensure you meet your monthly payment obligations. This can help mitigate the risk of being charged unnecessary late fees by forgetting to pay your entire balance.

Business Credit Card Repayment Terms

Compared to business charge cards, business credit cards have a revolving credit line that you’re expected to pay off each month. However, business credit cards are typically a more flexible method of financing because you can float expenses to the following billing cycle. Credit card issuers only require you to make a monthly minimum payment, but any unpaid balances will accrue interest.

The repayment terms of a small business credit card are:

• Type of credit: Revolving
• Repayment terms: Monthly
• Monthly minimum payment: 2% to 4% of the outstanding balance

Business credit cards are an excellent way to finance large purchases or carry a balance because of the repayment terms. Some of the best small business credit cards even offer introductory 0% APR for 12-month periods, which can save you money on interest charges for unpaid balances.

Business Charge Card vs Credit Card: Qualifications

Both business charge cards and credit cards are best for owners with strong personal credit scores. However, business charge cards require a personal credit score of 670 or higher compared to business credit cards, which require 640 or higher. You’ll also need to provide a personal guarantee for both, which makes you personally liable if your business fails to repay its debt obligations.

Business Charge Card Qualifications

A business charge card is an excellent option if your business has a steady cash flow and you’re a well-qualified business owner. Typically, business charge card providers require you to have a good to excellent personal credit score of 670 or higher. Although there is no revenue requirement, it’s best to have a steady cash flow to meet the monthly repayment schedule.

The qualification requirements of a business charge card are:

• Personal credit score: 670 or higher (check yours for free)
• Time in business: No requirement
• Revenue required: No requirement

It’s typical for business charge card providers to require a personal guarantee because of the lack of time in business or revenue requirement. This means that you, as the business owner, will become personally liable if your company can’t repay its outstanding account balances. A personal guarantee is also required on small business credit cards.

Business Credit Card Qualifications

Compared to business charge cards, a small business credit card is a good financing option if your business brings in little-to-no revenue. Additionally, some of the best small business credit cards only require personal credit scores of 640 or higher. In comparison, charge cards usually require a personal credit score of 670 or higher.

The qualification requirements of a business credit card are:

• Personal credit score: 640+ (check yours for free)
• Time in business: No requirement
• Revenue required: No requirement

When applying for a business credit card, it’s important to use honest and accurate information on your application. Typically, you’ll be asked to include both your personal and business income information. Disclosing that you have $0 in revenue won’t necessarily keep you from being approved. If you have a personal credit score of 640 or higher, you’ll most likely qualify.

Business Charge Card vs Credit Card: Ease of Use

There are two major differences when comparing a business charge card vs credit card for small businesses. The first is that charge cards are required to be paid in full monthly. The second is that business charge cards usually have no preset spending limit.

Business Charge Card Ease of Use

Once you’re approved for a business charge card and receive your card in the mail, you can start using your card right away. To use your charge card, you can swipe it at stores that accept electronic payments or by entering your card information online. At the end of the month, you will receive your bill and be required to repay your entire balance.

Business Credit Card Ease of Use

Similar to business charge cards, you can start using your business credit card immediately after receiving it in the mail. You can use your small business credit card in stores that take electronic payments or by entering your card information online. Since it’s a revolving credit line, the amount you use will become available again once you repay the amount.

Business Charge Card vs Credit Card: How to Apply

You can get a business credit card or business charge card online in a matter of minutes. Applying for either of these financing methods is as easy as providing your business and personal information. You will typically receive an approval decision within 24 hours and your card within seven to 10 days. You can shop and compare the best business charge cards and credit cards through our credit card marketplace.

If you’re looking for a strong business credit card to apply for, we recommend the Chase Ink Business Cash^SM. Applying online is easy and you could be approved instantly. If you’re approved, your card will come in the mail within seven to 10 days.

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Pros & Cons of Business Charge Cards

Business charge cards give business owners access to funds with no preset spending limits. They’re an excellent option for well-qualified business owners who want to avoid interest charges and earn potential rewards for their everyday purchases. However, you’ll have no access to introductory special financing periods.

