Opening a Credit Card for Your Business: Key Points in This Important Business Decision

Inevitably, owning a business means having business expenses that you have to pay. At this point, and sometimes even before the first bill comes due, people often think of opening a business credit card in order to pay for those expenses. There are definitely some pros and cons to this decision. Obviously, having access to credit in order to meet those expenses while waiting for your first sale to come in is useful, as are the points that can be accumulated using one of many different credit card programs.

That said, there are also reasons why opening a credit card, at least immediately, might not be the best move for your business. Consider these points before making the decision, and you can be confident that when you open your business credit card, you’re going to open the absolute best card for your organization.

1-Make Sure You Consider the Included Perks: You’ll know that you’ve found the right card for your business when you find one that includes perks that fit the way that you do business. The add-on perks offered by the credit card company should offer you benefits that you’ll actually use.


For example, if you travel a lot, there are credit cards that offer perks specific to heavy travellers. Many cards are branded by a specific airline which usually allows you to not only gather points, but also to enjoy features like free additional checked luggage, or special access to airport lounges. Many also include a limited amount of free or discounted hotel stays for affiliated hotel chains.

On the other hand, if you need to share your corporate account with a partner or co-worker, you may find it more useful to pick a card with features such as a free additional card for the account. Itemized spending reports are also very useful in situations such as these, as it allows you to keep track of exactly what each card holder in your organization is spending the business’s money on.  


2-Consider the Specific Advantages of a Business Credit Card: When many people start thinking about signing up for a business credit card, their only frame of reference is the personal credit card that they use for their day to day spending. However, a business card is quite different, and much more appropriate for business use. Learning the differences beforehand will position you better to pick the card most appropriate for your business.

One important difference between card types is that most business cards have a much higher credit limit, which is important for the large business expenses most companies incur. The sign up offers are usually designed specifically to attract business clients, and have reward programs that are geared towards corporate clients.

You also don’t want to entangle your business and personal expenses. A card specifically designed for a business will keep those expenses separate from your personal ones, which will make your life a lot simpler come tax season. It also means that use of the card doesn’t affect your personal credit rating, but rather the credit rating of your company. New companies however do require a person to take responsibility for that credit rating and the accompanying debts, until the company has time to build its own credit rating.

Now, it’s not all good news when it comes to business credit cards. There are certain laws designed to protect customers that are very important in the world of credit cards. The Credit CARD Act means that customers have 21 days to make payments on credit cards and will be given a warning 45 days before any interest rate hikes. You’ll find these same protections on some business cards, but because there is no legal enforcement of them, you’ll also find some other companies who try and offer cards without these important protections. Reading the fine print when shopping for business credit cards is even more important than doing so for personal cards.

3-Reward Programs are Not All Created Equal: Because corporate clients are the holy grail for credit card companies, the reward programs they offer to try and attract new customers are often quite lucrative for their corporate clients. Two categories should be of special interest to you: sign-up offers and the points that you accumulate after regular spending. Of course, how those points can be redeemed and what real value they have also needs to be considered.

When you’re comparing reward points programs, the important thing is to look for cards that offer a higher than standard rate (standard is 1 point per $1 spent) in specific spending categories. If you can find one that matches the kinds of typical expenses that your business incurs, you can rack up points at an astronomical rate.

As mentioned previously, redemption is the other half of the equation. Make sure that the things you can exchange your points for are of use to your business. This is especially important with things like travel, as some cards have travel point redemption limitations that may make them impractical for the types of travelling you actually do. Always make sure the rewards are easily obtained and useful to your company.

4-Pick the Card that Matches Your Company: Generally speaking, there are two types of ideal business credit cards. The first, is a truly outstanding rewards card. The second, is a low-interest rate card. If you have to carry a balance while you get your business off the ground, then a low=-interest card is likely your best bet, as it will help you manage your costs. You can then transition to a better rewards card when you start being able to pay off your expenses each and every month.

One of the best deals of this type is the introductory offer made by some business credit card lenders which offers 0% APR for the first year. If you need a little flexibility to get a business started, this can be a great option, although you need to be sure that you can clear the card after the first 12 months, or interest will start to accumulate.

Consider the fees levied for card ownership as well. Some companies with very low interest or excellent reward programs have fees that stretch into the hundreds of dollars. You should make sure that whatever you’re paying in fees is worth the financial benefit of the interest or provided rewards.

Hopefully, this gives you some things to think about when it’s time to apply for your first business credit card. These are a very important part of most businesses, and the right card can make life a lot easier financially for your growing company. When you find the right fit, put all of your expenses on the card to maximize your reward program.

Once you figure out what type of card fits with your business, you may even find it advantageous to sign up for more than one card. Experienced business account holders can find ways to leverage sign up bonuses and transfer programs to really extract the last ounce of value from the credit card lenders. Doing so responsibly can also help build your company’s credit rating, something that is very valuable for a variety of fiscal purposes in the future of your organization.

Related Content:

Credit Card Processing Reviews

Author: Hudson Piccini

Hudson Cynar, a Harvard University alumna and the owner of three prosperous enterprises, is a distinguished business consultant, author, and writer. Her expertise spans multiple business sectors, with a particular emphasis on storage containers, commercial copiers, payroll services, and medical billing software. Dedicatedly investing thousands of hours into product and service research, Hudson crafts insightful reviews to guide entrepreneurs in making informed decisions for their businesses.