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Guide to Choosing a Business Credit Card

By
Kayla Harrison
,
business.com writer
| Updated
Feb 01, 2019
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Guide to Choosing a Business Credit Card

Choosing the best business credit card can be enough to make your head swim. Nearly every credit card issuer offers several rewards cards, and there are multiple factors to consider – the APR, fees, perks, rewards and signup bonuses – each of which affect your overall satisfaction with your card. 

If you and your employees frequently travel for business, a card that offers travel perks and reward miles is a solid choice, though you'll pay an annual fee for a card that offers premium travel perks like baggage fee credits or lounge access. Otherwise, a card with cashback rewards is the best option for most businesses, as reward money is easy to redeem, and you can use it as you see fit. 

Pricing

Credit card issuers are upfront with their rates and fees, and you can find terms of use on each company's website. Here are the rates and fees to look for as you select a card.

Interest Rates

The credit card issuer uses your business and personal credit to determine your interest rate, which means that if you have an excellent credit score, you'll be eligible for low interest rates. If you have poor credit, your rates will be high.

  • Introductory rates: Many card issuers offer 0 percent introductory APRs for the first six to 12 months, though some are only for purchases and don't apply to balance transfers.
  • Standard rates: After the introductory period, this is the rate you'll pay. All the APRs we saw in our research are variable, based on the prime rate. At the time of writing, the rates we saw for business credit cards ranged from 12.24 to 24.74 percent.
  • Balance transfers: These are usually the same as your purchase APR.
  • Cash advance rates: These typically carry a higher APR than purchases or transferred balances.
  • Penalty rates: If you pay late on your business credit card, your APR may increase to the penalty rate, which is around 30 percent APR.

Fees

All credit card issuers charge late and returned payment fees. Other fees vary by card, so you'll want to check the card's terms before signing up to find out which fees apply.

  • Late fee: As mentioned above, these are expensive, costing up to $49. Although most card issuers charge a flat fee for late payments, some may charge a percentage of the past-due amount. In such cases, the late fee may exceed $49, depending on how much you owe.
  • Returned payment fee: This is usually the same as the late payment fee.
  • Annual fee: Many issuers waive this fee the first year you have your card, and others don't charge it at all. Annual fees are typically around $100, but premium travel rewards cards can cost up to $450 per year. If you have cards for your employees, there are a couple ways annual fees may be calculated, depending on the issuer. Some charge a single fee per company, others charge a fee for each card, and some charge both per company and per card.
  • Cash advance fee: This fee is either a flat rate, ranging from $5 to $15, or a percentage of the transaction, usually 3 to 5 percent – whichever is greater.
  • Balance transfer fee: Like the cash advance fee, this is either a flat rate or a percentage of the amount transferred, whichever is greater.
  • Foreign transaction fee: Sometimes called an international transaction fee, this fee usually costs 3 percent of the transaction. Some cards don't include this fee.

Negotiation Tips

Understanding how you'll use your business credit card and repay the balance can help you choose the best offer for your business. For example, if you typically carry a balance, you need a card with a lower APR. However, if you pay in full each month, you want the card that gives you the best rewards and perks. Here are some tips to save money and use your card rewards.

1. Look for cards with no annual fee. Choosing a business credit card with no annual fee is an easy way to save $100 or more each year. Before you splurge on a card with an annual fee, calculate whether the perks will save you enough money each year to offset the fee.

2. If you travel internationally, choose a card with no foreign transaction fees. If you travel a lot, see if there is a fee for using your card overseas. Foreign transaction fees can add up when you are abroad and leave you with an unpleasant surprise on your statement.

3. Make sure you qualify for signup bonuses. Business credit cards often include enticing signup offers, such as 50,000 bonus miles or a few hundred dollars if you spend a certain amount within the first few months of receiving your card. However, Money.com notes that if you've previously received a generous mileage signup bonus from a credit card issuer and airline, you may be ineligible to receive another one. Read the terms to determine whether you're eligible before you sign up.

4. Pay attention to how the rewards are calculated. Most of the big carriers now base rewards on dollars spent rather than miles flown. If you travel frequently for business, a travel rewards card may still be your best bet, but infrequent travelers should consider cashback or point-based rewards cards.

5. Consider how easy it will be to redeem your rewards. If you don't want the hassle of figuring out how to redeem miles and points, choose a card that offers cashback bonuses, as these are often simple to redeem.

6. Save your rewards miles for expensive flights. Money.com explains that you can get the best value on your rewards miles when you book premium business-class seats for international flights. The article also advises that redeeming points for upgrades isn't as good a deal as it used to be, as you may have to supplement reward points with a copay or, if you got a good price on your tickets, you may be ineligible to upgrade.

Reviews

Below are all of our reviews for business credit cards and related categories. Our coverage includes reviews of the best credit cards and business credit cards. See all of our reviews below.

Features to Look For – Choosing Your Benefits

Some banks reward your use of their card by giving you points that you can redeem for goods, airline miles, services or cash. Select business credit cards also offer statement credits as a reward.

If the card doesn't come at too high a price in terms of annual fees or interest rates, you might be attracted to benefits such as auto rental, baggage loss and damage insurance, or purchase protection in case of loss, fire, theft, damages or price depreciation. Some providers offer advanced benefits such as access to exclusive events, hotel amenities and air travel upgrades.

