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Susan earned a BA from Michigan State University and her MBA from St. Louis University and has spent more than 25 years as a financial copywriter. She holds 11 financial industry designations, includi...
With years of experience in corporate marketing and as the Executive Director of the American Chamber of Commerce in Qatar, Keri is now Editor-in-Chief at UP, overseeing daily content operations and r...
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If you own or run a company, it’s likely that you have at least some business-related expenses. Rather than paying these costs outright with a check or cash, though, there could be some definite advantages to using a business credit card.
But before you sign up for just any card, follow a few key steps to determine how to get a business credit card and which card would be best for your particular objectives.
How To Get a Business Credit Card
If you’re wondering how you can get a business credit card, the good news is that in many cases, it’s easier than you might think! Using a business credit card can also come with a number of nice perks, like cash-back, travel benefits, or other rewards.
In addition to simply paying your expenses, a business credit card can be used for a number of other financial-related needs, too. These can include alternate financing strategies in lieu of taking on business loans.
So, how exactly do you go about securing a business credit card?
5 Steps for Choosing the Right Business Credit Card
Narrowing down the right business credit card can be quick and easy if you work through the following 5 steps:
1. Total Monthly Spend
The first step is to determine approximately how much your company spends on a monthly basis. In some cases, it may just be the cost of your internet service and a few new ink cartridges.
In other cases, though, you could have high overhead expenses, along with the cost of inventory, supplies, and marketing materials. And don’t forget to factor in travel if you’re on the move — this can really add up!
Hot Tip: As a part of your business credit card decision, ensure that you don’t let large balances rollover if you aren’t able to pay off the statement in full every month. Otherwise, you could find that you’re stuck with escalating interest charges over time.
2. Type and Categories of Expenses
Having an approximate expense figure is key to pointing you in the right direction in terms of the perfect card, but so are the types of expenses you have.
Savvy business owners will ascertain their “categories of spend” and look to sign up for a business card that rewards you in those categories. For example, if you spend a lot on online advertising (such as Facebook or Google Ads) then a card like the Ink Business Preferred® Credit Card will earn you 3 points for every $1 spent on that type of purchase.
This can make a significant difference over the course of a year vs. putting that spend on a card that just earns you 1 point per $1 spent on advertising. So, it’s critical to determine where you’re spending your money and allocate that spend to cards that reward you for doing so. This is one of the reasons that savvy business owners can earn so many points — by rotating the use of 4 to 5 business cards you can ensure that each $1 you spend on your business is earning 1.5 to 5 points.
Some of our favorite business cards are as follows:
As you go through the process of getting a business card, you should determine whether or not a credit card or a charge card will best fit your needs. Although the 2 types of cards have some similarities, there are also some distinct differences.
One primary difference is that there is typically no pre-set spending limit on a charge card. Also, there is no interest charged to charge cardholders because you’re required to pay back the entire balance in full every month.
If your payment is late, you may be dinged with a sizeable late fee… or possibly even a suspension of your charge card.
In addition, many charge cards are only accepted at certain locations like retail stores or gas stations (typically referred to as “branded” cards), while credit cards like Visa and Mastercard are generally accepted anywhere.
4. Do You Want Rewards?
Having a rewards program associated with your business card can be a nice incentive. However, the rewards may come at a price.
For example, many rewards credit cards charge an annual fee. So, before you apply for a card, make sure that the potential rewards will meet or exceed any yearly fee you’re charged.
Put another way, you don’t want to sign up for a high annual fee travel card that offers luxury lounge access, like The Business Platinum Card® from American Express, if you hardly ever travel. Instead, it might make more sense to sign up for a lower annual fee card like the Ink Business Cash® Credit Card if you’re not a big traveler but you’re looking to get cash-back on your business spend.
5. What Do You Qualify For?
Even if you’re found the ideal business credit card, you will still have to qualify before you are issued a card to use.
