Business Credit Cards

Small-business owners—from the occasional freelancer to those with brick and mortar storefronts—should consider using a business credit card. The best small-business credit cards come with generous rewards programs, expense tracking and money-saving perks that can benefit nearly every type of business. And the best part is that you don’t need a formal business structure to apply for one!
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Business Credit Cards, Pros and Cons & How to Apply

Time in Business

< 1 year

Annual Revenue


Credit Score


Funding Amounts
$1,000 - unlimited
13.99% - 39.99%
Processing Time
1 to 7 days

A credit card is a way to buy things without taking money out of your business bank account immediately (a type of loan). Instead, the business will pay for what it bought on a monthly basis. If the business doesn't pay this bill, it will be be charged interest (the cost of your loan).

Businesses of all shapes and sizes get credit cards to pay for start up costs, short term and long term expenses and most commonly it's a great way to pay and track subscription costs. As an added benefit, a business credit card is a great way to build business credit. If the business gets a credit card and pays the bills on time, the businesses credit score will improve all-the-while banks and lenders see that the business is a financially responsible borrower and give you lower cost financing the future. Business credit cards can be a great tool if used responsibly.

How Do Business Credit Cards Work?

How Do Business Credit Cards Work?

As you grow your business, you need to pay careful attention to your finances. This is particularly important for your cash flow to ensure that you can always meet your obligations and keep suppliers and customers happy. You may have access to various finance tools and may be considering a business credit card or two. But before you decide, what do you need to know about these options, how do they work, and how should you apply?

What Is a Business Credit Card?

What Is a Business Credit Card?

A business credit card is specially designed for business owners and has certain benefits that set it apart from a personal card. It’s designed to provide short-term financing to smooth out any cash flow challenges or give you some emergency funding. It’s an excellent option for businesses that may have to deal with seasonality, where sales may be lower for certain months, while expenses or overhead remain the same. Credit cards are also a great choice to deal with unexpected expenses, or to pay for recurring subscriptions or other recurring expenses that the business can easily pay off at the end of each month.

How Do Business Credit Cards Work?

How Do Business Credit Cards Work?

These cards work in much the same way as personal cards. You can use them for purchases and receive a statement from the provider at the end of each billing cycle. Depending on your preference, you will receive a statement in the mail or online showing the total amount outstanding and the minimum you’ll be asked to pay.

Should you settle the bill in full each month, you won’t incur any interest charges, and in an ideal world, this is the best practice. However, if you decide you want to carry a balance, interest will start to accrue from your nominated payment date.

Interest rates can vary dramatically depending on many factors. Although less common, the credit issuing company may assess the creditworthiness of your business only when they offer you the card and then apply a certain interest rate. More common scenario is that you personally guarantee the credit card and the rate offered to you is a direct reflection of your personal creditworthiness. It’s important to consider the interest rate carefully, as if you carry a large outstanding balance month after month, your finance costs will be sizeable by the end of the year.

Some companies may offer you a charge card rather than a credit card. These card providers will ask you to settle the bill in full at the end of each month, and there is no option to carry a balance forward. Because of this, there is no interest rate, and there is typically no credit limit either. This type of card can have certain advantages if you are already established and have some sizable and repeatable monthly expenses. The company may offer you “rewards” based on your spending, with points allocated for each dollar spent. You may be able to redeem your points to make purchases or upgrade plane tickets. However, this card type may not be ideal if you’re just starting out and would rather spread out some costs over time.

How Are Payments Calculated on Business Credit Cards?

How Are Payments Calculated on Business Credit Cards?

At the end of each billing cycle, you’ll be asked to make at least a minimum payment by a certain date. The way credit card companies structure these payments can vary, so you should refer to the terms and conditions before you apply. For example, the company may ask you to pay the greater of a small percentage of the balance (perhaps 2%) or a low dollar amount. This will be based on the previous balance as shown on the statement, less any payments or credits made and any new purchases, cash advances, finance charges, or fees.

Note that companies may charge a different APR (annual percentage rate) for cash advances than for new purchases, which may affect the balance and, thereby, the minimum payment. If you make a payment in excess of the minimum required, this will be first allocated to a balance with the highest APR. Remember that if you pay the new balance in full by the due date, you will not incur any finance charges.

Business credit card companies use the periodic rate when calculating interest. This is the annual interest rate divided by the number of periods, typically monthly or quarterly. The company may also apply the periodic rate to the average daily balance over the accounting period to calculate the finance charge amount.

