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Business credit cards are similar to personal credit cards: You can borrow money from them and repay it on a regular basis. Business credit cards are designed for entrepreneurs and offer features like employee cards, rewards, or free office supplies. Other benefits are also available with business credit cards. On-time payments help build your business […]

Business credit cards are similar to personal credit cards: You can borrow money from them and repay it on a regular basis. Business credit cards are designed for entrepreneurs and offer features like employee cards, rewards, or free office supplies.


Other benefits are also available with business credit cards. On-time payments help build your business credit. They’re great for keeping your personal and business finances separate.


A business credit card is what?


Business credit cards are revolving lines of credit. You can spend up to an amount and then pay back some or all the debt. You can use this to make the purchases that you want, even if your cash flow fluctuates.

You can technically use a consumer card for business expenditures. Card issuers do offer products for small business owners. They often have higher credit limits compared to personal cards, and they make it easy to identify potential tax deductions.

Qualifying for business credit cards is one of the easiest forms of financing. Your personal credit score is a major factor in determining your eligibility. This can mean that business credit cards are more affordable for small businesses or new companies.


What is the business credit card?


Credit cards for business are similar to personal cards. You should use your business credit cards only for business-related expenses. This is for liability and bookkeeping purposes.


In general, this is how you use a credit card for business:


  • Charge your business expenses on the card.


  • You will receive a statement stating how much money you borrowed during the period of statement and what you have to repay.


  • If you can’t, pay the balance off in full. You’ll be charged interest on any remaining balance if you don’t. The annual percentage rate (APR) for business credit cards ranges from 20 to 30 percent.


  • Spending can earn you rewards like airline miles or cashback.

Charge cards for business are also available to owners of businesses. Charge cards do not have credit limits but they require that you pay off the balance in full each month to avoid penalties. These cards are best suited to businesses that have a high cash flow and want to maximise their rewards.


Business credit card benefits

Building business credit with credit cards is a great way to build credit. Your payment history is reported to the business credit bureaus by your credit card company. Early or timely payments will help you build your business’ credit rating by strengthening your history.

Finance purchases when needed. You may find that your business does not have the cash to make big purchases or stock up on items while still meeting day-today costs. Credit cards can be used to spread the cost of large purchases over time, especially when they have a low-interest intro rate. They also allow you to keep purchasing what you need in slow periods.

Business travel cards can reward you for spending. They offer benefits like airport lounges, airline miles and hotel points. Cash back credit cards offer a certain percentage on your spending, either all over or just in specific categories. This is usually credited or deposited as cash at the end each month.


The drawbacks of Business Credit Cards

The Card Act does not cover them. Credit Card Accountability, Responsibility and Disclosure Act (Card Act), passed in 2009, created new protections for consumers using credit cards. These include limiting fees on credit cards and preventing sudden interest rate changes. The rule does not apply to business cards, so interest rates may change without warning. You might also be faced with fees you aren’t used to paying on your personal cards.

These are more expensive than alternative forms of funding. Consider a line of credit or a loan for your business if you are looking to fund large purchases that you can’t likely pay off in one billing period. These products may be harder to get than credit cards for businesses, but their interest rates are usually lower.


Do you need a credit card for your business?

Businesses of any size can benefit from business credit cards. If you are a sole proprietor with an extra job or a small company with several employees, you may qualify for a credit card.