Credit Card Learning Center

Business credit cards

Most small businesses have had the headache of running business and personal expenses on a personal credit card. Sorting out what was for business and what was for personal use when the statement comes each month can be a perfect pain. Did that $97.48 spend at the stationery store include Billie's crayons, or were the crayons part of the bill for $27.95?

And does it really matter? Well, the taxman might think so. So might your accountant when you want to know just how profitable is your business.

Enter the business credit card
According to a 2003 study by the Small Business Administration, owners of 46% of small companies used their personal credit cards. Another 34% used business credit cards.

Apart from simpler accounting, having a business credit card allows you to build a credit history in the name of your business. Expect to have to start small, because the credit limit will be based to a great degree on your credit history. If your credit record is not good, you may have to put up a cash deposit to get started.

Cards with small limits from issuers such as Staples, Office Max and FedEx are potential starters. Some may require a personal guarantee. Good credit management should result in offers with higher limits from other issuers within a few months.

Advantages include discounts
A business credit card brings with it some other advantages. For example, wholesalers will sometimes give discounts that are not available to small businesspeople using personal credit cards. Many of the cards carry travel and accident insurance. Rental car collision insurance is another perk. Other issuers offer additional cards for employees, each with their own individual credit lines, along with detailed transaction reports on a monthly, quarterly and annual basis.

Another advantage, if you plan to pay balances on time and not use your business credit card as a revolving charge card: free capital. You can use the issuer's money without interest during the billing cycle. If you know the date the cycle begins, you can buy expensive items early in the cycle, delaying the use of company money.

What to look for in a card

  • If you expect to carry a balance, look for a low APR. The American Express Platinum Business card has 0% APR on purchases and balance transfers for nine months, then an APR (in May, 2005) from 8.74%. The Blue Cash for Business card from American Express has 0% APR for just six months, but it also gives cash rebates of up to 5%. There are no annual fees with either card.
  • Are there fees, and if so, will you gain enough to justify payment of those fees? Most non-airline cards do not carry annual fees. The Delta SkyMiles card is free for the first year.
  • What kind of extra benefits would you like? Look for cards that earn miles if you travel frequently, or those that offer incentives from vendors. CitiBusiness PremierPass card offers free companion travel, triple points on certain business purchases, and a wide selection of rewards including no-blackout flights.
  • What financial management tools does the issuer offer, and can they be accessed online? The Advanta Platinum card offers detailed expense management reports and online account management. You can even design your own card and have it customized with your business name. APR is zero for the first 12 months.
  • Is there flexibility to set different limits for different employees?
  • Is the card widely accepted, especially if you travel overseas? This includes any of the Visa, MasterCard, Discover or American Express cards.
  • Can you access ATM machines with it wherever you normally are? All of the major cards are accepted at most ATMs.
Business cards come in a wide variety of flavors. Make sure yours is to your taste.

Lowest Fixed APR Rate: 5.50%

Lowest Variable ARR Rate: 8.49%

Total Credit Cards in Database: 102