Understanding how to choose a business credit card is a seven-step process. The process includes knowing how a business credit card works, reviewing where your business spends the most, and examining potential fees and rewards. Your business’s spending goals and the rewards or perks you want to receive likely determine the best card for you.
There are dozens of business credit cards for you to choose from. A solid pick is the Chase Ink Business CashSM credit card because of its mix of rewards and financing. You can earn up to 5% cash back in categories like office supplies and have no-interest financing for 12 months on purchases.
There are seven steps needed when choosing a business credit card.
1. Understand How Business Credit Cards Work
Once you’re approved for a business credit card, you can request additional employee cards. Both employee cards and the primary card can earn rewards on everyday, business-related purchases. These transactions are expected to be repaid monthly; however, you can carry a balance knowing it will accrue interest until paid off. Keep in mind that a good payment history can help build your business credit.
The key things to know about business credit cards include:
- Personal liability: Most business credit card issuers require business owners to provide a personal guarantee. This means you—the business owner—are personally liable for the business’s debt if the business fails to repay its credit card balances.
- Issuing employee cards: One of the main benefits of opening a business credit card is the ability to give employees access to company funds through employee credit cards. Some, but not all, business credit cards offer free employee cards. You’re responsible for all employee transactions, but you will also earn rewards for these purchases.
- Earning introductory and ongoing rewards: Several small business credit cards offer sign-up bonuses worth several hundred dollars and ongoing rewards up to 5% of the purchase price of your everyday expenses. Rewards can serve as a discount on your business-related purchases.
- Repayment terms: Credit cards are expected to be paid off in full. However, compared to business charge cards, you can carry a balance from one billing cycle to the next. Unpaid balances will accrue interest until they’re paid off. Charge cards carry no interest because they must be paid off every month and typically have no preset spending limit.
- Building business credit: All business credit cards report to the main business credit reporting bureaus. This means you can establish and build your business credit with business credit cards. Personal credit cards, on the other hand, don’t report to business credit reporting bureaus, which means you can use them to build business credit.
While most business credit card issuers consider your business credit, most also require a personal credit check and a personal credit score of at least 670. If your personal credit score is less than 670, choose a business credit card for fair credit.
2. Review Where Your Business Spends the Most
After you understand how a business credit card works, it’s important to review your business’s monthly spending habits. Identifying your typical spending categories—travel, restaurants, office supply stores, or gas stations—can help you choose a card with rewards and perks that provide the largest benefit to your business.
Common business spending categories include:
- Travel: Travel-related purchases can include expenses like airfare, hotels, and car rentals. If you and your employees travel often for business, consider a business travel credit card.
- Restaurants: If you typically take clients or employees out to dinner, consider a business credit card that pays rewards on dining such as the American Express® Business Gold Card.
- Office supply stores: Office-oriented businesses should choose a card that pays rewards on office supplies such as Chase Ink Business CashSM. This can help you maximize your rewards on your monthly office supply expenses.
- Gas stations: Some business credit cards pay rewards on gas station purchases, which would be an excellent pick for people that have to drive far and often for business. A card that offers these rewards can help you offset gas costs.
- Social media and online advertising: If your business spends big on social media or online ad buys, choose a card that offers advertising rewards like Chase Ink Business Preferred®.
- Various categories: Some business owners have expenses in several different spending categories. If this is the case for your business, choose a fixed-rate credit card that pays the same rewards for every purchase. These cards typically pay fixed rates of up to 2% of the purchase price.
When you’re preparing to get a business credit card, it’s important to choose a card that pays rewards that align with where your business spends the most each month. This is the best way to maximize your credit card rewards and offset typical business expenses.
3. Examine Financing Costs and Fees
Before you apply for a credit card, you should consider the financing cost and fees—introductory and ongoing APRs, annual fees, and foreign transaction fees. Each of these factors can help save your business hundreds of dollars every year.
Introductory and Ongoing APRs
The first factor to consider when you examine financing costs is a card’s introductory and ongoing financing terms. Introductory APRs are available to any owner who’s approved for a 0% APR business credit card. However, credit card issuers typically offer the best ongoing APRs to business owners with excellent credit scores—at least 750. You won’t know your card’s interest rate until you’re approved.
Small business credit cards may offer:
- Introductory APR: 0% APR on purchases or balance transfers for nine months or more
- Ongoing APR: 9% to 25% variable, depending on your creditworthiness, which adjusts with the prime rate
Credit cards that offer interest-free financing, like the U.S. Bank Business Cash Rewards World EliteTM MasterCard®, can help you finance large purchases or balance transfers over a specific time period. If you open a card with an introductory APR, be sure to pay off your balance before the introductory period ends to avoid interest charges. If you want to avoid interest altogether, choose a business charge card, which is due in full monthly.
The second factor to consider when choosing a business credit card is whether an issuer charges an annual fee. Annual fees typically range from $0 to $450 or more, which some credit cards waive during the first 12 months. This serves as an incentive to apply for a card and can be a handy way to test run a card before paying an annual fee.
