How to choose a business credit card

Business credit cards are a convenient way to cover expenses, from office supplies to utility bills to client dinners. Having a card exclusively for business purchases also allows you to keep personal spending separate, which can mean fewer headaches at tax time.

Most business credit cards allow you to earn rewards in the form of points, miles or cash back. Additionally, business credit cards can include other features and benefits, such as free employee cards, travel perks and access to discounts on business services.

If you’ve never had a business credit card before, there are a few important things to know:

• Spending limits may be higher than personal credit cards, giving you more purchasing power for your business.
• Rewards, features and benefits are often tailored to how businesses spend.
• Business credit cards aren’t covered by the CARD Act, so they have fewer fee restrictions than personal credit cards, making it important to always pay on time.
• Most business credit cards require a personal guarantee, which means you — not the business — will be responsible for any debt incurred on the account.

With so many business credit cards to choose from, finding the right one might seem a little overwhelming. Here are the most important factors to consider.

1. Rewards

Earning rewards on a business credit card could save you money if you’re applying rewards as a statement credit against purchases or redeeming them for travel or cash. When it comes to how you can earn rewards, every business credit card is different.

When comparing business rewards credit cards, consider where you tend to spend the most. That can help you to decide what type of rewards program makes the most sense. For example, your business budget might include spending on:

• Travel
• Dining
• Office supplies
• Utilities, including internet and cellphone services
• Shipping
• Gas
• Advertising

It’s important to choose a card that reflects your spending habits. If your business primarily spends on everyday operations, you might prefer a card that pays you cash back on office supplies, utilities and advertising. On the other hand, a travel card could make more sense if you book frequent business trips.

When comparing rewards programs, also look at how rewards are structured. Certain cards tier rewards, with some spending categories earning more points, miles or cash back than others. There may be spending caps that limit the dollar amount of rewards you can earn each year. Other business credit cards offer a flat rewards rate on all purchases, which can be useful for those who have varied spending or don’t care to think about rewards categories.

Estimating the amount you could earn based on your typical monthly spending can help you decide which one might work best. Also, don’t forget about introductory rewards or anniversary bonuses. Many business credit cards offer a sign-up bonus when you meet a minimum spending requirement. Some may also reward you with anniversary rewards each year. Those are both additional opportunities to increase your rewards earnings if your primary goal for getting a business credit card is racking up points, miles or cash back. 

2. Annual fee

While some business credit cards don’t charge an annual fee, others do. As a general rule, the better the rewards program and the more features and benefits the card comes with, the higher the fee tends to be.

Whether it makes sense for you to pay an annual fee depends on your spending and what you’re hoping to get from the card.

For example, say you’re eyeing The Business Platinum Card® from American Express for travel. To recoup the card’s $695 annual fee in Membership Rewards points alone, you’d need to spend $14,000 a year on flights and prepaid hotels booked through amextravel.com. But if you don’t spend quite that much, you could still get some of the fee’s value paid back to you by qualifying for an annual statement and airline fee credits.

On the other hand, you might choose something like Capital One Spark Miles for Business instead if you’d like to keep things simple. This card earns an unlimited 2X miles on all eligible purchases, with no category restrictions. There’s a $0 introductory annual fee the first year, then $95 each year thereafter. The only trade-off is that this card offers less in the way of travel benefits compared to the Amex Business Platinum Card — no airport lounge access, for example. 

3. Interest rate (APR)

Paying interest with any credit card makes your purchases more expensive. The best way to avoid interest is to pay in full. If you think you’ll need to carry a balance from time to time, however, it’s important to understand what APR you’ll pay.

You might be interested in choosing a card with a low or 0 percent introductory APR if you’re planning a large purchase for the business. Low APR balance transfers are less common with business credit cards, though there are a few that offer them.

In general, the better your credit score, the lower the interest rate and APR you’re likely to qualify for. Business credit cards can base approval on your personal credit scores, so you might want to check your credit history before applying to get an idea of what rate you might be able to get.

Also, be aware that there’s a difference between business credit cards and business charge cards. With a credit card, you can make purchases and pay them down over time, accruing interest charges each month. A business charge card, such as the popular Brex 30 Card, doesn’t charge interest since you’re required to pay the balance in full each month. If you’d like the flexibility of carrying a balance, then you may want to rule out charge cards in your search for a business credit card. 

4. Added features and benefits

Business credit cards can offer more than just rewards. For example, some of the valuable features and benefits you might be able to take advantage of include:

• Travel protections: basic or upgraded travel protections, such as travel accident insurance, trip cancellation or interruption insurance, baggage delay insurance or roadside assistance
• Travel benefits: airport lounge access, complimentary concierge service, hotel and resort upgrades, free checked bags, in-flight food and drink credits or annual airline fee credits
• Everyday protections: extended warranty protection or purchase protections, like cellphone insurance
• Employee cards: employee credit cards at no charge with custom spending limits
• Account management tools: bookkeeping tools and the ability to export data to your preferred accounting software
• Discounts: exclusive discounts to services or products you regularly use, like cloud storage or upgrades when it’s time to replace computer hardware or software

Again, remember that the more perks a business card has, the more you’ll likely pay for the annual fee.

The bottom line

Getting a business credit card could make life as an entrepreneur easier if you can charge purchases as needed while earning some of what you spend back. When considering the best business credit cards, take time to weigh the rewards and benefits of each, as well as the fees and APR. Ultimately, the best business credit card for you is the one that offers rewards and features that fit your spending style at a cost you’re comfortable paying.