Business credit cards: What they are and how they work
Editor's Note
If you're an entrepreneur or business owner who's new to the world of credit cards, you might be wondering what a business credit card is and how it works. TPG is here to help.
Like personal credit cards, business cards provide benefits like valuable earnings rates, user-friendly perks and sometimes even 0% introductory annual percentage rates. When used responsibly, business credit cards can be a boon to your enterprise and help you maximize your business-related spending to boot.
What is a business credit card?
A business credit card is aimed at both large companies and small-business owners, usually offering benefits that specifically cater to businesses. Compared to personal credit cards, business cards usually have higher credit limits, increased potential for rewards, the ability to issue employee cards and useful tools for managing and monitoring business expenses.
Business credit cards can help you pay off fixed expenses, such as rent and utilities; they can also help you navigate fluctuations in cash flow or seasonal requirements — all while keeping your business and personal finances separate.
Related: How to get a business credit card
How business cards work
In some ways, business credit cards are similar to personal credit cards. With both types of cards, users make purchases using their cards that are charged to a line of credit. At the end of each billing cycle, cardholders receive a statement indicating the total balance owed and the minimum amount due. Paying your bill in full every month exempts you from any interest charges on your purchases.
As opposed to typical credit cards, many business cards function as charge cards, which require payment in full each month. The main advantage of charge cards is that they generally don't have a predefined credit limit.
They may not be the best choice for new businesses with significant startup costs that need to be paid over time or for businesses with irregular income. However, the absence of a spending limit can help established businesses with substantial monthly expenses that are factored into their budget.
While many business cards have no annual fees, there are also premium business cards that offer exceptional sign-up bonuses, rewards and perks.
Related: Who qualifies for a business credit card?
Business credit card benefits
A business card's generally higher credit line is valuable for both regular expenses and the unpredictable cash flow situations that often come with running a business. Business cards also allow you to track business spending separately from personal spending. That helps with managing accounts and simplifying tax preparation.
Some business cards provide extended interest-free periods, allowing for longer periods of low or no APR financing beyond the standard 21-day period. This flexibility provides a grace period to pay off balances and supports making business investments.
The best business cards also offer enhanced earnings rates on business expenses and business-related perks like free access to business tools and discounts on certain services.
Lastly, business cards allow you to add employees to your account with customized authorizations; this enables you to monitor their spending activity and accumulate rewards on their purchases. Individual credit limits can be set based on their specific roles within the company.
Business credit card drawbacks
A personal guarantee is typically required to qualify for a business card. This means you're personally liable for any outstanding debt that your business can't repay.
Some business cards also come with higher annual fees — sometimes for hundreds of dollars. While these fees are often justified by the substantial rewards and perks offered, it's still a consideration when applying.
Know, too, that business cards don't qualify for the same protections as consumer cards under the Credit Card Accountability Responsibility and Disclosure Act of 2009. Because of this, it's important to carefully review the terms and conditions of your business card to understand the issuer protections that cover your business.
How do business cards affect your credit?
If you apply for a business card, the card issuer will assess your credit history and credit score to evaluate your creditworthiness, just like with a personal card. Most business cards will come with a personal guarantee that makes individuals liable for any purchases made.
Additionally, most business card issuers report debt to business credit reporting services. Be sure to review your credit card agreement to understand which entities your debts and payments will be reported to and the timing of those reports.
Bottom line
If you're a small-business owner or an employee looking to augment your company's savings, it's worth looking into a business card. With higher credit limits and business-specific perks, the right card can help your business make a significant dent in its next expenditures report.
The key, of course, is finding the right card for you. For more help with that, check out our list of the very best business cards on the market right now.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
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- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees