Whether you’ve run your own business for years, are a new small business owner or are self-employed, a business credit card can offer rewards and perks on purchases you’re already making. And a business credit card may also come with a higher credit limit than a personal credit card.
Each credit card provider sets its own application requirements for business credit cards. But these days, it’s easier to secure one, even if you’re a new business owner or freelancer -- as long as you have good to excellent credit.
While a business credit card can help you earn rewards for eligible business purchases, this type of card also has some drawbacks. We’ll break down everything you need to know about getting a business credit card, choosing the right one and the perks that may make these cards worthwhile.
How business credit cards work
Business credit cards work similarly to personal credit cards. You’ll start by applying for the type of business credit card that makes the most sense for your company, such as a flat-rate cash-back card or a premium travel card, depending on your business and personal preference.
For example, if you choose a flat-rate cash-back business card, you’ll earn a fixed rate back for every qualifying business purchase. Others may offer boosted rewards in select categories. Business credit cards may also include cardholder perks, like purchase protection and extended warranties.
The big difference is that most business cards have higher credit limits, and the spending categories are usually business-specific. Instead of earning rewards like groceries and gas, businesses can earn rewards on travel, utilities and office supplies.
Like some personal credit cards, a business card may also come with a 0% introductory APR period, where you won’t accrue interest on new purchases for a period of time. Some also have a lucrative welcome bonus.
Once you start accumulating rewards, you can then redeem them to help offset other business expenses. Depending on your issuer, you may use them toward travel, a statement credit, new business purchases or other ways.
While you can technically use your business credit card rewards for personal use, experts don’t recommend this. Your business credit card rewards are tax-deductible, so it’s better to keep your personal and business expenses separate.
Who qualifies for a business credit card?
You don’t need to own a brick-and-mortar company or be a longtime business owner to be approved for a business credit card. In addition to traditional business owners or CEOs of startups, here are a few roles that may qualify:
- Independent contractors or consultants
- Freelancers
- Notary publics
- Online vendors
- Real estate agents
- Skilled workers (Electricians, handymen, plumbers, etc.)
- Sole proprietors
Even working some side jobs may qualify you for a business credit card, such as babysitting, baking or house-sitting. And even if your business isn’t bringing in revenue yet, you may be able to list your personal income from another job to help you qualify. Before applying, you can call the credit card issuer to ask about specific qualifications to understand your chances of approval.
Read more: New to Freelancing? What to Know About Taxes This Year
Drawbacks and benefits of business credit cards
The right business credit card can help you earn rewards on regular and one-off purchases. But if you’re not careful, carrying an outstanding balance can come with steep interest charges. Here are some of the benefits and drawbacks to consider.
Pros
Separate business and personal expenses. A business credit card helps keep your personal and company expenses separate, which can be helpful come tax season. Plus, it will make it easier to budget and track both your personal and business expenses separately.
Higher credit limit and more business perks. Business credit cards tend to have higher credit limits and may have better or more business-relevant rewards and perks. For instance, some business credit cards offer statement credits for select subscriptions and travel that could make managing your company a little easier and less costly.
Build your business credit. Once you have a business credit card, you’ll start building your business credit score. There are several business credit bureaus, but many card issuers look for a good Dun & Bradstreet score of 80 to 100. Good business credit can come in handy for future credit cards and loans.
Cons
High APR. Business credit cards tend to come with higher credit limits but also higher APRs. That means if you don’t pay your balance in full and on time each month, you’ll pay more in interest. Some business credit cards have APRs between 25% and 27%. And the penalty APR can be up to 29.99% if your payment is late.
Business information is required. To qualify for a business credit card, you’ll need to provide some information about your company or freelance work, such as your annual revenue and expenses. If you’re just starting out, it may be difficult to get approved without this information.
Annual fee. Most business credit cards come with a hefty annual fee to get the best business rewards and perks. Annual fees among our top business credit card picks range from $150 to $695. If you don’t think you’ll maximize the card’s value with the rewards or perks you’ll earn -- like statement credits and complimentary subscriptions -- it may not be worth the price tag.
Read more: Side Hustle Taxes Are Complicated. 5 Tips I Wish I Knew When I Started Freelancing
How to get a business credit card
The steps for getting a business credit card are similar to applying for a personal credit card. But there are a few differences to keep in mind when factoring in your business goals and expenses. Here’s how to get a business credit card and what to expect:
Check your personal credit history and score
First, take a look at your personal and business credit score (if you have one) to get an understanding of where your credit is at. Most business credit cards require good to excellent credit (approximately a 670 FICO score or higher). However, there are a few business-secured cards that may make sense if you have less-than-perfect credit.
If you have a new business, the credit card issuer will look at your personal credit to determine your creditworthiness for a business credit card. After two to three years, once you build a business credit score, you can then use this score to apply for other business credit cards and loans.
Choose which business credit card you want
Next, look at which business credit cards best align with your business spending habits. For example, if you travel often for business and spend the most on flights and hotels, you may benefit from a business travel credit card, like the Ink Business Preferred® Credit Card, to earn more rewards on travel purchases.
To help decide which card is best, also look at redemption options to see if you can easily redeem your rewards to save money -- whether for travel or cash back to cover another expense. For example, if you’re kickstarting a podcast, you may choose the Ink Business Unlimited® Credit Card to earn unlimited 1.5% cash back on every purchase -- from equipment to monthly subscriptions.
Remember you can always add other business cards later to work towards a more lucrative rewards strategy.
Apply
Once you’ve narrowed down your choice, it’s time to apply. You’ll need some of the basics for any credit card application -- your full name, Social Security number, birth date, address, email and phone number.
You’ll also need some business information, including your average annual income, business name, phone number and address, depending on the card issuer’s requirements. You may also be asked business-specific questions about revenue and the number of employees. The issuer may also request your business tax ID number and any supporting documentation the credit card company may request.
If you have a business credit score, most issuers will look at this to determine your approval status and credit limit. Otherwise, they’ll use your personal credit score.
If you’re approved, review your business credit card agreement to understand rewards, redemption options, perks and any fees. Use your new card wisely by only charging what you can afford to pay back in full and on time each month.
The bottom line
You don’t need to have dozens of employees or own a major corporation to qualify for a business credit card. Regardless of your type of business, weigh the pros and cons to decide which card is best -- including fees, rewards and how you’ll maximize the card’s value without overspending. Once you find a card that best fits your business, look at the eligibility requirements to understand your chances of approval and ask the card issuer any questions before applying.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
