This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.
Update: Some offers mentioned below are no longer available. View the current offers here: The Enhanced Business Gold Rewards Card from American Express OPEN, CitiBusiness ThankYou Card, Starwood 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.
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.
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.
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.
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.