Updated: December 14th, 2023 | By: Grace Kim
In today’s constant changing business world, having the right financial tools at your disposal can make all the difference to your company’s success. Whether you’re a freelancer and just opened up an LLC or you want to start separating your business from your personal expenses, which business credit card do you sign up for?
While you may have already made some business expenses on your personal card, you may now want to consider opening up a business card but where do you start?
Business cards work similarly to personal cards, but they report back to different credit bureaus and offer different credit limits. Many entrepreneurs are wary of credit cards but the truth is that business credit cards can offer extreme amounts of rewards and benefits.
In this post, I’ll be going over everything you need to know about opening up a business credit card and the best business cards to sign up for.
The Business Platinum Card® from American Express
Welcome bonus: 120,000 Membership Reward Points after spending $15,000 on purchases within the first 3 months from account opening
- Annual fee: $695
- APR: 19.49%-27.49% Variable
- Credit Score: 690-850
Difference between Personal and Business Credit Cards
According to Statista, 9% of the adult population in the United States have a running and established business. Additionally, 543,000 new businesses are started each month.
Personal and business credit cards are designed to meet different and unique financial needs of both individuals and businesses. And while it may not make sense for the remainder 91% of adult Americans to not be interested in signing up for a business credit card, here’s why you should:
1. Business credit cards can help build your credit score
Both personal and business credit cards report to credit bureaus, but to different ones. Personal credit is typically reported to consumer credit bureaus, like Experian, TransUnion, and Equifax. On the other hand, business credit cards are sent over to business credit bureaus, like Dun & Bradstreet.
If you’re in year one of your business and are wondering what determines the acceptance of your business credit card application, your inquiry is dependent on your personal credit score. You may get a small dip in your personal credit score when applying for a business card but this hard inquiry is only temporary.
For this reason, making on-time payments across both your personal and business accounts are crucial since this makes up of 35% of your overall credit score.
2. Business credit cards offer more valuable welcome bonuses
While many personal credit cards offer great sign up bonuses and offers, many business credit cards offer even more lucrative introductory bonuses. Especially if you already signed up and earned the welcome bonus with its personal counterpart, you’re able to combine and rack up even more points and miles with the business card.
3. Business credit cards offer additional perks tailed to business needs
Since many business cards have targeted offers to cardholders, you may find certain business cards that offer perks specified to your business needs, such as extended warranties on business purchases, purchase protection, access to business-related services.
4. Business credit cards usually offer higher credit limits
Depending on factors like your credit history, length of credit, and on-time payments, business credit cards usually come with higher limits than personal credit cards do. Especially if you have a huge shipment that needs to be placed before the holidays, having a business card can come in handy instead of splitting payments across multiple cards.
5. Personal credit cards have more consumer protection
While certain consumer protection laws don’t apply to all business credit cards, keep this in mind especially if you’re in the beginning stages of running a business. In the case that your APR jumps overnight, you can be charged huge late fees on a business credit card.
6. Personal credit cards have longer 0% intro periods
Having an introductory 0% APR period on certain credit cards, like the Chase Freedom Flex Card, for 15 months is a long time. But if you have a big purchase that you need to purchase but can’t pay it off for a couple of months, then choosing a personal over business card may be worth it in the moment. Just make sure you’re paying off that payment in full before the 15 months!
Capital One Venture X Business
Welcome bonus: 150,000 bonus points
Annual Fee: $395
Credit Score: 800
Regular APR: pay in-full card (doesn’t charge interest on purchases as long as card is paid in full)
Chase Ink Business Preferred® Credit Card
Welcome bonus: 100,000 bonus points
Annual Fee: $95
Credit Score: 690 – 850
Regular APR: 21.24%-26.24% Variable
Ink Business Cash® Credit Card
Welcome bonus: $750
Annual Fee: $0
Credit Score: 690 – 850
Regular APR: 18.49%-24.49 Variable
Why should you open up a business credit card?
Whether your business has been up and running for a couple of years or you’re in the beginning stages of opening up a business, there are a handful of reasons how a business credit card can come in handy. Listed are reasons why you may want to sign up for a business credit card to add to your overall credit portfolio.
1. Ability to separate business with personal expenses
While it’s important to keep your personal and business expenses separate, you can easily track your company’s financial transactions without having to go through personal charges by using a dedicated business credit card.
2. Building business credit
Obtaining a strong business credit profile can help boost your overall credit score, secure loans, and open doors to more financial opportunities. This can also be extremely valuable for businesses, especially when needed to make investments or with cash flow fluctuations. It provides an ease of mind when trying to manage short-term expenses without resorting to more costly financing choices.
3. Lucrative earning rates
Many business credit cards offer attractive rewards programs. Not only do these rewards include high earning high rates in bonus categories, but they also include cash back, and annual credits or discounts on business-related expenses, such as office supplies or subscriptions. By strategically using your business credit cards, you can accumulate rewards that can be reinvested back into your company or for personal benefits.
Typically, most business credit cards offer better overall rewards compared to their personal versions in order for you to stack up on the extra points and miles. Instead of being limited to a personal credit line, such as the Chase Sapphire Preferred® Card, you can stack up points with it’s counterpart, the Chase Ink Business Preferred® Credit Card.
Overall
For entrepreneurs, freelances, and business owners alike, opening a business credit card can be an extremely smart financial move for scaling your business today. Not only will you be protected by these financial institutions, but you’ll also have higher credit limits that opens up so many doors.
Business cards not only offer flexible options to manage cashflow, but it also helps with building business credit, and taking advantage of rewards and perks. What I love most about having a business credit card is that it enhances financial security with fraud protection, which is an ease of mind for a small business owner like me.
Lastly, make sure you’re paying off your credit card statement in full every month, build that relationship with these financial institutions, and you’ll be in good standing.
