The Best Business Credit Cards in 2023: Pros, Cons, and More
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Business credit cards have the sole purpose of helping companies, including yours, make use of and benefit from everyday spending to get rewards in return. Such cards offer rewarding programs, expense tracking, money-saving perks, and more to help almost every single business owner out there, no matter who you are; if you are a freelancer or a registered business owner, such credit cards are designed for you whether your business is a start-up or a big one. So to make things easier for you, our experts did all the heavy lifting to bring you all the benefits of business credit cards and help you find the right card for you.
What Are Business Credit Cards and How Do They Work?
Business credit cards are not that different from personal credit cards; the only difference is that they are designed especially for business needs. These cards can provide business people with rewards on their everyday spending on purchases made for their companies, help them track their expenses and cover such expenses during seasonal periods, help them build their business credit, help business owners qualify for a lower credit card APR, and make it easier for them to borrow in the future.
So how do these credit cards work?
Business credit cards and personal (consumer) credit cards work pretty much similarly; you apply for a credit card and get approved for a specific credit limit, which will be your spending maximum on that card. As you make purchases on that card, your available credit will start decreasing; in turn, every time you pay off your monthly statements, your credit will increase. You will find that some of those business credit cards will require you to give a personal guarantee; this means that you, as a business owner, will promise that even if your business cannot repay its debts, you will personally pay down the credit card balance.
Business credit cards are designed to help businesses gain back some of the money paid. For this purpose, these credit cards usually come with generous rewards programs, sign-up bonuses, money-saving perks, and more. Even though all credit cards offer rewards and perks, business credit cards customize their rewards to help businesses in the best way by offering the highest rewards on the categories in which they spend the most. When you use a business credit card, you will be able to save money on any eligible expenses, including business trips, hotel stays, copier ink, business events, and so on. Typically, rewards will come in the form of cash back or travel miles.
There are multiple types of business credit cards that you can choose from, and depending on the type you settle on, you will get certain benefits and perks.
Types of Business Credit Cards
You should do thorough research to understand all the benefits that come with business credit cards to determine the right one for your business to get the most out of it. Below are the main types of business credit cards and an explanation of how each one can help you:
Cash back business cards
These cards are best for netting a return on your business’ everyday spending. Just like personal cards that offer cash back, cash back business cards are a great option for anyone looking for a simple, easy way to get money back for the purchases they make daily. Some cash back credit cards offer money back at a flat rate on all purchases made for your business, while others offer higher cash back rates on certain categories in which you spend more.
Travel rewards business cards
These cards are best for business owners who want to save money on business trips. If you own a business that requires a lot of traveling, then a business travel credit card may be the best choice for you; you can make use of offers and rewards that give you extra miles, lounge access, travel insurance, and more travel-related perks. And even better, you can increase the value of the points you get with these cards by redeeming them through membership programs designed by issuers. For example, you can redeem the points you earn with the American Express Blue Business Cash™ Card through the American Express membership rewards.
Balance transfer business cards
These cards are best for businesses that need to manage and consolidate their debts. So if you own a business that has fallen into high-interest debt in the past, you can transfer the balance to a new business credit card account with a lower APR or an introductory 0% APR so you can pay all of your debt or as much as you can within the first months to save as much money as you can.
Zero-interest business cards
These cards are best for business owners who want to finance large purchases over a longer period of time. If you want to finance a business, you may need to spend a lot of money on raw materials and any other expenses that your business might need. If you resort to a credit card with zero interest, it will most likely have an introductory period with a 0% APR on purchases, balance transfers, or both. 0% intro APR can last between 12 to 21 months, which will give you, as a business owner, the ability to purchase materials over a long period with zero interest. Your best-case scenario would be paying down all of your balance before this zero-interest period is over.
These cards are best for business owners who look to maintain their financial discipline. Charge cards are similar to personal credit cards. The only difference is that instead of having a pre-set spending limit, charge cards are approved based on some factors, including your financial history, spending habits, and more. You should also always pay down the balance in full and on time. It is important to make sure that your business has the financial means to pay the charges every month because missing payments will result in fees and penalties.
Pros and Cons of Business Credit Cards
Business credit cards have so many advantages that should be enough reason for you to consider them. However, just like anything else, they have their own disadvantages that you need to be aware of to be able to weigh your options and make a well-informed decision.
- Easier Qualification— one of the best things about business credit cards is that qualifying for one is a lot easier than qualifying for a line of credit or bank loan, especially if the business owner does not yet have a well-established credit history to qualify for them.
- Convenience— business credit cards are a great financing tool; they allow business owners to access funds for any needed purchases or cash withdrawals. This can be very easy, quick, and simple with business credit cards; of course, much easier than dealing with checkbooks.
- Ease of Online Transactions— business owners make online deals with other business owners, vendors, contractors, service providers, suppliers, and so on; credit cards make all the online transactions easier, safer, and more reliable.
- Works as a Financial Cushion— business owners can find their needed financial cushion in a business credit card; when your company is behind on accounts receivables or if your sales are not bringing enough revenue leaving your business behind on cash, credit cards can help with that.
- Rewards— you will come across many business credit cards that offer generous rewards programs and incentives. Such rewards can come in the form of airline miles, lounge access, shopping discounts, hotel stays, and more. A lot of these credit cards also provide incentives in the form of cash back on some or all purchases.
- Bookkeeping Assistance— many business credit cards offer cardholders an online platform to keep a record of their accounts and get end-of-year reports and summaries to understand their spending habits, track & categorize their expenses, and manage their accounts. This will also help further monitor where and how much employees spend and make it easier to pay taxes.
