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A business credit card from a trusted bank makes life easier for small to mid-sized business owners. It can help you keep track of business expenses, streamline tax paperwork, and reduce hassle.
Many business card providers try to entice entrepreneurs with offers of low interest rates, cashback, rewards, extended warranties, and various perks. So which type of credit card is best for your business?
- Why You Should Have a Business Bank Account and Credit or Debit Card
- Different Types of Business Credit Cards
- Best Business Credit Cards
- The Takeaway
Why You Should Have a Business Bank Account and Credit or Debit Card
If you’re just starting as a freelancer or a small business owner, you may feel that managing a business bank account is too much trouble. However, having a designated business account and credit card, and in some cases business savings accounts, can help you:
- Separate personal accounts from business cash flow
- Streamline business spending
- Open and manage free employee cards
- Maintain a professional image
Keep in mind that to get the best type of business credit, you should have an excellent credit score, usually 670 and up. If you have a lower credit score, you may have limited business credit options.
Should You Choose a Business Debit Card or Credit Card?
It depends on your business needs. A business credit card opens a line of credit for your business and allows you to borrow money. A debit card links to your business checking account and works in a very similar way to cash.
A business debit card can be a great option for entrepreneurs with a less-than-stellar credit score. Debit cards are easier to obtain than credit cards, give you no room to overspend, and charge no interest.
If you need a convenient business debit card, check out Nearside Bank’s debit card with no sign-up costs, monthly minimums, monthly fees, or overdraft fees. As a bonus, Nearside offers 2.2% cashback on every business purchase throughout 2022.
Different Types of Business Credit Cards
Although all business credit cards work on the same principle, different credit cards offer unique selling points that provide higher value for certain businesses. For example:
- If you are launching your business and face major expenses, look for a card with special financing offers such as zero interest charges for a certain period.
- If you are struggling to find the best insurance package, check out business credit cards that offer purchase protection, insurance, and extended warranty coverage.
- If you or your employees travel a lot, consider a business card that offers travel perks – just make sure the flight discounts offset the annual card fee.
- If you make many foreign transactions, shop for a card that offers zero foreign transaction fees.
APR, or annualized percentage rate, is a major factor to consider when choosing a business credit card. Unlike interest rate, which relates solely to the loan sum, APR includes the total cost of borrowing: i.e. interest rate and fees. A fixed APR does not change with index shifts, whereas a variable APR may fluctuate depending on index interest rates.
Many business credit cards offer 0% APR during a limited timeframe. However, make sure you know what happens when that period runs out. If you know your APR will skyrocket after a year, you should prepare accordingly.
Best Business Credit Cards
Read on for a list of five business bank credit cards that offer good terms and attractive perks for small business owners.
Capital One Spark Cash Plus Credit Card
This business card by Capital One offers unlimited 2% cashback, $0 foreign transaction fee, and a welcome bonus of up to $3000. If you spend $5000 within the first three months of holding the card, you earn $500. Spending $50,000 within the first six months would give you a $2500 bonus.
Capital One Spark Cash Plus has an annual fee of $150 and no APR if you pay off the credit balance in full every month. Late payments will incur a 2.99% fee. This card requires an excellent credit score.
American Express Blue Business Plus Credit Card
This card by American Express allows you to earn 2X points in Membership Rewards for business purchases, with an annual cap of $50,000 a year, after which you earn 1X points per dollar. The card also has a welcome offer of 15,000 points for members that spend at least $3000 within the first three months of holding the card.
American Express Blue Business Plus has $0 annual fee, $0 introductory APR for 12 months (with variable APR of up to 21.24% afterward), and 2.7% foreign transaction fee. You need an excellent credit score to qualify for this card.
American Express Business Platinum Card
The Business Platinum Card by American Express comes with multiple perks and rewards, such as 5X membership points on prepaid hotels and flights booked through amextravel.com, 1X points for all eligible purchases, and 120,000 points after spending $15,000 within the first three months.
Business Platinum has an annual fee of $695, 0% APR for 12 months, variable APR of up to 22.24% after the introductory period, and zero foreign transaction fees. Card membership is open to applicants with good to excellent credit scores.
Ink Business Preferred Credit Card
Ink Business Preferred has a generous reward package of 3X points per dollar on eligible purchases with a cap of $150,000, and 1X points on other purchases. Members gain 100,000 welcome bonus points if they spend $15,000 within the first three months.
This card has an annual fee of $95, a regular APR of 15.99% to 20.99%, zero foreign transaction fees, and a balance transfer fee of either 5% or $5 (whichever is higher). You may qualify for this card if you have a good to excellent credit score.
Capital One Spark Classic
Spark Classic by Capital One is a basic card that comes with 1% cashback, $0 annual fee, no foreign transaction fees, and no balance transfer fees. On the other hand, it offers no welcome bonus or other frills.
Spark Classic has a comparatively high variable APR of 26.99% and requires an average credit score.
Choosing the best business bank credit card depends on your business needs, expenditure, credit score, and individual preferences. We hope this information helps you choose the best credit card for your business.
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