Business credit cards are a great way to finance company purchases and take advantage of various rewards and perks. However, even though business credit cards have numerous benefits, it’s easy for people to misuse them. To help you get the most out of your business credit cards, we spoke with experts and compiled a list of the best business credit card tips.
Evan Tarver, Financial Analyst & Small Business Finance Writer, Fit Small Business
Overall, the most important tip is to choose a business credit card
that is rated as a top overall card. For example, the Chase Ink Business CashSM credit card is one of the best general purpose small business credit cards according to a range of reviews. You can read our buyer’s guide on the best small business credit card for more information.
Julie Pukas, Head of U.S. Bankcard and Merchant Services, TD Bank
Small businesses should always use some of their slower days to consider their future credit needs. This is especially important for seasonal businesses who need to ramp up for the 4th quarter with inventory purchases. If done correctly, you can use your business credit cards to finance your expected future demand. If you don’t, you might have to rely on a loan with higher interest.
Brian Haney, Head of Business Products, JPMorgan Chase
It’s often beneficial to open a business credit card at the same bank where you do your business banking. If you have multiple business accounts at a single bank (including a business credit card), it’s easier to use online tools such as automatic payments and balance transfers. Further, many financial institutions will offer additional rewards and perks if you have multiple accounts.
Brandy Hadley, Assistant Professor of Finance, CSU San Bernardino
Compare all credit card characteristics when shopping for the right card and recognize that the importance of particular distinctions depends on your spending habits. For example, if your credit card balance is paid in full each month and you generally don’t incur interest, a card with rewards can be valuable. Conversely, if you expect to carry a balance, a card with a low APR is better.
Gerri Detweiler, Head of Market Education, Nav
Make sure that your business credit card doesn’t report to your personal credit. I used to have a business credit card that reported all data to my personal credit. At one point, I had to carry a business balance for about a year. That business debt affected my personal credit scores and it took me a while to recover.
Buck Stinson, SVP Small Business Cards, Capital One Spark Business
According to Capital One, only 17% of small business owners actually use a business credit card as their primary spending or financing method. This means that most small business owners are leaving savings and rewards on the table. Further, business owners who don’t use a business credit card have trouble managing cash flow since a business credit card is only paid off every 30 days.
Deborah Sweeney, CEO, MyCorporation.com
We put almost all of our company expenses on American Express cards, specifically the AmEx Plum card. This card provides 1.5% automatic cash back when we pay our credit card bills early and saves us thousands every month. What’s more, the card will typically have an introductory fee that gives you up to $600 cash back in the first 3 months.
David Waring, Co-founder, Fit Small Business
If you need less than $50k in startup financing to fund your business, a business credit card might be a viable option. For example, the average APR for credit cards is around 16% while some even offer 0% introductory APRs. When compared to other business loans such as working capital loans, the cost of capital can be 3x less with a business credit card.
Bradley Shaw, Founder, SEO Expert Brad
We send an employee each quarter on a trip using the previous quarters’ credit card rewards. Employees have journeyed to Ireland, Japan, Morocco, Vancouver and, most recently, New York City. This has been a huge hit among our employees. The result, of course, is a stronger company culture and a better work environment that helps increase operational effectiveness and outside-the-box thinking.
Priyanka Prakash, Managing Editor, Fit Small Business
A corporate credit card is a more robust version of a small business credit card. Corporate credit cards are best for companies that have $4 million in annual revenue, 15+ employees, and annual credit card expenses of $250k+. If you meet these qualifications, a corporate credit card is great because it gives you scalable financial controls, lower annual fees, cash rebates, enterprise perks, and more.
David Kosmayer, Founder, Bookmark Website Builder
It’s important to establish spending limits on specific credit cards. For example, senior management personnel should have higher average spending limits than lower-level employees. Traveling salespeople should probably have higher limits than in-office employees. This reduces the risk of unauthorized transactions, especially in cases when employees lose or abuse cards.
Inna Korenzvit, Founder, KORE Bookkeeping Solutions
Business owners sometimes like to open multiple credit cards that have 0% introductory interest as a means of short-term financing. While sometimes effective, this can also sometimes be a bad practice because higher credit card interest will eventually kick in. Not to mention, opening multiple cards can negatively affect credit rating and there is an effort involved with keeping track of all the open accounts.