When choosing a card for its benefits, be sure to look at the limitations. While the benefits may look good on the surface, limitations may render them nearly useless in reality. For example, some benefits may expire after a certain time, while other card issuers require that you use the card for a certain period of time before you're eligible to use the rewards. Some cards also have rules about what types of purchases count toward points or cashback rewards. Others have caps on how many points or rewards you can accrue in a certain amount of time.

Customer Service Options

When you have a question or an unexpected emergency (your card is stolen, for example), being able to reach the credit card company quickly is paramount. You should have online access to manage your account.

You want to make sure you can quickly reach a customer service representative over the phone. Check to see whether the company offers live chat online. This can be helpful when you don't want to wait on hold or you have a quick question.

Pay Attention to the Terms and Conditions Agreement

As any small business owner can attest to, credit cards can be a safety valve if you experience cash-flow crunches, and they do happen.

Business owners considering getting a new business credit card have dozens of options, with lots of incentives and attractive benefits. However, you'll want to ask for and carefully look over the terms of service before agreeing to sign up for a new card. Here's what you need to consider.

Teaser, Introductory Rates

Don't get teased into an attractive introductory interest rate while the actual rate lurks in the wings to make an unannounced appearance. Check the terms and conditions of service to see what your rate will be and if it will change after a certain time period. Another item to watch for is whether the rate is fixed or variable. A varying rate can skyrocket, leaving you paying much more interest than you planned, especially if you plan to carry a balance.

Late and Over-Limit Fees

When reviewing the terms of service, look at what your late fees and over-limit fee may be. Late fees fluctuate depending on the card. Some cards don't have an over-limit fee, which can be good for those times in your business cycle when spending is high or if you lose track of your balance and overspend.

The Truth in Lending Act and the Credit CARD Act of 2009 do not apply to business credit cards. That means issuers can legally charge you late fees. It is also well within their right to raise the interest rate on previously accumulated balances.

Additional reporting by Lori Fairbanks.

State of the Industry

Business credit cards account for less than 4 percent of all credit cards in circulation, but approximately $1 in every $6 charged, amounting to $430 billion in 2015, according to the Mercator Advisory Group.

Although most of the businesses that apply for business credit cards are approved, the Small Business Administration cites research by MasterCard that shows 46 percent of small business owners continue to use their personal credit cards to pay for business expenses.

There are, however, some differences between business and consumer credit cards. Consider the following.

Business-Centric Rewards and Perks

You can often earn more miles or points when you use your business credit card to pay for typical business purchases, such as office supplies, computer hardware and software, phone and internet bills, or for business travel. Perks frequently include travel-related assistance, conveniences, discounts or insurance.

Expense Management Tools

Business credit cards frequently provide account management tools that help you track expenses, attach receipts and import transactions into your accounting program.

Higher Credit Limits

Card issuers expect business credit card holders to spend more than consumers; some cards don't have a preset spending limit. If you use your credit card to purchase more than office supplies and incidentals, this can be a useful feature.

Higher Late Fees

The 2009 CARD Act doesn't apply to business credit cards. The main difference business owners will notice is higher late fees. In 2016, the CARD late-fee cap was $38, though business credit card late fees can be as much as $49, according to a fee survey conducted in 2015 by CreditCards.com. However, some of the best card issuers extend CARD consumer protections to their business customers. As with any business service, you should read the terms and conditions before signing up so you understand your obligations.

Lower APRs

Business credit cards usually have lower APRs than consumer cards, according to CreditCards.com's Rate Report. However, rates can be more volatile, as business credit cards aren't subject to the CARD Act and issuers aren't required to provide notification when they raise your rates.

Common Business Credit Card Questions & Answers

Have a business credit card question of your own?
Ask an Expert

How do you manage corporate credit cards?

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Receipts - the #1 pain of bookkeepers is getting substantiation from cardholders. I would suggest a cardholder policy that they sign that they must provide receipts for everything over $25 along with a policy stating thresholds of acceptable spend for meals and entertainment, hotel stays, etc. Aggregate vs. Individual limits - your company will have an aggregate credit limit (the amount of total credit the company has) that will usually not be the sum of all the individual limits (each...

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The universe is moving towards mobile - EVERYTHING. Therefore you have to keep up with current technology. There are plenty of portals which are protected and encoded for protection against ID theft. Don't be scared. Paypal is a perfectly acceptable option and its basicly free and super easy to set up. It also has some great options for small business owners such as auto invoicing etc. Download the app onto your phone and you can accept cards straight from your mobile device. Bam.

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I'm not a big fan of giving employees expense cards, unless they are vetted and you can be sure there won't be issue. Having the employee submit a receipt and request for reimbursement forces them to do better receipt logging. As far as how many credit cards you should open, I can't provide much there. Just keep it simple and don't play the Points Game. Focus on building value for your customers and you'll make more money than the points will give you!

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Business payment history is the lion's share of what goes into your business credit scores. Other factors are outstanding judgments, liens, etc. But the big one is payment behaviors. Pay on time or early, as in full as you possibly can (i. e. go beyond the minimum amount to as full as your budget can stand), and that will help build your business credit. Another piece of the business credit puzzle (it happens to be true for consumer credit as well) is to check your reports - not just...

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