Small business credit cards can be a great option for any small business, and one that many opt for.

However, before you decide to get one, make sure you’re aware of all the pros and cons that come with each type of credit card.

What are the Benefits of a Small Business Credit Card?

First, let’s outline the benefits. One key advantage that many small businesses appreciate are the reward programs they offer.

These points can count towards certain expenses—such as travel, office equipment, or dining to name a few—making them more beneficial than standard consumer cards with no rewards options.

However, the biggest benefit a small business credit card grants is the opportunity to build a solid payment history to establish (and improve) your company’s credit score.

Similar to improving your personal credit score, this enables you to borrow more money at a lower interest rate, and can benefit your insurance rates; among other things.

Things to Consider When Thinking of Applying for a Small Business Credit Card

1. Make Sure You Qualify

Before you start doing research on different cards, it’s important to be sure that you’re eligible. Here are the steps to take if you’re considering applying for a small business credit card:

  1. Know your personal credit score
  2. Operate a small business with the intent of making a profit
  3. Compare business cards to find the best fit for your particular circumstances
  4. Use your business card for business expenses
  5. Watch your rewards points grow

2. Comparing Rewards

One way to compare cards is by reviewing the reward programs of each. Rewards cards offer points, miles or cash back on every purchase you make with your card. When it comes to earning rewards, every business credit card is different. 

Consider where you tend to spend the most money, and that’ll help you choose the best rewards program—whether it’s travel, dining, office supplies, advertising, or other expenses.

3. Assess Interest Rates and Fees

Interest rates (APR) and fees are another aspect to consider. As you probably know, the interest rate is how much money you pay on unpaid balances carried over from month-to- month. 

You might be interested in choosing a card with a low or 0% promotional rate if you’re planning a large business purchase. While low APR balance transfers are less common with business credit cards, there are a few that offer them.

Also, be aware of annual fees. The better the rewards program and the more features and benefits the card comes with, the higher the fee tends to be.

Whether it’s worth paying an annual fee depends on your spending and what you’re hoping to get from the card.

4. Consider Additional Benefits

In addition to streamlining costs and earning rewards, small business credit cards can provide you with special financing offers, account management tools, extended warranties and more.

Below are some additional benefits to consider when comparing credit cards:

  • Special financing offers: Many business credit cards offer intro 0% APR periods on new purchases that can be as long as 15 months. During the intro period, you can carry a balance without incurring interest charges. 
  • Purchase protection and insurance: Business cards may offer purchase protections and insurances, such as cell phone protection or travel insurance.
  • Luxury perks: Premium business cards may come with annual fees over $400, but they often provide perks. Keep an eye out for annual airline fee credits, lounge access and elite status at airports or hotels.
  • Account management tools: Business cards often offer perks that make it easy to track spending. Cards may come with quarterly and year-end summaries, receipts, and the ability to export transactions to accounting softwares.
  • Contact our team today to get in touch with a tax expert; we’ll help you with your tax planning strategies, or any other tax concerns.

Before You Apply, Talk to a Financial Expert

If you find yourself struggling to choose a small business credit card, don’t hesitate to contact a trusted accounting professional. A skilled accountant can guide your decision making and help you choose the right card based on your company’s financial situation.

Contact us today, and we’ll put you in touch with someone that can answer your questions!