Small business credit cards: 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:
- Ink Bold® Business Card 50,000 points after $5000 spend within 3 months
- Ink Plus® Business Card 50,000 points after $5000 spend within 3 months
- The Business Gold Rewards Card® from American Express OPEN 75,000 points after $10,000 spend within 4 months. (Offer expired)
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.)