Power of Plastic: What to Look for in a Business Credit Card

Business.com / Financial Solutions / Last Modified: February 22, 2017

Your business is growing and the time has come to open a business credit card. Congratulations! Here's how to find the right one for you.

Sponsored by LoanMe, a licensed lender that offers loans to small businesses and sole proprietorships, with loan amounts up to $100,000 in most covered states and also feature same day or next day funding.

Your business is growing and the time has come to open a business credit card. Congratulations!

You could just pounce on the first offer to appear in the mail.  However, a better idea would be doing a little homework to determine the optimal credit card for your business.

From annual fees to rewards, from interest rates to payment categorization tools, there is a lot to consider. When you’re looking for a business credit card, some key things to keep in mind are:

Related Article: Building Your SBSS Score: Steps to Improving Your Business Credit


When you open a business credit card, it generally reports customer usage and performance to the credit bureaus. Since you no doubt plan to pay your business card on time and avoid high balances, having a business card reporting to your personal credit reports with Equifax, Experian and TransUnion may help your credit scores. 

“One thing entrepreneurs should understand is how a business card will affect their credit ratings,” says Gerri Detweiler, head of market education at Nav.com. “The advantage of a business credit card is that it often offers a larger credit line.”

Nav.com compiled a list you can check that illustrates how business credit cards report to personal credit. 

“Be aware of a term known in the credit scoring world as your ‘revolving utilization ratio,’” says Michelle Black, an author and credit expert at HOPE4USA.com, a credit education and restoration program located in the Charlotte, North Carolina region.  

According to Black, personal credit scoring models like FICO monitor the relationship between your credit card limits and your credit card balances – your revolving utilization ratio. If your personal credit history is thin because you’ve been avoiding credit cards in favor of a debit card, a business card that reports your full account activity may help your personal score.

Cash versus Credit Card LoanMe Loans

Is a Loan a Better Option?

Before taking the plunge with a business credit card, be certain about how you intend to use it. Depending on the size and frequency of your purchasing, a loan could be a better fit, as they typically have lower interest rates. Providers such as LoanMe have rates as low as 24% for a small business loan.

“High utilization ratio of credit cards can negatively affect your credit.  Fortunately, business loans are not part of the utilization calculation. This is why it’s common for owners to opt for business loans to address funding instead.” – Min Choi, Managing Director, LoanMe Inc.

Related Article: Applying for an SBA Loan vs. Funding From an Alternative Online Lender

What Features Should You Look For?

In many ways a new business credit card could be regarded as a tool. It is important to verify how many users can be added to the account. It’s also good to find out how the card will help track expenses.

“Being able to add multiple users at no extra charge dramatically simplifies the reconciliation each month,” says Adam Broetje, CEO of Seattle-based Odd Dog Media, a digital marketing agency. “No more importing multiple statements from multiple employees. It's a single credit card that auto-imports transactions into our accounting software. It saves our bookkeeper hours each month not tracking down statements or expense reports.” 

These days, your business credit card should also have some of the features and benefits of a keeping a CPA on staff.

“A business credit card is a tool to spend money that you were going to spend anyway,” says Matthew Coan, the owner of the business credit card comparison website Casavvy.com. “A business credit card also makes it easy to itemize and organize the expenses that you have. Many of them come with tools so that you can categorize payments and make sure that they are applied to whatever department you want them to go to. This is a great benefit when running operating cost analysis and seeing where your money is going.”

Rewards programs credit cards


It’s All About the Rewards!

Next, look at a card’s interest rates and rewards program.

“If you know your cash flow varies, and you may not be able to always pay off your credit card debt in full each month, prioritize credit cards with low interest rates,” says Robert Harrow, an analyst with ValuePenguin.com. “Those who do pay off their bill diligently should favor a reward card.”

Business credit cards can give you points for your spending, or a percent cash back. Carefully consider your options, because not all rewards are created equal.

“We're a new American Express client, largely for the rewards,” says Mark Aselstine, owner of Uncorked Adventures, a wine of the month club based in San Mateo, California. “The decision was pretty easy. Capital One offers 2% back on all purchases. But our largest line item on our card is our shipping charges from UPS. Those can be paid for with a credit card. Amex had a 5x points offer late last year on one type of charges. Getting the 5x points for our shipping charges really does add up in terms of free travel.”

According to Harrow, the IRS treats credit card rewards as a price reduction, not a gift or revenue. Any profits you make on credit card rewards do not get taxed. This is a nice perk; however, you must balance the dollar values of rewards with the reality of annual fees. Do the math and make sure you come out ahead at the end of the year.

Next, calculate the actual dollar value of potential travel rewards. Many business owners opt for cash back instead of points they can use for travel, and that's not the right choice for everyone.

“The value you get in hotel and airline miles you get from using a rewards card can far exceed whatever cash you're getting back with another card,” explains Allen Walton CEO of Dallas-based SpyGuySecurity.com.

For example, according to Walton, if you spend $70,000 in business purchases with a Capital One Spark Cash Business card, you will get 2% back, or $1,100. If you instead spend that on a CitiBusiness AAdvantage Platinum Select Card, you will get 70,000 points, which could be used to buy a first class ticket from Dallas, Texas to Tokyo, Japan. Currently, those are selling for $12,426 each. So, depending on the card you use, you could get either $1,100 or a first class flight to Japan worth over $12,000.

Of course, if you don't need to travel, a cash-back card is a better option.

Promotions And Offers Are Your Friend

Finally, pay attention to the latest promotions. It matters when you sign on the dotted line.

“A lot of cards have massive sign up bonuses if you apply for the card and spend a certain amount of money within three months,” says Walton.

Now that you’ve considered annual fees, rewards, interest rates, reporting and extra tools, you have a good idea about what you need in a business credit card. You’re all set to make a decision.

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