- Credit Building— if you use your business credit card responsibly and follow all the tips on the best practices, like paying your bills on time, in full, or paying more than the minimum amount due, not going over your credit limit, and so on, you will be able to build a positive credit report. Building your credit report will help you qualify for a line of credit or a bank loan in the future. It can also help you qualify for credit cards with lower interest rates. Irresponsible behavior, however, can damage your credit and disqualify you from having credit cards; this includes missing payments and going over the credit limit allowed, which can trigger a fee or a penalty. This brings us to the next section: the cons.
- Can Be Expensive— it is true that business credit cards are easy to use and come with many perks; however, this comes at a price. Credit business cards usually charge a significantly higher interest rate than a bank loan or a line of credit. And as mentioned before, going over your credit limit or missing payments can result in penalties, which can be in the form of increased interest rates. This can also happen if you do not carefully monitor what your employees spend, as you may easily end up going over the credit limit.
- Legal Liability on a Personal Level— when you sign up for a business credit card, the issuer may require a personal liability agreement; this means that you would need to provide a guarantee to repay your debt personally. So, if at any time your business is late in making the needed payments, it will negatively reflect on your personal credit report and might result in your inability to borrow money. This can also mean that you will start paying higher interest on your personal credit cards.
- Security Issues— you need to be very cautious to ensure that your cards or card information is safe from being stolen by employees, vendors, contractors, or anyone who can get their hands on them. You also need to make sure your employees, who are authorized to use your credit cards, do not abuse these cards for their personal use. It is also important to make sure your employees are careful not to let any of these cards get hacked while making online transactions. That being said, you should know that business credit cards do not offer the same level of protection that consumer credit cards offer. For example, you may not be provided the same level of assured services when disputing billing errors or making any merchandise returns. So before signing up for a card, make sure to read the terms and conditions very carefully.
- Fluctuation in Interest Rates— when you get a bank loan or a line of credit, your interest rates will be fixed. However, when you use a business credit card, your issuer can change your interest rate based on your card usage, which means your rates can flare up if you do anything wrong.
The Best Business Credit Cards in 2023
After carefully going over all the pros and cons of business credit cards, and if you find that they are the right choice for you, you should start looking for the best credit card that fits your needs. To make it simple, we have created a list of our top picks for business credit cards in 2023:
American Express Blue Business Cash™ Card
- This card offers a promo period of 12 months with an introductory APR of 0% on purchases from the date of account opening. After that, you get an ongoing variable APR of 18.24% - 26.24%, based on your creditworthiness and other factors which will be determined when you are opening your account.
- With this card, you earn a $250 statement credit after you make $3,000 in purchases on your Card in your first three months from account opening.
- You earn 2% cash back on all eligible purchases on up to $50,000 per calendar year. After that, you get 1% cashback. Your cashback is automatically credited to your statement.
- With Expanded Buying Power, you have the chance to spend over your credit limit, which you may need at some point, as your business keeps changing and growing. But keep in mind that while you can go over your credit limit, the amount you can spend is not unlimited; it all depends on your spending habits, credit history, your financial resources if you make your payments on time, and more.
Terms and conditions apply.
All information about American Express Blue Business Cash™ Card has been collected independently by Several.com.
Ink Business Cash® Credit Card by Chase
- This card has an introductory APR of 0% on purchases made within the first 12 months of account opening. After that, you get a variable APR of 13.49% of 19.49%
- After spending $7,500 on purchases in the first three months from account opening, you earn a $750 bonus cash back.
- You earn 5% cash back on the first $25,000 spent on office supply stores and internet purchases. In addition to that, you get 2% cash back on the first $25,000 spent at gas stations and restaurants. And on top of that, you get 1% cash back on all other purchases.
- This card has no annual fee.
Terms and conditions apply.
CitiBusiness® / AAdvantage® Platinum Select® Mastercard®
- This card has an ongoing variable APR of 15.99% to 24.99%.
- You earn 65,000 American Airlines bonus miles after spending $4,000 on any purchases made within the first four months of account opening. In addition, your first checked bag will be free on any domestic American Airlines.
- You also get 25% savings on American Airlines inflight Wi-Fi and can enjoy preferred boarding when using your credit card.
- Earn 2 miles per $1 spent on all eligible American Airlines purchases.
- Earn 2 miles per $1 spent on all purchases made at car rental merchants, gas stations, telecommunications merchants, and cable and satellite providers.
- Earn 1 mile per $1 spent on any other purchases.
- This card has an annual fee of $99, waived for the first 12 months, and no foreign transaction fees.
Terms and conditions apply.
When you get approved for the credit card you want, make sure to think well before deciding who should be authorized to get a card; many companies have lost control of their credit card spending after giving credit cards to all employees. So, develop a screening strategy to determine which of your employees should hold a card.
Even after giving the credit card to a select number of employees, you should take a further step by setting a spending limit; you can set a limit and have it written down and ask each employee to sign that they agree on not going over the limit. After doing that, you should make use of the online tracking tools to keep a record of all the money spent to make sure it is all under the credit limit allowed.
If you make sure to follow all the good practices of using a business credit card, then you will have made the right choice by signing up for one.
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This article includes the author's opinions, reviews, and analyses alone that have not been reviewed, endorsed, or approved by any of these entities. Please note that the information regarding each card's offer is believed to be accurate as of the date it was written and as card offers change regularly; reasonable efforts are made to maintain accurate information.