Travel Tuesday Top 10: Reasons to Get a Business Credit Card

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Update: Some offers mentioned below are no longer available. View the current offer here – CitiBusiness ThankYou CardStarwood Preferred Guest Business Credit Card from American Express

Last week’s limited-time 75,000-point sign-up bonus offer for the Amex Business Gold Rewards card was a good reminder that many of the credit cards currently on the market that are geared towards business carry rewards and benefits that are just as great – and sometimes better – than the personal credit cards that are out there including huge sign-up bonuses, category spending bonuses, and tons of other perks. A lot of people seem hesitant to apply for them, though, so I wanted to create a #TT top ten list of great reasons why you should take advantage of business credit cards.

Note: I am not a professional financial planner or accountant, so you should consult yours before making any credit decisions and above all, be responsible and don’t bite off more than you can chew.

1. You don’t need a large business to get one. This seems to trip up a lot of people who think that you need an actual, incorporated business with its own Federal ID number in order to apply for a business credit card. While you should aim to use your business credit card for business related expenses, each credit card company has a different threshold for what information they require for someone to get a business card. Most are very flexible, but Citi is generally the toughest, often requiring proof of your business, including government EIN and business checking account information. However, many small businesses start out as simple DBAs (Doing Business As) which simply denotes a business name used by a person or entity that is different from the person’s or entity’s true name. So if you start a small Ebay business and want to keep those finances separate from your personal expenses, it would be conceivable that you’d want a business credit card. If you are starting a small company as a sole proprietorship, you can just provide your social security number when asked for EIN and usually that suffices.

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Applying for a business credit card will incur a 2-5 point hit on your personal credit score.

2. Business credit cards don’t sit on your personal score. I want to start by clarifying that you get a 2-5 point hit on your personal credit score when you apply for a business credit score since banks use it to assess your creditworthiness and these cards are still personally guaranteed. However, after you have opened a business credit card, that line of credit sits separate from your personal credit line so utilization and other factors shouldn’t affect your personal credit score. This is good if you run big balances on your business cards since it won’t artificially damage your personal credit score. Just be careful, though, since if you default on a business card, expect the issuer to come after you personally since they are guaranteed by your personal credit.

Keep your expenses separate
Keep your expenses separate with a business card vs. a personal card.

3. Keeping expenses separate. Almost all of us have that credit card or cards that we put all our business or non-personal expenses on, whether we have a business of our own or not. It’s important to keep your personal expenditures separate from your business ones – especially as tax season draws nigh – whether you’re just getting reimbursed or you are operating your own company. Having a separate business credit card makes tracking expenses easy and you’ll pay less in accounting fees if your accountant doesn’t have to sort through personal vs. business expenses (plus it’s easier to get everything straightened out if you ever get audited by the IRS). This is also a great reason for a bank or issuer to give you a personal credit card when you apply since it’s one of the major reasons people apply for business credit cards in the first place.

