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When you’re preparing to launch your own startup, it’s easy to believe you don’t need a business credit card. However, there are serious benefits that come with picking up a credit card for business purchases, and these benefits aren’t just limited to rewards.
Benefits of a small business credit card for startups
Keep personal and business expenses separate
With a business credit card, you can keep your personal and business purchases separate. This can help you track your business purchases more carefully, but it can also simplify your finances and expense tracking around tax time.
Build your startup’s credit history
Getting a credit card for your business can also help you build your business credit score — a score that can affect your ability to borrow more money for your business in the future.
Manage cash flow
As if these benefits weren’t enough, picking up a business credit card can help you manage your cash flow more easily. You can pay suppliers with your credit card and wait to pay your credit card bill before your grace period is up without interest. For some businesses with turbulent cash flows, credit cards can supply some short-term financing. If you need to cover expenses for a couple of months while you’re maybe waiting for customer payment, you can use your business credit card for a short period. Unless you’re in a 0% introductory APR period you will incur a high-interest rate on your balance so it’s better to keep the amount on your balance as low as possible and pay it off as soon as you can.
Spread out the cost of a big purchase
Business credit cards offering introductory 0% APR on purchases for a certain amount of time can be a great way to finance a big purchase and pay it off over time with smaller installments. If you need to invest in equipment to scale up your business you should consider a 0% APR card to help spread out the financial burden.
Earn cash back or travel rewards on your spending
Finally, you can earn travel rewards or cash-back on all your business purchases, and these rewards can add up over time. There are some business credit cards offering high rates of cash back in categories your business may spend heavily in, such as office supplies and dining. Many business travel credit cards come with perks like lounge access which can help you make the most productivity out of your travel time.
Small business credit cards every startup should consider
No matter your reason for getting a business credit card, it’s important to compare offers to see how they stack up. The following small business cards offer the right combination of benefits:
Best for travel rewards: Ink Business Preferred Credit Card
The Ink Business Preferred card is one of the best options for startups that want to earn rewards for travel on each dollar they spend. This card offers 80,000 bonus points after you spend $5,000 within three months of account opening plus 3x points on your first $150,000 spent on travel, U.S. shipping, select online advertising, and cable, internet, and phone each year. Cardholders also earn 1 point per $1 on all other purchases.
What makes this card ideal for travel is the fact that you use points to book travel through the Chase travel portal or transfer them 1:1 to popular airline and hotel partners like Southwest Airlines, United MileagePlus, and JetBlue. A $95 annual fee applies.
If you want to learn more about this card, read our Ink Business Preferred card review.
Best for cash-back: Capital One® Spark® Cash for Business
Business owners who want to earn straight-up cash back on their purchases should consider the Capital One® Spark® Cash for Business. This card offers a flat 2% back on all purchases. As for the sign-up bonus, you can earn up to $2,000: a $500 cash bonus when you spend $5,000 in the first 3 months of opening your account; plus, $1,500 when you spend $50,000 in the first 6 months.
This card has a $95 annual fee but it’s waived the first year. When you’re ready to redeem your points, you can cash them in for statement credits at a rate of one cent per point.
If you want to learn more about this card, read our Capital One® Spark® Cash for Business review.
Best 0% APR offer: SimplyCash® Plus Business Credit Card from American Express
If you need some working capital to get your startup off the ground, it can help to seek out a business card that offers 0% on purchases for a limited time. The SimplyCash® Plus Business Credit Card from American Express has the best offer available; once you sign up, you’ll get 15 months with 0% APR on purchases made with the card (after that regular variable APR of 14.49% – 21.49% applies).
Even better is the fact this card offers rewards without an annual fee. Upon approval, you’ll earn 5% back on the first $50,000 spent at U.S. wireless telephone services and U.S. office supply stores. You’ll also earn 3% back on purchases made in one of eight categories of your choosing plus 1% back on all other purchases. Bonus categories you can choose to earn 3% back in include airfare purchased from airlines, hotel rooms purchased with hotels, car rentals booked direct, U.S. gas stations, U.S. restaurants, advertising with select U.S. media, U.S. shipping, and select U.S. computer software, hardware, or cloud computing.
Best for airline miles: CitiBusiness® AAdvantage® Platinum Select® World Mastercard
We like the CitiBusiness® AAdvantage® Platinum Select® World Mastercard due to its large signup bonus and value proposition for small business owners. Upon approval of this card, you can earn 70,000 miles after you spend $4,000 on purchases within four months of account opening. You’ll also earn 2x miles on eligible American Airlines purchases, telecommunications merchants, cable and satellite purchases, car rentals, and gas stations along with 1 mile per $1 on everything else you buy.
Finally, you get a free checked bag and 25% off in-flight internet service when you fly American and use your card. The CitiBusiness® AAdvantage® Platinum Select® World Mastercard comes with no foreign transaction fees and a $99 annual fee that is waived for the first 12 months.
If you want to learn more about this card, read our CitiBusiness® AAdvantage® Platinum Select® World Mastercard review.
What to watch out for
While these cards can help you earn rewards and simplify your business finances, it’s important to keep the pitfalls of business credit cards in mind. For starters, credit cards tend to come with high interest rates that make carrying a balance an expensive proposition. If you need to borrow money and pay it back over many months, you may be better off taking out a business loan.
Also note that, if you signed a personal guarantee when you applied for your business credit card, you will be liable for debts your business racks up whether your business venture succeeds or not. If you’re worried about running up balances you or your business will not be able to repay, you may want to reconsider your business plans or stick to cash to lessen your risk.
When used responsibly business credit cards can be an excellent tool to help build your companies credit history, keep your personal and business expenses separate, help cover the times you’re cash flow constrained, and earn great cash back returns and travel rewards.
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