Jeff White, Analyst & Staff Writer, Fit Small Business
If you have a fleet of 2+ company vehicles that drive between 1,000 – 5,000+ miles a month, it might be a good idea to get a fleet card over a general purpose business credit card. This is because fleet cards typically offer tiered gas discounts that can save you more money than a cash back rewards card or even a fuel card.
Ian Atkins, Finance Editor, Fit Small Business
Fuel cards are a great alternative to fleet cards if you have 1 – 2 company vehicles. This is because fleet cards generally have monthly fees that are only waived if you drive 1k – 5k+ miles per month. If you have company vehicles with less usage, a fuel card might be right for you. Check out our guide on the best fuel cards for more information.
Ari Socolow, Editor-in-Chief, BestCashCow
There are a ton of business cards available with a range of possible rewards. However, these rewards are often category-specific. You might earn 5x points on a card for office expenses but 0 points for travel expenses, or vice versa. This makes it important to segregate your expenses so you pay expenses on a card with high rewards in that category.
Ian Wright, Founder, Merchant Machine
Make sure you put as many of your recurring businesses expenses on a rewards credit card as you can. This includes things you might not always think about such as Google and Facebook ad spend, subscription payments and even website hosting and domain renewal. The benefit is that you earn passive rewards for spending what you would anyway.
Conrad Magalis, Marketing Manager, AdvanceAcceptance
Business credit cards are often the easiest entry point for many small businesses to begin building up their credit score. Building credit early on with a business credit card allows businesses to get better rates for equipment leases, loans, and other similar needs. and other needs later on. For more information on your business credit score, read our guide on how business credit scores work.
Emile L’Eplattenier, Head of Real Estate Finance, Fit Small Business
It’s never too early to create an internal corporate credit card policy that outlines rules, regulations, and best use of company credit cards. If you don’t already have a credit card policy in place, you risk misuse and poor financial oversight, both of which can put your company in the hole. Read our article on best practices for a corporate credit card policy agreement.
Noah Grayson, Managing Director, South End Capital
There are credit cards that let you write checks against your available credit line, either for balance transfers or cash to yourself. The transaction fee is typically 2% – 5%, which is much lower than a cash advance against your credit card, which can cost up to 28%. The result is more credit at a lower rate, saving you money and helping your business grow.
Brian Thomson, Founder, BrianThompsonlaw.com
A small business credit card that offers a cash back bonus on all purchases can be valuable to a small business. If you’re able to charge your office rent, health care insurance, wireless phone bill and more to your business credit card, your spending can easily add up to ten to twenty thousand dollars or more annually.
Kerri Byron, Marketing Manager, Cortera
If you already have a business credit card, make sure that your credit card payments are being properly reported on your 3 major business credit reports (Dun & Bradstreet, Experian, Equifax). Failure to do so can drastically impact your business credit score. You can read this ultimate guide on business credit reports for more information.
Bob Tankel, Founder, Tankel Law Group
There’s a war raging for online financing options. Paypal Credit, for example, offers lines of credit with 6 months of 0% interest. You can get a credit decision in as little as 3 minutes and there is typically no annual fee. Further, PayPal even offers more robust financing options that can help you with larger working capital purchases.
Craig Cody, President and Founder, Craig Cody & Company
If you use your business credit card for personal use, or if you use a personal bank account for business transactions, your personal transactions will factor into your business credit score. Make sure that you place all your business expenses on a separate credit card to keep personal expenses from being commingled with business expenses.
Carson Yarbrough, Marketing, Creditcards.offers.com
Business charge cards are business credit cards that typically don’t have a spending limit. This means that you can use a charge card to help you buy equipment, pay vendors, and purchase inventory without worrying about running out of credit. This is a huge benefit for a growing business. However, business charge cards typically require that you pay off your balance in full each month.
Matthew Coan, Founder, Casavvy.com
A grace period is a period of 10 – 20 days after your credit card bill is due. Sometimes, business credit cards will give you a grace period where they don’t charge you interest for an unpaid business credit card statement. This can help you manage cash flow and avoid any late fees or interest payments.