Having a separate credit card for your small business has many advantages. There is often a higher credit limit, many credit cards offer reward programs, and small business credit cards generally have lower interest rates than personal ones. With a credit card specifically for your small business, you can give employees a company credit card with preset spending limits. Separate accounts keep your business expenses completely detached from your personal expenses, which makes life easier during tax season. It also protects your personal assets, like your house and your car, if your business gets sued. Having a company credit card establishes proof that your business and your personal finances operate separately. Before you commit to a company credit card, understand what to look for and check out our recommendations.
Tiered or flat rate rewards systems
Tiered rewards systems offer cash back, points or miles at different rates that are determined by how the cardholder spends money. The more you spend, the more rewards you can receive. Flat rate rewards are becoming more common because they typically have better long-term benefits. With these programs, cardholders receive rewards at a standard rate. Additional cash back can be earned from making purchases in a certain category or paying your bill on time.
The Importance of APR
Another important part of a credit card is the annual percentage rate (APR). When cardholders don’t pay off their credit cards, they are charged interest that’s based on a percentage of the remaining balance. If you have a low APR, you will be charged less interest on the money in your credit card balance that you don’t pay off. In order to qualify for a low APR credit card, you have to maintain a high credit score. People with lower credit scores tend to have higher APRs. In addition to an APR, credit cards typically have other fees.
Capital One Spark Cash for Business
The Capital One Spark Cash for Business credit card offers customers flat-rate rewards. To qualify, you must have a good to excellent credit score. There are no foreign transaction fees and it offers a flexible rewards system. Since the rewards program doesn’t have an expiration date, you can redeem them for cash back at any time. The $59 annual fee is waived for the first year and there’s an opportunity to earn a one-time cash bonus of $500.
Ink Business Cash Credit Card
The Ink Business Cash Credit Card from Chase provides a $300 cash bonus when you spend $3,000 in the first three months. There’s no annual fee and 0% APR during the first 12 months. With this credit card, you can add employee cards with no additional cost. The tiered reward system is best for companies that regularly spend a lot on business expenses.
The Enhanced Business Platinum Card
American Express offers The Enhanced Business Platinum Card for small businesses that require a lot of travel. There is no spending limit and there are no foreign transactions fees. Cardholders benefit from premium travel perks on qualified airline purchases. With this credit card, travels have access to airport lounges worldwide. The $450 annual fee is intimidating but it can be written off as a business expense in your taxes. The Enhanced Business Platinum Card is a charge card, not a credit card. This means you have to pay the full balance each month.
Choosing a credit card for your small business can be intimidating but it’s an important tool to further develop your company. If you read the fine print and understand what you’re looking for, a company credit card will have many advantages for your small business.