What Are The Benefits Of A Business Credit Card? (2024)

Credit Card Rewards Expert

Updated: Oct 31, 2023, 1:29pm

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Business credit cards are geared and tailored toward business owners. Whether you own a small or start-up business, are a sole proprietor or are the owner of a large multinational company, you can apply for and benefit from a business credit card. Depending on your business needs, some cards may be a better fit for you than others.

Most companies use credit cards for business expenses, such as buying office furniture and supplies or traveling. However, many of these cards have terms and conditions that prevent people from using them for personal expenses.

Having a business card helps you establish business credit, which lenders and other banks consider if you ever apply for a loan for your company. If you need to make any large purchases, various cards provide short-term financing.

Business credit cards come with many benefits compared to other forms of financing and payment methods.

Compared to loans or equity investments, one major benefit to a business card is that applications are relatively short and straightforward and approval may come instantly. For businesses looking to add access to capital, it’s hard to find a more convenient option than a business credit card.

Another benefit to business credit cards is having the ability to easily review transactions, track expenses and document activity over time. Many cards have built-in integrations to other reporting tools to make your finances a breeze.

Lastly, business cards facilitate payments more easily than other methods. Credit cards are accepted nearly everywhere and may even earn rewards for expenses your business must cover anyway. It’s also usually easy to add employee cards if others need convenient payment options as well. Plus, compared to debit cards, business cards can include extra stop-guards for your business such as extended warranties, fraud liability or purchase protection.

As long as you want to keep your personal and professional costs separate and have the credit needed to qualify for a particular card, a business credit card is probably a good fit. It is not necessary to have a storefront or a team of employees, although some cards may request proof of income.

The following types of businesses should consider getting a business credit card:

• Corporations
• Large business owners
• Limited liability companies
• Small business owners
• Sole proprietors
• Freelancers

Just like anything else, there are pros and cons of business credit cards.

Business Credit Card Pros

A few of the most popular benefits of a business credit card are:

1. Keep personal and business finances separate: Keeping your personal and business expenses separate can make your financial life much more simple.
2. Less impact on your personal credit: Most business credit cards won’t report the balance to your personal credit as long as the account is in good standing.
3. Boost your business credit rating: Business credit cards can make a massive difference to your credit rating. Your business can establish credit by making timely payments. If you want to be eligible for long-term finance in the future, getting a credit card is a great way to do so.
4. Improve business cash flow: Having a healthy cash flow is important for any business. By having access to credit, you can pay for expenses throughout the month and take advantage of your credit card grace period to increase your access to cash.
5. Set up personalized spending controls: You can monitor employee spending patterns by adding employee cards to your account. Many business cards also offer the ability to set spending limits on employee cards.
6. Numerous company-specific rewards: The cash-back percentages, travel benefits, mileage earning and welcome bonuses that come with business credit cards may be higher than with personal credit cards and also typically will target business-specific categories.
7. Travel and other business-related perks: Many premium business cards offer perks such as airport lounge access, discounts on shipping or software services or car rental insurance for business travel.

Business Credit Card Cons

Business credit cards also have some disadvantages.

1. Fewer consumer protections: Legally speaking, business credit cards do not have to offer users the same CARD Act safeguards that personal credit cards do. Some consumer protections have, however, been voluntarily adopted by many business credit card issuers.
2. Personal credit check and guarantee: Almost all business credit cards require that an applicant’s personal credit history be checked. This is due to the fact that the applicant for the card is often responsible for any card balance that the merchant is unable to pay.
3. High APRs: A business credit card is probably going to be much more expensive to use to finance company expenses than an SBA loan or a standard loan. Like the majority of credit cards for personal usage, business cards tend to offer high regular APRs.

While you can think of a business credit card in a similar way to a personal one, there are key differences you need to take note of. If you want to build your company’s credit, keep your personal and business finances separate and earn rewards, you should strongly consider applying for a business credit card.

However, think carefully and be wise when making a final decision as you want this to benefit you and not become a problem in the future. As long as you spend wisely and take care of your credit, as you should with any credit card, you should be able to benefit from the various perks and rewards that a business credit card has to offer.