How to Choose a Business Credit Card
Every small business owner knows firsthand how hard it is to run a business. The demands on your personal time as well as your finances feel burdensome and never ending. Whether you're an entrepreneur, just launching a business or have run a business for a few years now but have used your personal credit card, a prudent financial move is to open a business credit card.
A business credit card buffers your exposure to receivables, tracks spending and lets you separate business finances from your personal finances. They come with other benefits too. Business credit cards often have rewards programs that appeal to the needs of business owners, and you can issue cards to employees to streamline business-expense processes.
Business credit cards are not the same thing as consumer credit cards. For that reason, we offer several suggestions to help you find the best credit card for your business. Three credit cards that you can consider are the American Express OPEN for Business, AT&T Universal Business Rewards Card and the CitiBusiness AAdvantage Card.
Best Convenience Features or Rewards
Small business credit cards often include business-related features so you can spend less time managing your business's finances and more time doing what you love: running your business. For example, some business credit cards track expenses online, so you can quickly and easily create expense reports. Some cards integrate with QuickBooks. Others let you file receipts digitally using a mobile app.
Traveling can be a hassle sometimes, especially if you have to do it for your job. Flight delays and scrambling to make last-minute reservations threaten work productivity, not to mention are very stressful. The American Express Open line of business credit cards grants you access to airport clubs all over the world and amenities in hotels and resorts. With the American Express International Airline Program, you can receive companion tickets for both first-class and business-class airfare. If your company requires you to spend a lot of time in the air, this line of business credit cards may serve you well.
Best for Small Business Rewards
Some business credit cards enroll you in office-supply and business-related savings or rewards programs. Some also provide various protections against identity theft, fraud and employee misuse.
Business cards generally offer rewards programs and member benefits of some sort, but sometimes those benefits don't align with actual business needs. AT&T's Universal Business Rewards Card offers benefits designed to help small businesses.
Best with No Annual Fee
Another item to check is your annual fee, and it gets complex here. Some credit card companies don't charge an annual fee at all, like the AT&T Universal Business Rewards Card, whereas others do. Others have an upfront fee but do not charge for the ensuing years. And some cards may not charge an annual fee for the first year but then may charge a fee the following years.
Bank of America offers business credit cards with a relatively low annual percentage rate (APR) and useful account features. You can get extra cards and issue them to employees, and you can establish the credit limits for each employee card.
Best Employee Credit Cards
Another useful feature for business cards is the ability to have separate cards for employees, like the CitiBusiness AAdvantage Card. Many business credit card companies let you set spending limits for employees. This can help ensure that your budget stays intact. Be sure to check on fees, though. Some card companies charge for extra cards while others offer them for free.
Citi has teamed up with American Airlines to create the AAdvantage line of business credit cards. These cards offer airline miles as their main perk. If you or your employees do a lot of business travel, this card has many benefits. However, your airfare must be through American Airlines.
Pay Attention to the Terms & Conditions Agreement
As any small business owner can attest to, credit cards can be a safety valve if you experience cash-flow crunches, and they do happen.
For those business owners considering getting a new business credit card, there are dozens of options to choose from, with lots of incentives and attractive options. However, you'll want to ask for and carefully look over the terms of service before agreeing to sign up for a new card. Here's what you need to consider:
Teaser, Introductory Rates
Don't get teased into an attractive introductory interest rate while the actual rate lurks in the wings to make an unannounced appearance. Check the terms and conditions of service to see what your rate will be and if it will change after a certain time period. Another item to watch for is whether the rate is fixed or variable. A varying rate can skyrocket, leaving you paying much more interest than you planned, especially if you plan to carry a balance.
Late & Over-Limit Fees
When reviewing the terms of service, take a look at what your late fees and over-limit fee may be. Late fees fluctuate depending on the card. Some cards don't have an over-limit fee, which can be good for those times in your business cycle when spending is high or if you lose track of your balance and overspend.
Foreign Transaction Fees
If you travel a lot, see if there is a fee for using your card overseas. Foreign transaction fees can add up when you are abroad and leave you with an unpleasant surprise on your statement.
The Truth in Lending Act and the Credit CARD Act of 2009 does not apply to business credit cards. That means issuers can legally charge you late fees. It is also well within their right to raise the interest rate on previously accumulated balances.
Features to Look For
Choosing Your Benefits
Some banks reward your use of their card by giving you points that you can redeem for goods, airline miles, services or cash. Select business credit cards also offer statement credits as a reward.
If the card doesn't come at too high a price in terms of annual fees or high interest rates, you might be attracted to benefits that can include auto rental, baggage loss-and-damage insurance, or purchase protection in case of loss, fire, theft, damages, or price depreciation. Some providers offer advanced benefits such as access to exclusive events, hotel amenities and air travel upgrades.
When choosing a card for its benefits, be sure to take a look at the limitations. While the benefits may look good on the surface, limitations may render them nearly useless in reality. For example, some benefits may expire after a certain time while other card issuers require that you use the card for a certain period of time before you're eligible to use the rewards. Some cards also have rules about what types of purchases count toward points or cash-back rewards. Others have caps on how many points or rewards you can accrue in a certain amount of time.
Customer Service Options
When you have a question or an unexpected emergency (your card is stolen), being able to reach the credit card company quickly is paramount. You should have online access to manage your account.
In addition, you want to be sure you can quickly reach a customer service representative over the phone. Also check to see whether the company offers online live chat. This can be helpful when you don't want to wait on hold or you have a quick question.
Other Rewards Credit Cards best-picks
Company credit cards are a convenient way to separate your personal finances from your business finances. This move will also help you each April when you prepare your tax returns. Your CPA will thank you for separating out your personal and business finances.
The benefits and rewards associated with business credit cards are intended to be helpful for business owners. However, the legal protections afforded by the Truth in Lending Act and the Credit CARD Act of 2009 do not apply to corporate credit cards. Bottom line: shop wisely.
Be sure to read the rest of our buying guide to earn more about business credit cards.
Contributing Reviewer: Alina Bradford
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Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.