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Business Credit Cards

Being a small business owner is one of the best decisions I’ve ever made– but it was far from the last big one I’ve ever made. When you’re a new small business, one of the first questions that comes to mind is, “how do I handle my business’s finances?”. This might leave you wondering how to structure your earnings, what bank accounts to open, and of course, the question I get often “should I open a business credit card?”.

Today, I’m breaking down why I use a business credit card, its benefits, and how to decide which business credit cards are right for your small business.

Whether you’re building a side hustle, or already running a successful full-time business, you’re likely getting mailer after mailer of card offers for your small business.

You might be thinking “why do I need a business credit card?” especially if you already have a personal card you love.

I talk frequently about only using credit cards in my personal life, but what about when I’m making business-related purchases?

It should come as no shock to you that I spend in my business just like I do in my personal life –– credit cards only. 

My reasoning for this is the same regardless of the type of credit card you’re utilizing –– credit cards offer better fraud protection, better rewards for the things I love like travel and dining, and help me build my credit score. I use credit cards for every bill and expense I have and pay them in full at the end of each month. This system lets me take advantage of the full offerings of each card, and never puts me into debt.

By utilizing my credit cards this way I’ve been able to take free trips, earn cash back, and take advantage of killer perks. Plus, my credit score is firmly in the excellent range.

I have a whole list of recommendations for personal cards, including cards for students, frequent flyers, and of course, business owners. But there are important things to keep in mind as you’re researching and applying for a business credit card.

Business size

There’s no “too small” when it comes to business credit cards. You can be in start-up mode and bringing in a few hundred extra bucks a month or the CEO of multiple seven-figure businesses like me. 

Keep in mind, however, that the size of your business is a factor in choosing which business card is right for you. For instance, many cards are annual fee-free, and you’ll likely want to look into these options if you’re still in the “side hustle” phase. 

When you’re building a business, it’s tempting to want the best of everything, but you’ll need to take a realistic look at where your business finances are and make sure that you’re not losing money just to have a credit card. Especially when there are so many incredible business card options with no annual fees!

The good news is that as your business grows and changes, your preferred credit card can, too!

Making the math work for you

Another important factor to consider is how much you’ll need to spend to take advantage of credit card introductory offers or to make the annual fees worth it. For example, as of the date this article was published, the Chase Ink Business card has an incredible introductory offer of $750 in bonus cash if you spend $7,500 in your first three months. A great offer…if you’re making and purchasing enough to warrant spending $7,500 in three months. 

The last thing you want to do both for yourself and for your business is to rack up thousands of dollars that you don’t have the ability to pay back before the interest begins to pile on.

I personally use and LOVE the Chase Ink business card, but I get a lot of mileage out of it, and by the time the annual fee rolls around, it has more than paid for itself.

There are plenty of options for business owners who are looking for annual fee-free cards or cards with lower thresholds for perks. 

A great annual fee-free card with a lower introductory offer is the Capital One Spark Select for Business. As of this article’s publishing date, this card offers a $500 cash bonus when you spend $4,500 in your first three months, which might feel more attainable for the smaller side of small business owners. Another great bonus for this card? No foreign transaction fees! 

Both the Chase Ink for Business and the Capital One Spark card offers 1.5% cash back on every purchase, so you’re still getting great benefits regardless of the card you choose. 

The importance of timing

What if you don’t have consistent spending that matches up with what you need to take advantage of these intro offers? 

Not all is lost. A great tip, whether you’re looking at business credit cards or personal, is to make the timing work for you. 

For personal credit cards, this looks like opening a card before a big trip, home project, or large events like weddings. If you’re already planning to spend the money you might as well put it on your credit card and take advantage of those incentives!

For business, this is a little trickier, but not impossible by any means. Notice the fluctuations in your business –– do you have a busy season coming ahead where you know you’ll be spending more on supplies? Looking to replace your wheezing computer or another out-of-date tech? Planning to attend a conference or just building a busy season of business travel? This is a great time to sign up for the card you’ve been eyeing.

A warning: credit cards are not business loans or emergency funds

I am and will forever be a big supporter of using credit cards for all the reasons above and more, but not without the caveat that a credit card is a tool that needs to be used properly.

Signing up for a business credit card as a starter loan or an emergency fund for your business almost always goes south. The incentives that drove you to get your new card in the first place can become void if you aren’t paying your card balance off IN FULL every month.

If you’ve struggled with managing your debit or credit cards in the past, it’s worth it to wait to get a credit card until you know you can manage the funds without going into debt. 

Resources

Looking for more resources on credit cards? I recorded an entire credit card episode about credit cards and credit scores for the Financial Feminist podcast.

I get asked all the time: what are your favorite money management tools?

Treasury: We’re building a one-of-a-kind, non-judgemental community where you can learn exactly how to invest, build wealth, and receive exclusive access to Her First $100K.

Chase Freedom Unlimited: My go-to travel and dining rewards card that I recommend.

Deserve: The card I recommend for building credit. Great for students.

Juno: Overwhelmed by your student loans? Juno uses the power of group buying to negotiate with banks to get members better deals on their student loans. You can join Juno for free today to access their deals and find out how much money you could save. Rates for refinancing start at 2.25% fixed, with up to $1,000 cashback.

Personal Capital: The tool I check daily, Personal Capital is the best tool for tracking your net worth and your progress towards goals like saving, debt payoff, and (yes!) $100K. 

The $100K Club Facebook Group: Need some honest money conversations in your life? Join my free community to get your burning questions answered.