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How to pick a business credit card

Learn how to choose a business credit card that suits your needs and maximizes your reward benefits.
Written by Mandy Sleight, Contributor

Businesses of all shapes and sizes can benefit from a business credit card. It can make tracking expenses easier while also offering benefits like business management tools, free employee cards, integration with accounting software, and more. Why not use a credit card as a  tool to help your business? By understanding how to pick a business credit card, you can find the right one to make your business expenses more worthwhile.

With so many options available, it can be hard to choose the best business credit card for you. Taking the following steps can help you decide which card will offer the most incentives and perks to fit your business needs.

1. Understand credit card basics

While personal and business credit cards perform the same function, there are some differences you need to consider.

  • Most business credit cards offer owners the ability to open employee cards, often for free. You can set spending limits and track purchases while earning points and other incentives for their transactions. This can also make it easier by not having to reimburse employees for personal expenses on their own cards.

  • Don't mix your business and personal expenditures. Always keep your personal spending on your personal cards and your business spending on your business cards. It will make tax time easier and minimize personal liability for business losses.

  • The Credit CARD Act of 2009 provides consumer protections on personal credit cards, but not business credit cards. Make sure to pay your statements on time and in full.

  • You may have to supply your social security number and personally guarantee the business credit card. This means you are personally responsible for the balance if the business won't pay. Your credit score could also affect what interest rate and card you're eligible for, especially if you don't already have established business credit.

  • There are differences between small business credit cards and corporate credit cards. Small business credit cards have low or zero annual fees, offer employee cards, have better rewards programs, and allow any size business to apply. Corporate credit cards don't affect personal credit, have higher annual fees and lower rewards, and are reserved for corporations and LLCs. 

These are just the basics on business credit cards. Weigh the pros and cons of different business credit cards and consider if your business is financially stable enough to meet the terms and conditions.    

2. Review your business's needs and transactions

When you're ready to pick a business credit card, the last six to nine months of expenses can help you narrow down your choices. Virtually all business credit cards offer features and perks for certain categories, like travel, shopping, restaurants, and gas. If your business spends most often in a few specific categories, there are business credit cards that offer the best rewards for those transactions.

If you or your employees travel on business, consider travel rewards business credit cards. If you prefer a specific airline, you can also get branded business credit cards that offer additional perks. There are also gas cards for businesses if you travel by road rather than air. 

Even if your personal credit isn't in the best shape, you can still qualify for a rewards business credit card. You could also start out with a secured business credit card. Secured cards require a deposit to open the account, which serves as your credit limit. Once you've built up a good payment history, you can get your deposit back and increase your credit limit before you apply for an unsecured business credit card.

You can also get rewards for things like subscriptions, phone and internet services, and office supplies. There are cards designed for startups or new ventures and established businesses that need big shipping budgets. If you need to make a large purchase, some cards offer 0% APR for a few months to allow you time to pay it in full without interest.

By identifying how your business spends money and what it needs to function, you can figure out which type of business credit card offers the best perks and features for you.

3. Consider the pros and cons of an annual fee

While features, perks, and rewards are an important part of picking a business credit card, they aren't always free. Some business credit cards come with a hefty annual fee that could dissuade you from considering the card. But higher annual fees usually come with larger sign-up bonuses and rewards rates. 

To know if the annual fee is worth it, you'll have to do some math. Review how much value you could get in a year from your business's expenses in rewards, perks, and bonuses. If the value is more than the annual fee, it might be worth it.

FAQ: How do I apply for a credit card?

Once you've picked your business credit card, it's time to apply for it. Before you open the application, you'll need to have some information ready:

  • Full name

  • Date of birth

  • Social security number

  • Tax identification number for the business

  • Business type

  • Annual and projected revenue

  • Monthly expenses

As the business owner, your personal information will provide a personal guarantee that you will handle all payments if the business doesn't pay. Most credit cards require good or excellent credit -- which is a credit score of at least 670 -- so your credit score factors into whether you'll be approved. Some business credit cards report to personal credit bureaus, so defaulting on one could affect your personal credit.

Once you're approved, you can start using your card and earning rewards! If you're denied, you may need to work on your personal or business credit before you apply for another business credit card. 

FAQ: What should I look for in a business credit card?

When considering a business credit card, you should look at both the ways you spend money and your future expenses. Business credit cards come with a host of perks and rewards, including cash back, purchase and warranty protection, and employee cards. Examining your expenses to get a card that can maximize rewards and perks can help you choose the right card.

Beyond the perks and rewards, consider the APR and annual fee. If you don't pay the balance in full every month, the APR would be an important feature to consider when selecting a credit card for your business. The annual fee is a recurring expense each year you keep the card open, so if the rewards don't outweigh the cost, it might not be the best choice.

FAQ: Can I use my EIN to apply for credit?

When applying for a business credit card, you can use your employee identification number (EIN). With a small business credit card, your personal credit score may also be considered and you could be personally liable if the business doesn't pay the credit card balance.

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