A business credit card is a line of credit issued to a small business or sole proprietorship. They allow business owners to keep their business and personal expenses separate. By doing so, record keeping is easier, especially at tax time.
How Do Business Credit Cards Work?
Business credit cards operate just like a personal credit card, with the exception that the card may have a different rewards structure or offer different protections.
How Is a Business Credit Card Different From a Personal Credit Card?
The main way business credit cards differ from personal credit cards is in their lack of consumer protections like those in the CARD Act. Business credit cards may also report to business credit agencies and offer different rewards and benefits than personal credit cards.
How to Compare Business Credit Cards
With the many different types of credit cards available, picking one for a business can be a lengthy process. Prospective cardholders have multiple factors to take into consideration before landing on a best-pick.
Annual Fee
Annual fees often cover membership benefits offered by cards. Prospective cardholders should calculate how much they’ll need to spend in order to accumulate enough rewards or cash back to offset that fee.
Earnings Structure
Some cards have high points per dollar offers, but when it comes to redeeming the points, they fall flat. Be diligent in evaluating each point value and be sure you’re looking past the number of points in favor of what the points will actually get you.
Intro APR
Many cards will offer not only a welcome bonus, but an intro APR. What amount of time will the card offer that teaser rate? Make sure you will be able to pay off any large purchases before the interest rate applies.
Ongoing APR
If your business needs to carry a balance, looking for a card with low interest rates, or interest-free promotional periods, can save money. Always remember that APRs are determined based on your creditworthiness, so the lowest interest rate presented in the terms and conditions might not be what you’re granted upon approval.
Financing Options
Is the card a charge card or a credit card? A charge card will need to be paid off monthly, while a credit card will allow you to carry a balance with interest. Make sure you know which type of card you are applying for and that it will best fit your needs.