Spark 1% Classic review: Good value for small-business owners who need to build credit

The Spark 1% Classic from Capital One gives small-business owners with fair credit or a limited credit history an unsecured line of credit and the chance to grow their credit score while earning rewards. The card earns an unlimited 1% cash back on general purchases and 5% cash back on hotels and rental cars booked through Capital One Travel.

While it lacks the top-of-the-line features found with many of the best business credit cards, it does offer solid business perks like free employee cards, the flexibility to choose your own monthly due date and discounts on business essentials. As long as you can pay your balance in full each month and avoid the card’s high APR, the Spark 1% Classic card has the potential to be a good fit for business owners who need time to build credit before qualifying for better options.

Quick highlights

• Rewards rate: 1 percent unlimited cash back for all business purchases
• Welcome offer: N/A
• Annual fee: $0
• Purchase intro APR: N/A
• Balance transfer intro APR: N/A
• Regular APR: 28.49 percent (variable)

Current welcome offer

There is no current sign-up bonus offered for this card, which isn’t unusual. Business credit cards with welcome offers are typically reserved for small-business owners with good credit or higher.

Rewards rate

The Spark 1% Classic offers a flat rate on general purchases without having to worry about spending caps.

How you earn

You’ll earn an unlimited 1 percent cash back on general purchases, including purchases made with employee cards. This is a decent rate for credit-builders and close to the flat rates of 1.5 percent and 2 percent offered by business cards for people with good credit.

You’ll also get a chance to earn bonus rewards on select travel — 5 percent cash back on hotels and rental cars when booked through Capital One Travel. This is a nice feature for a no-annual-fee card, especially since finding a travel rewards card for people with fair credit is no easy task, especially if you’re a business owner.

How to redeem

Cash back can be redeemed in a number of ways, including for a statement credit or check. You can set up your preferred redemption method so you redeem cash back automatically at a set time each year or when you’ve earned a specific amount. You can also redeem your rewards for previous purchases and gift cards. Plus your earnings never expire, so you don’t have to worry about redeeming before a certain time period.

Rewards are worth 1 cent per dollar when redeemed for statement credit or check. So you’ll earn $10 cash back for every $1,000 you spend on general purchases. For other redemption options like gift cards and paying for previous purchases, the value of your rewards will vary and could be worth far less than what you’ll get when redeeming for statement credit or check.

While the Spark 1% card doesn’t have many of the perks you can find with premium business credit cards, there are a few benefits with Capital One worth mentioning.

For some credit builders, the biggest perk is that it’s an unsecured card. Having an unsecured line of credit can make it easier to manage your business while you grow your credit score, especially compared to secured business cards, which require a cash deposit. Here’s a look at the rest of the card’s top features.

Build your credit

With this card, you can work on building or rebuilding your credit score. The card is designed for those with fair credit, unlike other business cards where you must have an excellent credit rating to qualify.

Control over employee cards

You can give employees their own cards and also set spending limits on employee cards. You can assign account managers to authorize payments or review and dispute transactions. The control is in your hands as the business owner.

Fraud and liability protection

If your Spark 1% Classic card is lost or stolen, zero fraud liability means you won’t have to worry about paying for unauthorized transactions. You can also set up fraud alerts to be notified if there is suspicious activity on any of your cards.

Roadside assistance

You can relax when you’re out and about knowing this card has you covered if you need roadside assistance. If you need help with changing a tire, towing or a jump-start, then all you have to do is call.

The Spark 1% Classic charges no annual fee. If you need to use your business card for travel overseas, you also won’t have to pay any foreign transaction fees. Cash advances are subject to a minimum of $10 or 3 percent of the advance, whichever is greater.

You won’t get a chance to enjoy an intro APR offer on purchases, which is a feature found on some no-annual-fee business cards. Without an intro APR offer, the only way to avoid the card’s high variable APR of 28.49 percent is to pay your balance in full each month.

It’s also important to pay your balance on time each month. If you make a late payment, you may get hit with a penalty APR of 31.15 percent. After 12 on-time payments, Capital One may consider removing the penalty fee, but there’s no guarantee.

The Spark 1% Classic card is an accessible option for small-business owners with fair credit. But it won’t be a good fit for everyone, especially if you can’t qualify for an unsecured card or your credit score is high enough to help you get approved for a more rewarding business card. Here are two of the best alternatives to the Spark Classic.

Spark 1% Classic vs. Bank of America® Business Advantage Unlimited Cash Rewards Secured card

If you can afford to tie up a minimum of $1,000 in a security deposit, the Bank of America® Business Advantage Unlimited Cash Rewards Secured card is one of the few secured business cards to offer rewards. Not only does it offer a higher cash back rate of 1.5 percent compared to the Spark 1% card, it also doesn’t charge a penalty APR if you make a late payment. While these perks may not be enough to make it a better pick over an unsecured card like the Spark 1%, it’s definitely worth considering if you can’t qualify for an unsecured card and want to earn rewards while you build credit.

Spark 1% Classic vs. The Blue Business® Plus Credit Card from American Express

If your credit score is close to the “good” range (670 or higher), you may want to consider The Blue Business® Plus Credit Card from American Express. It’s a no-annual-fee card better suited for small-business owners with travel expenses, offering 2X Membership Rewards points on everyday business purchases up to $50,000 per year (1X points thereafter). It also comes with a welcome offer, the chance at a lower APR and an intro APR offer on purchases

To get the best value, you’ll have to redeem your rewards for travel. Membership Rewards points are worth up to 1 cent when booking travel through the Amex portal and could go even higher if you transfer your points. According to Bankrate’s latest points valuations, your rewards could be worth up to 2.1 cents on average when redeemed with a high-value Amex transfer partner. But redeeming your rewards for non-travel options drops your value below 1 cent.

Best cards to pair with the Spark 1% Classic

Consider pairing the Spark Classic with another credit card offering an attractive intro APR on purchases or balance transfers. This will allow you more payment flexibility on your purchases, especially if you’re a startup and monthly stability is a concern.

If you have a limited credit history or average credit, the Capital One Spark 1% Classic is a solid choice. It gives small-business owners an unsecured line of credit, so you can build credit and avoid using a secured credit card, which will force you to tie up funds in a security deposit. It also offers a chance to earn straightforward rewards on all purchases. As long as you can pay your balance in full each month to avoid the card’s high APR, you’ll be able to put some cash back into your business as you work to improve your credit score and qualify for a better business card with better features.

The information about the Spark 1% Classic has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.

For rates and fees of The Blue Business® Plus Credit Card from American Express , please click here.

For rates and fees of the American Express Blue Business Cash™ Card, please click here.