5 Tips to Choosing the Right Credit Card for Small Businesses

Using a small business credit card instead of your personal credit card for your business expenses comes with a lot of advantages. For one, it makes expense tracking and reporting much easier and allows you to build your business’ credit background. With your business expenses separate, it also makes it much quicker for you and your accountant to calculate your taxable income and returns. 

The rewards of having a separate credit card for your business might be attractive. However, the key to fully enjoying these benefits is choosing the right small business credit cards. With hundreds of lenders offering credit cards for small businesses, how do you choose one that best fit your business situation?


That’s what we’re here to help you with. Check out these five tips in choosing the right credit card for your small business:

  1. Be sure to know how a business credit card works

To choose the best credit card, you need to understand how it works first. The more you know about it, the better informed you’ll be when it’s time to make a decision. Be sure to read more about it before shopping for the available credit cards for your business. 

To get you started, here are the basics of small business credit cards:

  • Small business credit cards work just like a personal credit card. The difference is that the former could only be used specifically for business expenses. It also comes with a higher credit limit than personal credit cards, which is helpful if your business makes a lot of purchases monthly.
  • In most cases, credit card providers may require a personal guarantee for the card. A personal guarantee means that if the business cannot pay the credit card dues, the owner would have to assume the responsibility of repayments using their personal finances. 
  • Credit cards can come in two forms: charge cards and standard business cards. Charge cards typically have no spending limit, but business owners must pay their debts in full by the end of each billing period. Standard credit cards have spending limits but allow you to carry a month-to-month balance. If your business can afford to repay your credit card balance in full every end of the billing period, then a charge card may work for you. But if you want to spread your payments into a few months, a standard credit card may be a more viable choice. 
  1. Consider how you’ll use the business credit card

Review your business expenditures and try to see how a business card would fit in addressing your financing needs. Consider the categories where you usually spend most of your money in. It could be travel, dining, or advertising. 

To help you with that, consider the following:

  • Does your business require you or your employees to travel a lot? If so, a small business credit card without a foreign transaction fee would be beneficial. It also helps to ask if the credit card has a point reward scheme where you can accumulate points and convert them into travel miles. 
  • Do you meet with clients in restaurants frequently? Choosing a business credit card that rewards dining makes more sense if you’re spending on restaurants frequently for client meetings. For instance, the American Express Business Gold Card offers 4X membership rewards on the first two categories where your business spends most. 
  • Are you on the road a lot? Some credit cards also offer a cashback on gas and fuel spending per month. This feature is helpful, especially for business owners in the transportation or freight and shipping industry. 

Knowing where most of your money goes will make it easier to determine which credit card would offer the most benefits based on your expenses.

  1. Consider your credit standing

When applying for a small business credit card, banks and other providers usually look at the business owner’s personal credit score. This is true, especially if your business is still in its early days and you haven’t established business credit, yet. 

If you have a good credit standing, you’re more likely to receive better payment terms for your credit cards. Subprime borrowers or those with credit scores lower than what’s viewed as a good credit score may have difficulty securing flexible payment terms. 

  1. Check the annual fee of the small business credit card

The annual fee is basically the cost that banks and lenders charge for your credit card use calculated on a yearly basis. Annual fees range from nothing to hundreds of dollars per year. While your first thought would be to choose a card without an annual fee, a card that does charge that fee could be more beneficial for you. 

Here’s why: Most small business credit cards with an annual fee often come with higher signup bonuses and greater reward rates. In other words, even if you pay a couple of bucks each year, it doesn’t compete with the benefits you get to receive with your business credit card. 

  1. Checkout what perks the credit card offers

Aside from rewards, credit card providers may also provide their subscribers with different perks to help with expense control. For instance, some small business credit card providers offer expenditure reporting that lets you know how much you’re spending on a particular business area. Some credit card companies may let you download your expenditures and import them immediately to your accounting software. 

If you’re paying an annual fee for your credit card, make sure you’re maximizing the perks that come with it. It may include travel miles, seat upgrades, waived baggage fees, discounted hotel stay, and more. These types of benefits can really be a tie-breaker between cards with and without annual fees.  

The Bottom Line

Business credit cards offer several benefits for businesses. For one, it could provide owners with fast access to capital whenever they need it. It also provides a way for companies to start building their credit background to qualify for a more comprehensive financing option in the future. 

But it’s also important to consider different factors when choosing a credit card. While it may seem easy at first glance, remember that you’re making a financial decision that can affect your business. As much as possible, choose your credit cards wisely and use the factors above when doing so. If done right, your small business credit card could be an invaluable resource that will help your business grow and succeed.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.