Business Credit Cards

Why apply for a business credit card? Simply put, credit cards for small business bring certain characteristics and utilities to the table that general-consumer credit cards do not. For example, small business credit cards allow you to easily track business spending, and many offer quarterly as well as end-of-year expense reports that simplify tax season and are conducive to company spending analysis. They also make it easy to issue each employee his or her own card as well as customize and change the limits of these cards as needed. In addition, business credit card accounts allow you to earn rewards on employee spending and get heightened savings on important business expenses, such as office supplies and telecommunication services. Filling out a business credit card application is therefore not only the first step toward garnering a spending vehicle for your company, but is also a way to simplify and improve your business operations.

Why not apply for a business credit card? Unfortunately, business credit cards were not included in the credit card industry reform legislation—the CARD Act—that was enacted toward the tail-end of the Great Recession and has proven quite successful in both increasing transparency within the general-consumer credit card market and improving consumer rights. The biggest downside of this exclusion is the fact that the CARD Act provision prohibiting issuers from increasing interest rates on existing debt without cause does not apply to most business credit cards. It’s dangerous to revolve a balance on a small business credit card since your interest rates can therefore change at any time and for whatever reason. If your intent is to fund your company’s operations, do not apply for a business credit card, apply instead for a general-consumer credit card.

What credit standing is needed to get a business credit card? Like general-consumer credit cards, business credit cards are available to people of all credit levels. Also like regular credit cards, if you will, a small business credit card’s rewards and other benefits increase based on credit standing, while the fees and rates generally decrease.

Interestingly and contrary to many people’s beliefs, while a company’s credit standing is taken into account for business credit card approval, the small business owner’s personal credit score is actually the key deciding factor. Therefore, when starting a small business, for example, you should apply for a business credit card that is marketed for someone of your credit stature and avoid falling into the trap of looking for business credit cards for new businesses. If you are unsure of your credit standing, try our free credit estimator.