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Different Types of Business Credit Cards

Allan Halcrow

By Frances Coppola | American Express® Freelance Contributor
5 Min Read | November 13, 2020

Different Types of Business Credit Cards

These days, even very small businesses and sole proprietors can often qualify for business credit cards. Whether you’re a freelance writer or running a publishing firm employing 30 people, there will most likely be a business credit card out there that works for your business.

But choosing the right business credit card can be daunting. There’s a wide variety of cards, all offering different benefits and with different terms and conditions. Those differences exist for a reason: the characteristics of your business may be best-suited to one business credit card’s set of benefits and terms, while the business across the street could be better off with an entirely different approach.


To help small business owners make an informed choice, this article offers an overview of:


Tips on Comparing the Basics of Business Credit Cards


When considering which type of business credit card to choose, it’s a good idea to look first at the basic characteristics of the card.


All business credit cards charge interest. Interest rates are typically quoted as an annual percentage rate (APR). The interest rate you will be offered depends on your business’ credit score and possibly also your personal credit score. APRs vary widely but tend to be higher on cards that offer a good range of rewards.


Business credit cards may offer a 0% intro APR period on purchases. Provided you pay off the balance by the end of the interest-free period, using a business credit card can be an inexpensive way of smoothing your cash flow. Check the card conditions to find out how long the interest-free period is. Some cards offer an initial interest-free period of up to a year. This can be good for a startup with upfront expenses to stock up or buy essential equipment. However, sometimes the interest rate to which the card reverts at the end of the intro period may be quite high.


When evaluating interest rates on business credit cards, you can consider how your business works and the pattern of your cash flow. If you expect to pay off your balance every month within the interest-free grace period, you could consider a card with a range of rewards that will enable you to reduce business costs. However, if you think you might often run balances from month to month, you may find a basic card with a low APR meets your needs better than rewards cards with higher rates.


Some cards also offer a bonus on purchases made during an initial qualifying period usually from three months to a year. Again, this can be a good option for a business that needs to stock up or invest in equipment.


Most business credit cards require a good to excellent credit score. If your business doesn’t have its own credit score yet, perhaps because you’re just starting out, your card issuer may use your personal credit score. Some credit card providers may accept lower credit scores but charge higher interest rates and fees due to the greater risk that comes with lower scores.

Fee-Based vs No Annual Fee Business Credit Cards


Many business credit cards charge an annual fee and many others do not. Those that don’t may have higher interest rates than cards with an annual fee. If you’re confident that you can usually pay your card purchases in full within the interest-free grace period, then a card without an annual fee could be a good choice. However, if you’re likely to run balances beyond the interest-free period, then a card with an annual fee and a lower interest rate might be a better value for your business.


Many business credit cards with annual fees also have an extensive range of rewards, and may also offer cash back. The benefits you gain from rewards and cash back cards depend on how you use the card, but it could be worth considering a card with an annual fee if it has a range of rewards that particularly suit your business. 


Some cards waive the annual fee for a period of time, which may be a year or more. This can be useful for a startup, particularly if it is also associated with a lower interest rate and/or an introductory bonus. 


Understanding Cash Back Business Credit Cards


As their name implies, cash back business credit cards give you money back on purchases made with the card. Typically, this is a percentage of the purchase amount anywhere from 1% to 5%. Some business credit cards offer higher cash back amounts on certain types of purchases, such as office equipment. There may be a limit on the total value of purchases qualifying for cash back within a period such as a year, or the cash back percentage may drop if the total value rises above a certain pre-set amount.


Some business credit cards combine cash back and rewards programs, as described in the next section. It’s worth evaluating the whole package offered, as the value to your business of a card with a lower cash back percentage but a particularly suitable rewards program could be greater than a cash back card with a higher cash back percentage but no rewards or a less suitable rewards program. It’s also worth comparing the value to your business of rewards programs on cards that don’t offer cash back.

Evaluating Business Credit Card Rewards Programs


The rewards programs that business credit cards typically offer fall into three broad types:


  • Travel rewards.
  • Office supplies and marketing expenditure.
  • Employee and manager treats.


Business travel credit cards usually offer discounts of points for purchases such as air fares, rail tickets, car hire, gasoline, hotels, and food on the go. If they are co-branded with a hotel chain, airline, or gas station chain, the points/discounts may be substantial – but your business may lose the flexibility to use the card with other providers. Some cards also offer other travel-related perks such as car rental insurance, access to airport lounges, concierge services, and no-fee foreign exchange. Obviously, business travel credit cards are great if your business involves frequent travel, but if you travel infrequently, consider whether you will make enough use of the card to benefit from the rewards.


Cards that offer discounts on office supplies and equipment, or on marketing expenditure such as social media advertising, can be great for keeping business costs down, particularly if the business has frequent supply needs. These cards may also be co-branded. If you’re considering a co-branded card it’s worth looking at the range of goods and services offered by the partner to make sure it meets your needs.


Some cards offer a range of personal treats and perks, such as weekend getaways, meals in restaurants, and theater tickets. You can use these to reward high-performing employees, or perhaps treat yourself and your long-suffering family when you have been working very hard. 

Helping You Manage the Business 


Many business credit card issuers offer features that can help you manage your business. For example, some cards provide itemized statements that can be downloaded directly into your accounting software. Some provide tools that can link your itemized statement with receipts.


If you have employees, you could consider a card issuer that will provide multiple cards on the same account and pool spending on all cards when calculating cash back or reward points. Some issuers allow you to set different spending limits on each employee’s card. Employee spending typically appears on your itemized statement so that you can track your expenses directly rather than having to wait for expense reports. 


The Takeaway

There’s such a wide range of small business credit cards available today that choosing the right one can seem like a lot of work. But it’s well worth taking the time to evaluate the various types so that you can find the best business credit card to match your business. 

Allan Halcrow

Frances Coppola spent 17 years in the financial services industry before becoming a noted writer and speaker on banking, finance and economics. Her work appears in the Financial Times, Forbes, and a range of other publications. 


This content was written by a freelance author and commissioned and paid for by American Express. 

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