Best Business Credit Cards

Access to credit can be difficult to come by and expensive for small businesses. Small business credit cards can be flexible, invaluable tools for business owners facing short-term cash crunches. Interest rates can be lower than they are for other convenient sources of credit, such as advances against accounts receivable or credit card receipts and unsecured loans available from small business lenders on the Internet. Thanks to credit card incentive and rewards programs, it may make sense for business owners to route as much of their normal expenses as possible through their business credit card. The rewards offered by business credit cards are becoming increasingly generous as more lenders advertise extra large sign-up bonuses and plump rewards on everyday expenses. Picking the right business credit card can save you thousands of dollars each year on interest, help you book

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Best Business Credit Cards (6)

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What is a business credit card?

A business credit card is a credit card intended for use by a business rather than for an individual’s personal use. Business credit cards are available to businesses of all sizes. They can help businesses build a credit profile to improve future credit borrowing terms. Small business credit cards may also be backed by a personal guarantee which integrates a personal liability which can also help in structuring credit terms.

How do business credit cards work?

Business credit cards are designed for use by business owners for business use rather than private individuals who have cards for their personal use. They are often used to build a company’s credit history, improve its cashflow and keep business expenses separate from personal charges. Business credit cards are available to businesses of all sizes, including sole proprietorships, and they may or may not show up on your individual credit report.

Business credit cards are great tools to organize expenditures, earn rewards, and save on interest payments. Even if your business's spending is modest, choosing the right credit card can save you large sums of money over time.

"All businesses, regardless of size, should have credit cards specifically designated for business use. You can even qualify for these cards as a sole proprietor," says Ted Rossman, CreditCards.com industry analyst. "Business credit cards offer excellent rewards and make it easier to track expenses and manage taxes."

An important difference to note: Small business cards are different from corporate credit cards. Corporate cards are issued by only a few banks to companies that have a relationship with that bank, and are issued to the company as a whole rather than to an individual within the company.

Business Credit Card Benefits

Business credit cards can be a good way to manage and itemize expenses. In addition to offering the usual conveniences associated with credit cards, business credit cards help small businesses in particular to keep business spending separate from personal spending. This separation can be helpful for accounting and tax purposes. They also provide an easy way for employees to make purchases and for businesses to monitor employees’ business purchases.

Business credit cards usually have unique benefits designed to entice business customers. These benefits may be different from the benefits offered to individual customers. For example, some business credit cards offer cash back on purchases at stores where businesses are likely to frequent, such as office supply stores. Business credit cards also tend to offer larger sign-up bonuses than individual credit cards in anticipation of high business spending. Many will also offer 0% interest as an introductory rate for a short period of time.

Travel perks are another common benefit, since many businesses have significant travel expenses. A business credit card might entitle the holder to use an airline’s VIP lounge at airports or receive discounts on hotel stays during business travel. Business credit cards also sometimes offer more flexible repayment terms designed to appeal specifically to businesses, whose cash flow may be irregular.

Selection criteria: what makes a great business credit card?

Good value for an annual fee: If a card is going to come with an annual fee, make sure the rewards and benefits will provide enough value to make it worth the cost.

Rewards for your business expenses: The best cards for you will offer points or cash back for the types of purchases you make the most.

A big signup bonus: Businesses spend more than typical consumers, so the signup bonus for a good business card can also be pretty high.

Extra benefits: Pretty much every card comes with some basic shopping and travel protections, but exceptional cards have more interesting and valuable benefits.

Travel perks: Higher-end cards offer additional services to make traveling easier and more enjoyable, like statement credits, room upgrades, complimentary amenities, and elite membership status with airlines and hotels.

Good customer support: Dealing with bad customer service can be a headache, but it would be even worse if that affects your business too.

Foreign transaction fees: If your business travels outside of the country or buys anything in a foreign currency, look for a business card with no foreign transaction fees to eliminate those costs.

How to make the most of your business credit card?

1. Always, always pay on time

Consider setting up automatic payments that will deduct money from your bank account each month, or set up personal alerts on your phone or computer to remind you when a payment is due.

If you think you may miss a payment, calling up the card issuer, being honest and asking for a grace period is always worth a try, says Neil Lerner, state associate director of the Wisconsin Small Business Development Center at the Wisconsin School of Business.

2. Know when your 0% interest promotion expires

Maybe you like the sound of 0% interest on purchases for 12 months. This type of deal can be really tempting — it’s basically an interest-free loan and can help your business manage a short-term cash shortfall.

Once the 0% APR period ends, however, small-business owners should know what the new interest rate on the card will be. You can find this in your monthly credit card statement under “purchase APR” or on your cardholder agreement. To avoid getting dinged by interest, you’ll need to pay off the entire balance on the card each month before your payment due date. If you have the cash to do so, it’s a wise investment.

3. Earn your sign-up bonus

Companies use sign-up bonuses to entice you to apply for their credit cards. The deals can be quite enticing: Who doesn’t want to earn $500 or more in travel rewards, gift cards or a statement credit?

Keep in mind that to get this bonus, you generally need to spend a certain amount of money in a specific time period. For example, a card may offer a $500 cash bonus but only if you spend $5,000 on purchases within the first six months of opening the account.

4. Maximize rewards, and don’t forget to redeem them

One of the biggest perks of a business credit card is the rewards you get on purchases. Make it a priority to earn them. If your card offers you 5% cash back on purchases at office supply stores or on gas, use your card for those things.

5. Deduct interest and fees on your taxes

Any interest and late fees paid on your business credit card are deductible on your taxes, as long as the card was used for business purposes, according to Craig Smalley, an accountant and financial advisor based in Orlando, Florida.

For businesses operating as sole proprietorships, these expenses should be listed on the second page of Schedule C under “interest: other.” For S and C corporations, the expenses would be listed on a Form 1120 under deductions.

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