Similar to when you apply for a personal credit card, the card issuer will typically check your credit report so they can determine your payment history, as well as your credit utilization ratio and the average length of your other credit accounts. This can be done for both your personal credit score as well as your business credit score (if you have one).
Hot Tip: If you have trouble qualifying for a particular business credit card, you could try applying for a card that’s affiliated with your current bank or other financial institution where you already have a financial relationship built.
How To Apply for a Business Credit Card
Applying for a business credit card is pretty similar to applying for a personal credit card. The card application will ask you for personal and financial information, but there will be some additional information fields, too:
Name of the business
Type of business
Your role in the business (i.e., owner, founder, etc.)
Tax ID number (which might be your Social Security number) or Employer Identification Number (EIN)
Years in business
Number of employees (if applicable)
Annual revenue
Estimated monthly expenses
Final Thoughts
Because all businesses and financial needs are different, there is no single “best” business credit card across the board. To determine the card that is right for you, review several potential options — including spending limits, rewards offered (if any), annual fee, and qualification factors.
For rates and fees of The Business Platinum Card® from American Express, click here.
Featured Image Credit: StartupStockPhotos via Pixabay
Frequently Asked Questions
The best rewards points will really depend on what you’re looking for regarding perks. For instance, some cards offer you “points” when you spend on the card — and the point value may even vary, based on where you are spending. You can then “cash in” your points for a plethora of items like books, clothes, and other types of merchandise.
Other cards offer travel-related options such as points to be redeemed for airline tickets or hotel stays. Others offer cash-back, which may be used for paying part of your monthly balance.
All credit card issuers will want to know information about you and your business. So, your name, contact details, and Social Security number will be required, as will your credit score. In addition, the card issuer will usually want to see the amount of revenue that your company is bringing in. This can help them determine whether or not you have the financial wherewithal to pay your business credit card balance.
If your business is just starting out, though, you may still have options when it comes to getting a company credit card. In this case, the card issuer will typically want to know the amount of your personal income.
When applying for a business credit card, all card issuers will typically consider both your personal credit score and your business credit score (if you have one). However, even though the card you are applying for is intended to be used for business purposes, it is usually your personal credit score that is weighted more heavily in the decision.
This is especially the case if your company is relatively new and you don’t have much (or any) business history to show.
Business expenses can vary significantly from one month to the next. There are some cards available that have a large 5- or 6-figure spending limit, which gives you some major flexibility.
On the other hand, business charge cards will usually have an unlimited spending limit — but you also need to pay off the balance of the card in full every month. Otherwise, you will be docked with a late fee and/or higher interest, and possibly even suspension of your business charge card usage.
You may be able to find a “best of both worlds” business card, that gives you the option to either pay your statement in full every month or to defer a portion of your bill with no penalty.
While they may initially appear similar, there is a difference between a business credit card and a corporate credit card. The biggest of these is the fact that with a business card, the business owner — and oftentimes their credit score — is on the hook if the bill is not paid. With a corporate credit card, though, if the bill is not paid, it is the company itself that is responsible for paying it.
Just like with your personal credit card(s), your business credit card(s) could be at risk of identity theft. In fact, because business cards often have a higher credit limit, these can be a treasure trove for criminals to get hold of.
To help prevent or combat identity theft with your business credit card, be sure that you keep a close watch on your statement. If you see any charges that were not authorized, contact the card issuer immediately to report them. In most instances, you are not liable for any fraudulent charges.
While writing about finance and insurance isn’t something that keeps most people awake at night, it is what Susan Wright has focused on for more than 25 years. As a financial copywriter, Susan has an eye for money-related details such as credit and savings, and she loves to pass along helpful information to consumers. Susan holds 11 financial industry designations (including CLU, ChFC, RHU, REBC, ADPA, CITRMS, CIPA)as well as several licenses.
Disclaimer: Any comments listed below are not from the bank advertiser, nor have they been reviewed or approved by them. No responsibility will be taken by the bank advertiser for these comments.
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