Why You Should Add a Small Business Credit Card to Your Wallet

With some of the very best offers for the most lucrative credit cards being business cards (see The 5 Best Small Business Credit Card Offers and 5 Most Lucrative Credit Card Offers Right Now, and 5 Most Rewarding Credit Cards for Your Spending Every Day), it’s worth looking at what the cards are good for, what they aren’t good for, and who can get them.

The Best Current Business Credit Card Offers

The very best current offers for small business cards are:

The American Express Business Gold Rewards card has a great signup bonus, Membership Rewards points transfer to airline frequent flyer programs in all three alliances.

The Ink cards, though, aren’t just great bonuses (Chase Ultimate Rewards points transfer to United, British Airways, Korean, Southwest, and hotel programs like Hyatt, Marriott, and Priority Club) but are also great cards for spending — no foreign currency transaction fees, double points on hotels, and quintuple points on telecommunications (phone, internet, television) and office supply store purchases.

Why Small Business Credit Cards are Great for Spending

Business cards don’t show up on your credit report. Banks do pull your personal credit when they are deciding whether or not to approve you for the card, but after that the card doesn’t get listed.

That’s useful because one of the major components of your credit score is your credit utilization . That’s not about whether you pay off your cards each month, that’s about how much of your available credit you are using at a given time.

Your cards report your balances each month — not your unpaid balances, not overdue balances, but how much you’re carrying on the card on a given day (and paying off the card before the end of the billing cycle may not help, since they may report mid-cycle).

About 30% of your score stems from how much of your credit you use. If you’re using $2000 out of $4000 available credit, you’re using 50%. You may pay off your bill each month but you still look risky, you’re not being afforded lots of credit that you’re responsible with in the eyes of your credit score. If you’re using $2000 out of $20,000 available credit, that’s only 10% and looks much better — even though you are spending the same amount on your cards each month. Which is why applying for more cards can actually improve your score, despite that conventional wisdom that it’s bad for your credit.

In addition to boosting available credit (increasing the denominator), you can improve your score by reducing the amount of that credit you are using at any point in time (reducing the numerator). By putting your spending on a small business card, the balance of which doesn’t get reported, you reduce the amount of credit that it appears you’re using. Which is good for your score.

How You Can Get a Small Business Credit Card

I find it very useful to have a business credit card, and have for a long time – I got my first one about a decade ago, giving my social security number as a business tax ID (for sole proprietorships American Express lets you leave the business tax ID box blank).

Before I had my award booking business I would use my social security number. Most of the time back then (much more so than now) I would be approved instantly, or at least automatically.

Even having $0 in business income was often fine, it’s good to separate out business and personal expenses from the very beginning when starting to look out for business opportunities.

I’ve been a huge proponent of diversifying income — sure, I have a job, but I also blog and book awards and my writing earns income not just here but on websites like Conde’ Nast Traveler‘s. In the past I’ve also done fundraising consulting. And I own a rental property, as well.

It’s much easier to deduct the expenses for a business when the financial transactions for that business are kept separate from personal finances. So just as it’s useful to have a business bank account, it’s useful to have a business credit card. And that’s true even — and especially — before you have any revenue for the business. Keeping things separate from the start is a great reason to have a business credit card. Answer questions on the application truthfully. If you don’t have any business income, then list zero. That’s fine, you can get approved on the basis of your personal (non-business) income. And if you’re not approved automatically, you can still explain that you haven’t earned income from the business yet, you’re just now setting it up.

Different Perks and More Spending Bonuses

While I love my Chase Sapphire Preferred card — most of my expenses fall into the travel and dining categories which that card bonuses — I want to earn the greatest rewards for my spending. Earning 5 points per dollar with the Ink cards on telecommunications and office supplies are huge, especially with the wide variety of items you can buy at office supply stores (fortunately there’s a Staples just a couple of blocks from my home.

Are Business Cards for Business Expenses Only?

Business cards often carry the admonition that you agree when you apply you will only put business-related expenses on the card. Business cards do not carry the same consumer protections as personal credit cards, and it’s important for banks to draw the distinction and be able to say they’ve advised consumers and that consumers even agreed. That’s for their legal protection. While no bank has ever questioned the charges I’ve made on my cards, they’ve taken steps on their end that are necessary to distinguish business cards from personal cards for regulatory purposes.

An Opportunity to Get More and Different Cards

I have a wallet full of cards. The banks expect that. Speaking recently with one credit card executive, he intimated that he does as well — and that they give you more than one of his bank’s cards because they know you want more than one card and would rather that you have multiples of theirs than one of theirs and other banks’ cards as well.

The cards you’re able to get are dependent on both your overall credit and your income, some banks have limits on the number of cards they will issue to you. There are some reports of American Express giving up to four personal cards, for instance. But business cards are often not a part of that limit.

(Note that some though not all of the cards above include my referral link, I do receive credit if you’re approved for the card using it, I offer it because it’s the best current offer. The opinions, analyses, and evaluations here are mine. The content is not provided or commissioned by the American Express or any other company. They have not reviewed, approved or endorsed it.)

