Small businesses can use business credit cards to build credit, improve cash flow, manage employee spending, and streamline expense reporting—all while earning cash back and travel rewards. However, credit card mismanagement can cause financial trouble. We spoke with experts who shared their best business credit card tips to help you use credit cards the right way.
Here are the top 27 business credit card tips from the pros:
1. Use Credit Cards to Bridge Your Working Capital Gaps
James Sinclair, Marketing Manager, Trade Finance Global
Managing cash flow within a business is the single most important part of keeping a business alive. However, a business may encounter cash flow gaps from time to time, especially if you have clients paying on terms. Business credit cards can be very useful for bridging any temporary gap in your working capital.
To find a credit card to help with your working capital, read our review of the best 0% credit cards.
2. Plan Ahead for Future Business Credit Needs
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 fourth 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.
3. Work with One Financial Institution
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.
4. Consider When a Cash Back Credit Card Is Right for You
John Ganotis, Founder of Credit Card Insider
In general, cash back cards, especially those that provide the same flat rate on all purchases, can be great for business owners who don’t want to have to plan ahead about how they’ll redeem rewards. When considering a card that earns more cash back on certain categories, it’s important to contemplate whether the card’s bonus categories align with your business expenses. If the card you’re considering has an annual fee, you’ll want to make sure the rewards value you’ll earn in a year outweighs the cost of the annual fee.
5. Consider When a Points Credit Card Is Right for You
Ted Rossman, Industry Analyst at CreditCards.com
If you book a lot of business travel and are comfortable jumping through some hoops to maximize your rewards, you’re best suited for a transferable points program like Chase Ultimate Rewards or American Express Membership Rewards. These programs let you transfer to dozens of airlines and hotel chains. If you know what you’re doing, you can get considerably more value than the standard one cent per point/mile on cash back, and you’ll benefit from a diversification effect. Because your points can be used many different ways, a negative change to one airline or hotel loyalty program won’t hurt as much as if you had all of your eggs in that basket.
6. Actually Use Your Business Credit Card
Buck Stinson, SVP Small Business Cards, Capital One Spark Business
According to Capital One, only 17 percent 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.
7. Don’t Let Business Credit Affect Personal Credit
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.
8. Pay Off Your Balance on a Weekly Basis
J.R. Duren, Personal Finance Expert & Credit Card Analyst, HighYa.com
Use your cards only for the expenses you know your business can pay back at the end of the week. Pay off your balance every week to keep your balances low and increase your credit scores. This will also help you keep track of what you’re earning and what you’re spending on a more consistent basis. This helps you limit your card spending one week at a time and also control your business’ weekly purchases.
9. Take Advantage of Business Credit Card Rewards
Makenzi Wood, Personal Finance & Frugality Blogger, Picky Pinchers
There are credit card issuers that offer perks and rewards for using the card on your purchases. These rewards come as miles, points, or cash rebates. If your business makes regular purchases, it’s best to use the type of credit card that offers great rewards to maximize your benefits.
To learn more, read Fit Small Business’ article on how to maximize credit card rewards for your small business.
10. Get Business Credit Cards for Your Employees
McCall Robison, Manager, Best Company
If your company regularly requires your employees to make business-related purchases, it’s best to get business credit cards for them to easily monitor their transactions and limit their spending. This is also a great way to maximize the rewards and perks of business credit cards, instead of letting your employees pay for business-related purchases in cash and reimburse them afterwards.
11. Use a Business Credit Card to Build Business Credit
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 later on.
For more information on your business credit score, read our guide on how business credit scores work.
12. Reward Employees with Business Card Perks
Bradley Shaw, Founder, SEO Expert Brad
We send an employee on a trip each quarter 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.
13. Negotiate APR & Credit Terms Before You Activate Your Card
Travis Moore, Owner, SellYourNorCalHouse.com
One helpful tip when you receive your new credit card is to call the customer care hotline before activating it. You can negotiate your APR, credit limits, and balance transfer offers. The key is to be very nice to whomever you speak to as you try to navigate up the chain to speak to someone who can make something happen.
14. Compare Business Credit Card Characteristics
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.
