How to choose the best credit card for your business

How to choose the best credit card for your business

Establishing a business is, by no means, an easy undertaking. You need to make many decisions and manage your finances effectively to make your operations run smoothly. One of the critical decisions regarding your finances is whether or not to get a business credit card. If you decide to go for it, you must choose the one that best aligns with your business's financial goals and provides benefits tailored to your industry.

Considering the many options available to business owners, if this seems like a hassle, don't worry. In this post, we'll explore why you need a business credit card and how to choose the best one for you.

Perks of having a business credit card

A business credit card is not something all business owners decide to apply for as soon as they launch their company. However, business credit cards have some interesting perks that will make running your business easier. From providing an easy way to send money and payments to your suppliers, to keeping tabs on your spending, here are some reasons to apply for a business credit card:

#1 They make managing expenses much easier.

The most obvious one is separating your business-related expenses from your personal expenses. This is especially important for your company's accounting department, making their lives easier and their job more efficient since they won't have to sort those expenses themselves.

#2 They can help your business save on business travel.

If you are a frequent traveler, a business credit card can also come in handy on your next trip since many offer great travel rewards that will help your business save on travel expenses while you enjoy your trips a lot more.

#3 They help build your business's credit score.

Finally, having a business credit card can help you build your company's credit score, making it easy to be approved for business loans in the future.

How to choose a business credit card

Now that you know why you would want to get one, let's see how to choose a business credit card.

#1 Learn how business credit cards work.

While business credit cards work almost the same way as personal credit cards, there are some differences that you might want to look into. This includes things like special business rewards, discounts on business-class flights, and discounts on different business-related purchases, including things like office supplies, internet services, and more. While we may have access to rewards programs like Fetch Rewards for our personal spending, that’s not usually the case for businesses, so business credit card rewards programs are one of the best ways to save money on your purchases. However, if you don’t start by learning how these programs work, you’ll likely end up leaving money on the table.

These cards sometimes also include perks like free additional cards for your employees, as well as several valuable functionalities like expense tracking to keep an eye on what your employees are doing with the company credit card.

Reading through articles that detail how you can make the most out of a business credit card is the first thing you have to do when choosing a card, and it will determine whether or not it will be good for you to have one for your business.

Additionally, you might also want to determine whether applying for a charge card is better than the standard business credit card, or vice versa. While these two cards generally have the same functions, a charge card obliges you to pay the full amount of your credit at a negotiated time. As for standard credit cards, you can opt to pay your credit through installment, the only catch being the interest.

Depending on your business's need to spend and how well you can pay for your credit in the future, these two types of cards can be helpful for you in different ways.

#2 Consider the annual fee.

For most business credit cards, annual fees are little to none. Some positively-reviewed cards, such as The Blue Business® Plus Credit Card from American Express, charge no annual fees, which is a blessing for some. However, this does not mean you should reject other business credit cards that have fees, since those often come with amazing perks that offset or even pay for that fee several times over.

The American Express Business Gold Card is a good example as it has an annual fee of $295, which is not a low fee by any measure. However, applying for the card grants you a generous amount of benefits like a sign-up bonus of 70,000 points and 25% rebates when booking through Amex Travels.

It may not look like it at first, but your business might be better off when your card has an annual fee, especially when the benefits are helpful for your operations and finances.

Annual Fees may or may not be a dealbreaker for some business owners, so it is worth considering when choosing the business card you want to apply for.

#3 Take a look into your business operations.

There are hundreds of business credit cards to choose from, and one way to narrow down these options is to look at your own business. Ask yourself some of these questions:

  • What are my business's most common expenses?
  • Do I need a card that grants me additional benefits as a frequent flier? How can owning a card help me categorize my expenses?

Having these questions set as guidelines for your business card selection will help you narrow down your options and eventually lead you to the right decision for your business. There are other factors you need to consider once you do a thorough check of your business operations. Aside from your travel behavior, you can also assess if there are cards that may give you certain accommodation benefits, which may come in handy if you are a businessman who regularly meets with clients and participates in conferences. 

On the other hand, if you find value in treating your employees or prospective clients to monthly dinner meetings rather than meeting in your office, you might want to check out cards that grant discounts or rewards on those types of purchases. These are incremental factors that will have long-term and substantial effects on your business, so it is best to consider them when looking into a business credit card.

#4 Determine which card will give the most appealing APR

We don't usually get personal credit cards to carry a balance since many of our purchases are unproductive at best. However, that's not always the case when using a business credit card. In some cases, especially if you're having trouble securing investors for your business, you may use your business credit card to borrow money you don't currently have and pay it back over time. In these cases, choosing a credit card with as low an APR as possible can make a huge difference.

The Annual Percentage Rate is considered the price you have to pay for borrowing money from the bank to finance your operations, and ideally, the card with the lowest APR is the one you should go for if you think you'll be using it as a form of credit.

It's also worth noting that APRs can vary depending on your credit history on your personal credit card, so the better your credit scores are, the more likely you are to receive a lower APR.

#5 Customer service matters.

Customer service is one aspect of choosing a business credit card that is often overlooked, but is really important to consider. You do not want to have the additional burden of reaching a customer service representative should you encounter some issues with your card, especially when you are overseas. Business owners put great value in their time, and having a business credit card with poor customer service can badly impact your business.

As part of your research, you should look into how you can reach the credit card company if you encounter a problem with your card. An ideal choice would include 24/7 phone support, a dedicated landline, and a specified email address that you can all access easily when you have a concern in mind.

It might not be the first thing to pop into your head when choosing a credit card, but it's still worth considering.

#6 Weigh the perks and benefits.

There is nothing more appealing for a businessman than to know that he has scored a great deal for their business. The same applies to choosing a business credit card. Not everything is good for your business, so you have to know all your options and weigh the benefits they offer to choose the most fitting card.

Depending on your and your employees’ activities, you can select a business credit card that offers you the best benefits. For instance, if your company requires you to travel frequently in and out of the country, choosing a good travel rewards credit card that gives bonus miles for every trip or rewards you with free flights is the best option.

If your business requires you to make loans every so often, you should consider choosing a card with a low APR. Weighing your card's options starts with an internal assessment of your business needs, and only then can you begin narrowing down your options.

#7 Build your personal credit score.

One of the things you should know is that your business credit will be linked to your personal credit. How your credit profile looks on both your personal and business credit cards will affect each other, especially the first time you get a business card. Banks expect that as a business owner, your financial literacy applies not only to your business but also yourself. As such, you need to show that you can manage your finances well and that you don't represent a risk to the issuing bank.

If you still don't have a credit history with your business, the only source of information the bank will have to decide whether or not you are worthy of a line of credit is your personal credit history. This is why if you have a credit card of your own, you should use it smartly to boost your credit score and so increase the likelihood that you'll be approved for a better card for your business.

The bottom line

A credit card that you can use specifically for your business purchases is an effective way to manage your finances. However, the process of choosing one can be difficult given the requirements needed and the number of options you have. If you apply for one without a proper understanding of how a business credit card works, you might be missing out on many great benefits that could give you an edge over the competition.

This is why it is important to know the basics of what works best for your business, especially when the benefits offered by some banks can be helpful for your future operations. Remember that your business can only fully thrive if you know where all your money is going and how you're spending your resources, and having a business credit card will make this as easy as it can be.

Article by Jordan Bishop