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  1. Being an officer in a corporation, I have been “churning” both personal and business cards(with a EIN) for a few years. What do you think about adding a small business using my SSN to the mix? Would it impact my other applications? Would that just be greedy?
    For instance I have a AEBG under the EIN, but I am tempted to apply for one under my SSN. We own and manage some rentals. Could that be considered a small business?
    Thanks for your input

  2. Maybe a dumb question, but you mention that, “Banks do pull your personal credit when they are deciding whether or not to approve you for the card, but after that the card doesn’t get listed;” does it affect your credit score differently than a pull for a personal credit card? I’d assume as much but want to be sure…

  3. Although I think that you are one of the better bloggers if not one of the best, I still think that your credibility takes a hit when you lower yourself to pimping credit cards like the other bloggers on BA and somewhere else.

    Do we really need to hear a hundred times a month that the Chase Sapphire and Ink cards are the best and they are must have/kings of credit cards?

  4. To echo Kris, this post appears as if you are advocating for people to sign up for a small business credit card regardless of their circumstances. You do say “Answer questions . . . truthfully,” but I am concerned about your advocating a business credit card to people without businesses or business income (not that business income is necessary to have a business). Would you advocate signing up for a business credit card if you did not receive referral credit? If so, perhaps remove the affiliate links from this post? I generally think you are among the best points/travel blogger in the game, but a post like this does damage your credibility. This post feels like you’re basically advertising for readers to sign up for credit cards where you receive compensation when they do. And even if people are unqualified as determined by the online approvals system, you advocate them calling for reconsideration. I understand the need for confidentiality, but it really makes me curious how much you are being paid for advertising these 3 credit cards.

  5. Without fail, Gary reveals when and if he is compensated for credit card referrals. He discloses fully, so you can factor any potential bias into your evaluation of his recommendations. Full disclosure is the gold standard. That’s what you should expect from any writer, and it’s far more than some other bloggers share with their readers. Quite frankly, my friends, if you can’t make your own decisions after receiving this information, you aren’t very bright.

    Because of his hard work and straightforwardness, Gary has earned a reputation as perhaps the top blogger in the miles and points area. He’s always the first one I read. I always try to use his links, in hopes he will be motivated to continue to supply this shoe-leather work and information. If you object, why don’t you take your eyeballs elsewhere? There’s plenty of other stuff to read on the Net, though most of it’s not as insightful.

    And, by the way, the reason that credit cards are a huge focus on most of the points travel blogs is that getting a 50K signup bonus is far easier and faster than sitting in an airline seat for 50K miles. As Willie Sutton said, when asked why he robbed banks: “That’s where the money is.” IMO, Gary doesn’t overemphasize credit cards, but he’d be derelict if he ignored them.

    When I see critical comments from posters like “Kris” and “Truthiness,” I honestly wonder if competitors are employing trolls in an attempt to harass the most informative and readable blogger in this space.

  6. It would be helpful if you include “exist” strategy if you provide entry points to CCs with AFs.

  7. I’m not a “troll” nor am I a “competitor[]“. I honestly believe that this post is encouraging people to sign up for a business credit card (as opposed to a personal card) who possibly are not qualified.

    As for personal credit card posts, I can’t really object because anyone can apply (but not everyone will be approved). And as for full disclosure, I agree Gary is all about it. However, based on the entrety of the content, this particular post appears to be motivated by the referral credit.

    As for taking my eyes other places, I actually agree that Gary is among the best in the miles/travel/points game, so I will continue to read and support his blog. And I actually appreciate that he does not censor his comments – like some other points bloggers – so that both comments of support an criticism are aired. But a dose of occasional skepticism does not make me a “troll”.

  8. @Robert Concord,
    “I honestly wonder if competitors are employing trolls in an attempt to harass the most informative and readable blogger in this space.”
    I bet One Mile at a Time and Million mile secrets have hired trolls. Great thinking, Sherlock!

  9. Gary has helped me and my family immensely. Over the last 3 years, probably over $25K in travel benefits out of thin air.

    In the last 3 months alone, have obtained around 400K points- 2inks for 100k, 2amex golds for 150k, hilton 40k, club carlson 85k, 2 fairmont cards (already have 2 nights confirmed @ The Plaza) + the spend points that were 80% manufactured for $8 per thousand.

    Thank you Gary!

    Haters gonna hate….I’ll be at the Park Hyatt Tokyo.

  10. Welcome to Flyertalk 2013. The anti-blogger loons have escaped the asylum. Nothing will satisfy their hate.

    Disclose a new program….and the response is your spoon feeding the riff-raff.
    Talk about a benign topic like credit card alternatives, and once again you’re pushing your links to make $$.
    And, god forbid you discuss something like manufactured spending….well Mr. Gary…once again you’ve killed the golden goose.

  11. I agree with Robert Concord. Most point travelers are educated. While I think Gary is amazing, I’m not going to get a credit card just cuz he writes about it. People think for themselves.