Pros of Business Charge Cards

The pros of business charge cards are:

• No preset spending limit: Unlike business credit cards, business charge cards have no preset spending limits. This means you can make business-related purchases without worrying about hitting your credit limit.
• No risk of accruing interest charges: Business owners who know they can afford to pay their account balance off every month will mitigate any risk of interest charges. This can help reduce any potential penalty fees from unpaid balances.
• Earn rewards and access robust card perks: Some of the best business charge cards provided by American Express offer points rewards and additional card features. Such features include airport lounge access and travel insurance. These features can be worth thousands of dollars every year.

Cons of Business Charge Cards

The cons of business charge cards are:

• Balance must be paid in full monthly: It’s important to only apply for a charge card if your business has enough revenue to pay off its account balance every month. Unpaid charge card balances can result in late fees of $38 or higher.
• No special financing periods: Business charge cards don’t offer introductory 0% APR periods. This isn’t a good card option if you need to finance a large purchase or carry a balance. If you want access to special financing periods, consider a no-interest business credit card.
• Only for well-qualified business owners: American Express requires business owners to have a good to excellent personal credit score of 670 or higher. In comparison, business credit card providers typically only require personal credit scores of 640 or higher.

Pros & Cons of Business Credit Cards

Small business credit cards provide business owners and employees with a revolving credit line they can use as needed. They’re most beneficial for businesses with little to no revenue and those that can’t qualify for a business line of credit. If you don’t pay off your balances entirely, you run the risk of accruing monthly interest charges until repaid.

Pros of Business Credit Cards

The pros of small business credit cards are:

• Easy access to company funds: Business credit cards are an excellent way to access your credit limit with vendors who accept electronic payments. Plus, they’re a handy way to get company funds in the hands of your employees for business-related expenses.
• Earn rewards on business expenses: The best small business credit cards offer cash back or points rewards on business-related purchases for specific spending categories. These rewards can be seen as a discount and can help save your company money on its everyday purchases.
• Funding for business with little to no revenue: New businesses have the opportunity to access financing through small business credit cards. With fewer qualifications than other financing methods, businesses with little-to-no revenue can still access necessary capital.

Cons of Business Credit Cards

The cons of small business credit cards are:

• Limited accessibility to cash: If a vendor only accepts cash or check, a business credit card can cause some issues. Cash advances through a business credit card are typically expensive and only provide amounts that are less than your available credit limit.
• Potential high annual fees: Some business credit cards carry high annual fees because of the rewards structure and additional features. If this is the case, make sure you can offset the card’s annual fees with the rewards you earn on your business-related expenses.
• Possible monthly interest charges: Unlike business charge cards, any unpaid balance will accrue interest charges until they are fully repaid. If you fail to repay your balance every month, you can easily fall into a cash trap. To avoid interest charges, a good practice is to pay off your entire balance monthly.

Business Charge Card vs Credit Card Frequently Asked Questions (FAQs)

We covered a lot of different information about a business charge card vs credit card for a small business. Some questions are asked more often than others, and we address those here. If you have any other questions, please leave a comment below or visit the Fit Small Business forum, and we will provide an answer.

The most frequently asked questions about a business charge card vs credit card are:

What is the difference between credit cards & charge cards?

The primary difference between credit cards and charge cards has to do with the ability to carry a balance and float expenses to the next billing cycle. Charge cards don’t allow you to carry a balance because the balance is required to be paid in full monthly. Credit cards only require a monthly minimum payment.

Do charge cards still exist?

Charge cards still exist, and American Express is the only major issuer that provides business charge cards. An easy way to remember if it’s a charge card is that if a card doesn’t have an APR and the balance is due in full monthly, then it’s a charge card. If it carries an APR, it’s a credit card.

Which is better, a charge card or a credit card?

Charge cards are best for people who can afford to pay off their entire account balance at the end of the month. Credit cards, on the other hand, are best if you need to finance a large purchases or carry a balance. Charge cards have additional benefits, such as no preset spending limit.

Bottom Line

Overall, business charge cards are best for business owners who know they can afford to pay off their entire balance every month. If you know you’ll need to carry a balance or want to pay your statement over time, a business credit card would be a better option. However, any unpaid business credit card balances will accrue interest until fully repaid.

If you’re looking for a strong business credit card with a no-interest period, we recommend the Chase Ink Business Cash^SM. It offers up to 5% cash back and an introductory 0% APR period on purchases for 12 months. Plus, you can earn a $500 bonus after spending $3,000 within three months. You can apply online in a matter of minutes.

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