These cards may not need to conform with the Credit Card Accountability Responsibility Disclosure Act of 2009 (CARD Act). This legislation was put in place to protect consumers against unfair practices in this industry, but some card providers may choose to comply with some of the laws. These laws may affect how much the company can charge if you pay the bill late, and may give you a choice of whether to accept a pending interest rate or opt out.

Estimate your credit card payments using the Lendzero Business Credit Card Payment Calculator.

Pros and Cons of Business Credit Cards

Pros and Cons of Business Credit Cards

Pros and Cons of Business Credit Cards


  • Line of credit. This allows you to deal with cash flow peaks and troughs.
  • Potentially higher credit limit. It’s typically larger than that offered with a consumer credit card.
  • Possible sign-up bonus. As credit card companies look for new business, they could extend this bonus and monthly cashback bonuses when you continue to spend.
  • Extra cards for employees. These may come with individual credit limits, and you can authorize certain employees to make some purchases for the business.
  • Rewards. Some providers will give you points or bonuses, especially if you use the card for business travel.
  • Longer interest-free period. Some issuers can offer extended periods of interest-free financing than you would typically get with a personal credit card.


  • High interest rates or fees. If you carry a significant balance monthly, you could pay a lot in interest charges.
  • Lower levels of protection. The CARD Act may not protect these accounts.

Accountability. In most cases the business owner is still personally responsible for the debt incurred. As such, poor management could affect your personal credit history.

How to Choose the Best Business Credit Card for My Business?

How to Choose the Best Business Credit Card for My Business?

Work out what you need from your business credit card.

  • If you have multiple employees, would it be best to get individual cards for each, making them responsible for handling their expenses?
  • Are you just looking for a card to help with larger, one-off purchases, or do you need to cover regular travel expenses?
  • Cost is a major consideration, so you must make careful comparisons. Understand the various interest rates and service charges and how each company makes its calculations. Remember to look beyond any initial, lower APRs or sign-up bonuses, so you understand how much a line of credit will cost you when used.
How Business Credit Cards Help or Hurt Your Personal Credit

How Business Credit Cards Help or Hurt Your Personal Credit

When you open a business credit card account, you need to give a personal guarantee that you will repay the money that you borrow. So, if you pay on time and carry a relatively small monthly balance, this could positively impact your credit score. However, if you miss payments and carry a large amount month by month, your business credit card account could affect your credit history.

Note that companies have different policies, and some may not automatically report account activity. Thus, you should check with a provider before you apply, see the chart below for details; however this might not be the most up to date data .

Business Credit Card Consumer Credit Reporting Policies
Credit Card Issuer Account Activity Reported to the Consumer Credit Bureaus
American Express Negative activity only
Bank of America None
Capital One All activity for some accounts*
Chase Negative activity only
CitiBusiness None
Discover All activity
PNC None
Wells Fargo None

*Capital One used to report all business credit card activity to the consumer credit bureaus. As of October 2020, the bank no longer reports credit activity to the consumer credit bureaus for its Capital One Spark Cash for Business credit card customers.

Should I Obtain a Loan, Line of Credit, or Business Credit Card?

Should I Obtain a Loan, Line of Credit, or Business Credit Card?

The answer to this question will generally depend on your specific needs.

A loan will be issued for a set amount and therefore have an upper ceiling. You typically get a fixed interest rate and a specific monthly repayment so you can accurately account for the loan in your cash flow projections. This may be a good option if you have a large, one-off purchase to make, but do not envision any further needs.

A line of credit is more flexible. You can tap into this option as new obligations come along up to a pre-agreed limit. You may get a variable rate of interest, which could go up or down depending on fiscal policy. Lines of credit may have higher limits than business credit cards.

The business credit card is similar to a line of credit in many respects as it will have a pre-agreed limit, expected monthly payments, and given interest rates. These interest rates tend to be higher for a business credit card than for a line of credit. Remember, charge cards may be another option if you know that you can pay back the outstanding balance in full, as they effectively give you “free” interest for a given amount of time.

Business Credit Cards: the Bottom Line

Business Credit Cards: the Bottom Line

Business credit cards can be highly advantageous for any organization, especially if it often faces challenges with monthly cash flow. However, it’s essential to understand the obligations and read the small print carefully to appreciate the costs and implications.

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