  12. Quite a lot of misinformation going on here in this article. Credit cards report mid cycle ?

    To newbies reading, do not fall for this trap. Your balances get reported at the end of statement cycle which is different for different cards and adjustable to your liking by calling CSRs. Just pay in full before statement cuts to report 0 utilization. End of story as far as utilization is concerned.

    I am ok with CC advertisements, but spreading false information and propaganda is uncool.

  13. Full disclosure is legally required. I don’t get why people give props for this. Love this blog to death, but it’s not like the Chase Ink cards have changed in the last 6 months… I own the ink plus and Amex cards on here, but it seems this post is a bit overkill

  14. One cautionary note: Some of the benefits on business cards are different than on personal cards. For example, SPG Amex personal offers car rental coverage internationally; SPG Amex Bus offers coverage only in the US by default (you can pay a modest extra fee for international coverage).

  15. My only question is why every BA blog has so many more of this type of article lately. My guess is the affiliate networks are requiring a quota. One of these articles a month is enough, and I’m sure Gary knows that.

  16. @Steve – the level of disclosure I give is way beyond what’s legally required, and a practice that isn’t consistent by any means across various websites for what it’s worth

  17. @DFW I see you complained that your comment wasn’t approved for a few hours, sorry, i was on a flight without internet and approved it as soon as i could. I’ve been flying for > 24 hours. You are, however mistaken or more likely misunderstanding and we’re talking past each other. I am unfortunately too tired at the moment to walk you through it. Hope you’re having a great day nonetheless!

  18. I’d never heard of “credit utilization” before, thanks for explaining what that is, and how it influences one’s credit rating.

    As for all of the sturm und drang about Gary receiving commissions, I don’t get it. I have no interest in trolling through every Club Conrad/Hyatt/Starwood credit card offer to determine which cards offer the best rewards. I rely on others for that, and anyone who is willing to read the fine print should be rewarded for their due diligence. And based on his past suggestions, I know that if an amazing card with no commission turned up, Gary would tell me about that card too!

  19. The information is very necessary for those whose main way to earn points is via credit card signups first and utilization second. Those who have other ways of earning big points may not always welcome the competition for award seats. That’s natural.

    I’m new to the idea of mid-cycle utilization and would like more explanation. What I take this to mean is that if I apply for a credit card, the pull’s information is based on what I owe at this moment (which may be a lot), as opposed to what I owe on each given card on the due date (which is zero plus just those charges made since the last closing). In other words, a couple of days before making an application, I should pay down my accounts in order to reduce utilization, right? I haven’t been doing that.

  20. Alright I did not know about the travel, sorry.

    But those lines and reasoning are absolutely not correct any way you try to explain it. As someone who frequently experiments with different utilization ratios and other FICO factors regularly throughout the year, I think I know exactly how it works :)

    Currently have 803 in EQ and 798 in TU. Don’t get to play with EX yet as there is no easy way to get the scores and I am not a PSECU member.

    Utilization is entirely under one’s control and has nothing to do with how much credit you are using at any point in time and it getting reported “mid-cycle”. If I have a 20,000 limit card, use all of it and pay it off before statement cuts, I still report 0 utilization for FICO scoring. That is how most of us play the game. Of course if you are paying it after statement cuts but before due date, the credit card will report high utilization and impact FICO scores negatively.

    But that isn’t what you were explaining. You seem to imply that CC companies will suddenly report mid-cycle and catch you with high utilization which can be protected by signing up for small business cards.

  21. Regarding Chase’s requirement that you certify that you will only use the business card for business expenses and not household spending – you state above that this is just for the bank’s legal protection and that they are completely fine with you using the card for personal spending. Has Chase ever actually confirmed or stated this? My hangup with Chase specifically was that clicking that box seems to cross the line of lying/breaking the T&Cs, but if Chase has no problem with it, that could change my viewpoint and open up some of the great opportunities presented by Chase business cards.

  22. Hi Gary,

    I love your blogs and enjoy reading them. While I am sure a blog post like this is well beyond the legal limit, the legal limit in this arena is so low that at least my expectation of a good post is much much higher than that legal standard. I prefer a truthful truthful blog than a “barely-to-well-above-the-limit” one. But still, thanks for all the posts.

  23. Please dont forget that many of the consumer protections that we enjoy with credit cards are NOT given with business cards. I do carry these cards, but be careful NOT to make them primary.

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  25. @ DFW: Actually there are card issuers that do not wait until statement date to report. To be fair, there may be only a very, very small handful, but there are those who report mid-month or at other odd intervals.

    I’ve also personally experienced where somewhat common consumer initiated actions have resulted in an issuer reporting out of sync. I recently asked Navy for both a CLI and a product change at statement date + one week. A week ago Navy reported with the then current $0 balance, but within 2 days of the CLI they reported again with not only the new limit but also a $29 balance.

    While the chances are very slim with a personal card, a business card generally provides a 100% guarantee you’ll never get dinged for utilization — provided you never default.

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