Business credit cards that charge higher annual fees typical offer better rewards and additional perks, including airport lounge access and insurance. Only choose a credit card with an annual fee if the rewards and perks you’ll receive will offset that fee.
Foreign Transaction Fees
The third factor to consider when you’re choosing a business credit card is whether a card charges foreign transaction fees. Foreign transaction fees are typically up to 3% on purchases made outside the United States. If you travel outside of the US for business frequently, choose a credit card without foreign transaction fees. Some of these cards even offer rewards on foreign transactions, which can help save your business even more money.
4. Decide If You Want a Sign-up Bonus
Some small business credit card issuers may offer a sign-up bonus as an incentive to apply for one of their credit cards. These rewards can be worth up to $500 or more after you spend a certain amount of money within the first few months of card ownership. This can be a handy way to earn extra cash for your business in the first few months of owning your card.
Remember, most business credit cards that offer robust introductory reward structures also charge annual fees. However, there are also some credit cards that offer introductory rewards and charge no annual fees, including Chase Ink Business CashSM.
5. Choose Your Type of Ongoing Rewards
Business credit cards typically offer cash back or points rewards as a fixed-rate or as tiered rewards for different spending categories, including travel, restaurants, or office supplies. The best fixed-rate credit cards typically pay rewards of up to 2% or 2x points per dollar on every purchase; the best tier-based rewards cards pay 3% to 5% (3x to 5x points) in one or more spending categories and 1% (1x points) on all other purchases.
Choose between the following types of reward structures:
- Fixed-rate rewards: Choose fixed-rate rewards if your business typically spends across a variety of spending categories and you want to earn the same rewards rate on every purchase. You can earn up to 2% of your purchase price.
- Tiered rewards: Choose tier-based rewards if your business spends big in a few categories category each month, such as office supplies or travel. You can earn up to 5% of your purchase price.
Additionally, if you travel for business often you may want to choose a card that offers points- or miles-based rewards that you can redeem for travel. Otherwise, a cash-back business credit card may be a better option. Regardless of the type of rewards you choose, ongoing rewards can help you keep more money in the bank and offset any additional financing costs, including potential annual fees.
6. Consider If You Want Additional Perks
Some business credit cards also offer additional perks beyond cheap financing, sign-up bonuses, and ongoing rewards. While these perks can be extremely beneficial to your business, they’re typically coupled with higher annual fees. However, it’s worth considering these perks—free employee cards, spend management tools, annual travel credits, or airport lounge access—if your business and its employees can take advantage of them often.
Some perks to consider through business credit cards are:
- Free employee cards: Many business credit cards offer free employee cards. This is a handy way to give employees access to company funds and earn rewards for their purchases. However, premium cards may charge additional fees for employee cards.
- Purchase protection and insurance: Some cards offer purchase protection and insurance, like car rental or baggage insurance that can protect your business and its employees.
- Annual travel credits: There are some premium business travel credit cards that offer annual travel credits, including the American Express Business Platinum Card®. Although this can be a helpful way to earn some extra cash for travel, most cards that offer travel credits also charge steep annual fees.
- Airport lounge access: There are very few airport lounge access credit cards. However, some of those cards offer unlimited free access to more than 1,200 airport lounges worldwide, which can make business travel more enjoyable. Be aware of high annual fees, though.
- Security screening reimbursements: Some business travel credit cards offer application fee reimbursements for security screening programs, including TSA PreCheck and Global Entry.
Remember, when you’re considering the additional perks and benefits you want to receive through a credit card, it’s important to take notice of a card’s annual fee. Cards that offer top-tier perks like airport lounge access and annual travel credits typically charge annual fees up to $450 or more.
7. Get a Business Credit Card
Once you’ve learned how to choose a business credit card, it’s time to get a business credit card, which is a four-step process. Understanding your personal credit score and maintaining a score of at least 670 is the first step to applying for a business credit card. You can typically apply online in a matter of minutes.
Typical business credit card requirements are:
- Minimum personal credit score: 670
- Time in business: None
- Minimum annual revenue: None
It’s common for business credit card issuers to require a personal guarantee—making you personally liable for the business’s debts—because there is no time in business or annual revenue requirement. However, these qualification requirements make a small business credit card an excellent financing option if your business has little-to-no revenue. Compare the best credit cards to find the right one for you.
Business Credit Cards for Different Spending Needs
There are several different business credit cards you can choose from, which may be overwhelming. It’s best to evaluate where your business spends the most each month and choose a credit card based on that information. Choosing a business credit card that offers rewards for your everyday expenses can save your business money.
Common business credit cards for different spending needs are:
- Chase Ink Business CashSM: Good for office-oriented businesses that want to earn premium cash-based ongoing rewards. You’ll also have an opportunity to earn a substantial introductory reward.
- American Express Business Platinum Card®: Good for travel rewards and premium travel perks, including airport lounge access and security screening program reimbursements. Choose this card if you want a robust travel credit card.