Update: This offer is no longer available. View the current offer for the Chase Southwest Rapid Rewards credit card here.
4. More sign-up bonuses. If you’ve already churned through most of the personal credit cards currently on the market, applying for business credit cards allows you to go for a whole new set of sign-up bonuses. Though you’ll have an inquiry on your credit, you’ll also be eligible for a sign-up bonus like the Ink Bold and Ink Plus‘s 50,000 Ultimate Rewards points, the Southwest Business Card with card has a 50,000-point sign-up bonus, the  Starwood Business Amex‘s 25,000-point bonus, or that limited-time Amex Business Gold 75k sign up.  If you already got the 50,000 American Airlines AAdvantage miles on both the personal Visa and Amex, you could always get one of their business cards like the Citi Executive / AAdvantage World Elite Mastercard or the CitiBusiness / AAdvantage World Mastercard to rack up even more miles, or the the sign-up bonus of 10,000 Medallion Qualifying Miles with first purchase Business Delta Reserve card from Amex if you need that little extra bump for elite status. Check out my list of the best business cards for earning travel points, miles and cash back. Just remember, many business cards have higher spending requirements, so know what you’re getting yourself into before you sign up.
Earn triple points on airfare with the Business Gold Rewards Card.
Earn triple points on airfare with the Business Gold Rewards Card.
5. Different bonus spending categories. Just like personal credit cards that have category spending bonuses such as the Sapphire Preferred’s 2x on travel and dining and the Amex Premier Rewards Gold’s 3x on airfare and 2x on gas and groceries, many business credit cards extend spending bonuses on certain categories of merchants, so by using your business cards on those specific categories while continuing to use your personal cards on the categories where they earn a bonus, you can maximize even more of the dollars you are spending. The Business Gold Rewards card from Amex, for instance, has the same 3/2/1 earning structures as the personal card, awarding 3x points on airfare, 2x points on purchases in the U.S. for advertising in select media, gasoline at U.S. stand-alone gas stations, and shipping and 1x points on other purchases. Restrictions: Points are earned only on eligible purchases. Bonus points limitations apply. The Chase Ink Bold and Ink Plus both offer 5 points per dollar spent on office supplies/cell phone/internet/landline/TV, 2 points per dollar on gas stations and hotels and 1 point per dollar on everything else. Restrictions: $50,000 max spent in both 5x and 2x categories. For its part, the CitiBusiness Thank You card earns 3 points per dollar spent on eligible purchases in rotating categories.
Airport lounges are a great place for frequent fliers to wok or relax at the airport.
Airport lounges are a great place for frequent fliers to work or relax at the airport.

6. Business perks. Amex and Chase both have geared rewards programs and benefits specifically for their line of business credit card products.  Amex OPEN Savings gives automatic discounts at certain vendors: like 5% off Hyatt, 5% off Courtyard by Marriott and up to 10% off at Office Max as well as 90 days of purchase protection and extended warranties. For its part, Chase gives cardholders of both the Ink Plus and Ink Bold complimentary Lounge Club membership. It’s sort of like Priority Pass membership where you pay to join and then each time you visit a lounge, you pay a day pass fee. Lounge Club has 350 VIP airport lounges worldwide and membership is priced at $150 per person per year. Ink Bold and Ink Plus cardholders get two free lounge passes per year and then after that, they will have to pay the usual $27 per person per visit fee. The Ink Plus also gives you access to Chase’s Blueprint service which helps you design a plan to pay off purchases in flexible ways and track your spending.

7. More types of cards. Although many banks decide how many credit cards you can have based on your overall credit line limit, some banks have limits on the number of cards you can have. For example, you can only have four personal credit cards with Amex. However, Amex will let you get an unlimited number of business and charge cards as long as your credit is healthy, so if you’ve maxed out the bonuses that you can get on personal cards from a single bank, having the option to get business versions of those cards is a great way to keep those bonuses coming in and to be sure you are maximizing those category spending bonuses on every single purchase.
8. Establishing a business credit history. This one goes hand-in-hand with the fact that your business credit card’s line of credit doesn’t sit on your personal report. While you hopefully have a high personal FICO score to apply for the card in the first place, once that card is open, its entire record sits separate from your personal credit. If your business takes off and you apply for loans for purchases, real estate, or other large expenses, however, banks will look at your business line of credit when determining your interest rate, and the more established your line of credit, the better rates you’re likely to get.
American Express, Visa, and Mastercard all offer purchase protection so you
American Express, Visa, and Mastercard all offer purchase protection so you can feel safer when making big business purchases.

9. Protections. Although purchase protection and insurance is generally less generous on business credit cards than with personal cards, they can still provide valuable and comprehensive protections against fraud and on purchase the same as any Visa, Mastercard or American Express card does so that if something goes wrong with something your business purchases, it won’t have a crippling effect on your bottom line. For instance, both the Chase Ink Bold and Ink Plus cards as well as the CitiBusiness AAdvantage card are World Mastercards, which come with warranty extension, price protection, and Master Rental Insurance on car rentals – find more details on these benefits here. American Express’s OPEN Savings plan also offers a host of protections including warranty extension, purchase protection and car rental and loss insurance, so the benefits are fairly comprehensive.

10. More spending power. Business credit cards often come with higher lines of credit, which is how many small businesses get off the ground. Just remember, especially with business charge cards, you need to pay the bill off in full every month or else you’ll incur huge fees, which will likely negate the value of the points/miles accrued.

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