15. Don’t Use a Debit Card for Business
Monica Eaton-Cardone, Co-Founder & COO, ChargeBacks911
While they vary from issuer to issuer, many of the liability protections built into consumer debit cards don’t apply to business debit cards. (This can also be true of credit cards, but to a much lesser degree.) If a fraudster misuses your business debit card, your company could end up responsible for invalid purchases. Worse, if not caught quickly, a fraudster may be able to tap directly into your business bank account and/or other linked accounts, draining them as well. Businesses are better off sticking to credit cards; at the very least, carefully read your agreement to understand your liability.
16. Use One-Shot Virtual Credit Cards for Online Payments
Rodolphe Ardant, CEO, Spendesk
Most modern companies have to make countless online purchases. These could be for new software and technologies, equipment from Amazon, or other miscellaneous expenses. Every time you make one of these payments, your credit card details are logged in another possibly-secure server. If you’re nervous about this idea—and you should be—one-shot virtual credit cards are a great solution. These let you create unique card details that are only used for this one payment. Your real bank details are safe, and you’re still be easily able to make payments when you need to. Plus, you can set these cards up in an instant, preload them with the exact amount required, then give them to team members to execute the payment—all while knowing that there’s no risk of fraud.
17. Get a Separate Credit Card for Your Business
Carson Yarbrough, Marketing Associate, Credit Cards Explained
As your business grows, it’s essential to get a separate credit card intended solely for your business expenses. The best option for this is a small business credit card which offers you the ability to separate your personal expenses from business expenses. This helps you monitor your business expenses and makes tax filing less complicated.
To find the right business credit card for you, check out Fit Small Business’ review of the 13 best small business credit cards.
18. Set Card-Specific Spending Limits
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.
19. Keep Your Credit Utilization Ratio Under 30%
Katie Ross, Education and Development Manager, ConsumerCredit.com
Credit utilization is the percentage of total available credit that you are using. Know your credit limit and make sure you don’t fully consume it. Credit utilization impacts your credit score, so keeping your credit utilization ratio at ideally 30 percent or lower will help you build good credit. Also, if you keep your credit utilization low, it will be easier for you to pay off your debt every month.
20. Maximize Rewards with Segregated Expenses
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 no 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.
21. Never Skip a Payment
Jessica Brown, Money Expert, Money Super Market
It’s best to pay your balance in full every month. However, if you can’t afford to pay the full balance, make sure to at least pay the required minimum and never miss a payment. This is vital—otherwise, you’ll be charged with penalties and compromise your credit record.
22. Take Advantage of Cash Back Rewards
Brian Thompson, 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.
23. Check to See if You Have a “Grace Period”
Matthew Coan, Founder, Casavvy.com
A grace period is a period of 10 to 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.
24. Determine Your Credit Needs Before You Apply
Denise Beeson, President, DeniseBeeson.com
Small business owners must decide what they need in a business credit card. Specific use of the need will assist you and your bank or credit union to determine which card and what limits may be needed. For example, if you employ drivers, you may want a business credit card to track mileage and gas (especially for IRS reporting). You can also monitor the driving distances and record the travel to assist in future logistics. Scheduling drivers and trips to various locations can assist your business in productivity and cost control.
25. Don’t Forget About Other Payment Options
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 no interest. You can get a credit decision in as little as three 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.
26. Know Your Credit Card Benefits to Simplify and Streamline Business Activities
Jeff Hofmann, General Manager, Chase Ink Business Cards
Remember to do your research before applying for a credit card so that you’re aware of any built-in benefits and not doubling up on costs. For example, some business credit cards offer collision insurance for rental cars, meaning one less thing to worry about when you’re focused on your business trip. By knowing your available rewards and the options for redeeming and maximizing them, you can make sure to get your money’s worth and keep your business moving forward.
27. Use a Business Credit Card with Longer Repayment Terms
Evan Tarver, Editor, Fit Small Business
While most business credit cards have net-30 payment terms, meaning you have to pay off the balance in full each statement cycle (or month), some business cards offer up to net-60 payment terms. This lets you float business expenses for up to 60 days, helping you manage your cash flow and do things like take on projects in which you’re being paid on net terms.
To find the right business credit card for you, check out our review of the 13 best small business credit cards.
A business credit card is a great funding option to help your company meet temporary cash flow gaps while earning rewards and perks. It is also a great way to build business credit. Follow the above business credit card tips from the pros to ensure you’re using your card to your advantage so you can enjoy many other benefits.