- U.S. Bank Business Cash Rewards World EliteTM MasterCard®: Good for accessing interest-free financing on both purchases and balance transfers. Choose this card if you need to carry a balance.
- Capital One® Spark® Miles for Business: Good for fixed-rate miles on all spending. Choose this card if your business spends across multiple different reward categories and wants to redeem rewards for travel.
- Capital One® Spark® Cash for Business: Good for fixed-rate cash back on every purchase. Choose this credit card if your company spends in a variety of spending categories.
- Bank of America® Business Advantage Cash Rewards Mastercard®: Good for earning gas rewards and if you have an existing relationship with Bank of America. Choose this card if you drive far and often for business purposes.
- Chase Ink Business Preferred®: Good for advertising on search engines and social media sites. Choose this card if your company has a big online ad buy budget.
- American Express® Business Gold Card: Good for restaurant spending and earning rewards in the two categories where you spend the most each month. Choose this card if you take clients or employees out to dinner frequently.
Your business’s spending goals and the rewards you want to earn likely determine which business credit card is right for your company. However, if your company has at least $4 million in annual revenue and at least $250,000 in annual card expenses, a corporate credit card may be a better decision for your company.
Using Business Credit Cards vs Personal Credit Cards
Business credit cards are a handy way to establish and build your business credit. The best cards on the market offer 0% APRs, cheap ongoing financing, and low-to-no annual fees. Additionally, when you use a business credit card instead of a personal credit card, you’re able to separate your business and personal finances.
You should use business credit cards instead of personal credit cards for business to:
- Build your business credit: Business credit cards report to the main business credit reporting bureaus, which means you’ll build business credit when you use your card. Personal cards, on the other hand, don’t report to business credit reporting bureaus, so you can’t use them to build business credit.
- Access cheap introductory financing: The best cards available may offer 0% APRs on purchases and balance transfers and low ongoing APRs. This is an excellent way to minimize credit card costs.
- Separate your business and personal finances: Keeping your business and personal finances separate makes for an easy tax season. It’s also important that you don’t commingle the two so it’s easier to track your business expenses throughout the year.
Choose a business credit card over a personal credit card if your goals are to separate your business and personal finances and build your business credit. Both of these two aspects are crucial when you are establishing your company.
Get a Business Credit Card Alternative
If you don’t want to have your personal credit checked or you have spending needs that a traditional credit card can’t handle, consider a business credit card alternative. The most common alternatives to a business credit card are prepaid business cards, corporate credit cards, and purchasing cards.
Prepaid Business Card
Prepaid business cards work like a combination of a credit card and a small business checking account. Prepaid cards allow business owners to preload funds into their account and distribute through employee cards. You can set daily spend limits and track employee expenses. Additionally, prepaid business cards typically don’t require a personal credit check. However, you’ll need to have the necessary cash on hand because you must preload the funds.
Corporate Credit Card
Corporate credit cards are best for companies that have at least $4 million in annual revenue and at least $250,000 in annual credit card expenses. Compared to business credit cards, corporate credit cards don’t require the business owner to provide a personal guarantee. However, they offer similar features as business credit cards, including the ability to issue employee cards. Corporate credit cards carry no interest because your balance is due in full monthly.
Both business cards and purchasing cards (P-Cards) are a handy way to access short-term financing for your business. However, purchasing cards are designed to help streamline the business-to-business purchasing process. You can also use them to set employee spending limits, receive robust reporting, and possibly earn pay early discounts. P-Cards charge no interest because you must repay your balance each month.
Frequently Asked Questions (FAQs) About How to Get Business Credit Cards
We covered a lot of information on how to choose a business credit card and the requirements to get one. There are some questions that are asked more often than others, and we address those here. If you have any other questions, feel free to comment below, and we will provide an answer.
What is the best way to get a business credit card?
When you’re opening a business credit card, it’s crucial to know your personal credit score, as most credit card issuers require a credit score of at least 670. Once you research your credit card options and the rewards or benefits you want to receive, you can typically apply online and receive a decision instantly.
What is a good business credit card?
A good business credit card is one that provides your company with the most value through financing, rewards, and any additional perks like travel credits. Be sure to choose a business credit card that pays rewards in the categories where you spend the most each month to maximize your rewards and offset any card costs.
Can anyone apply for a business credit card?
Just about anyone can apply for a business credit card, as long as you can list some type of business—even if it’s a side hustle. When you apply for a business credit card, you don’t necessarily need an Employer Identification Number (EIN); you can apply for a business card with your Social Security number (SSN).
When you’re choosing a business credit card, it’s important to understand how a business card works, where your business spends the most each month, and the card’s rewards, financing costs, and perks. Your business’s spending goals likely determine which card is the right fit for you.
We recommend Chase Ink Business CashSM as one of the best business credit cards available. It offers up to 5% cash back on purchases like office supplies and no-interest financing on purchases for 12 months. You can also earn a cash-based sign-up bonus worth $500. Apply online today.