Best Business Credit Cards of August 2020
Best Cards Summary
CitiBusiness® / AAdvantage® Platinum Select® Mastercard®
Why this is one of the best business credit cards: The CitiBusiness / AAdvantage Platinum Select World Mastercard is a business airline rewards card ideal for business travelers who frequently fly with American Airlines. You can earn double miles on eligible American Airlines purchases as well as purchases with telecommunications merchants, cable and satellite providers, car rental agents, and gas stations. A sign-up bonus worth 65,000 miles is available if you spend at least $4,000 in purchases within the first four months of account opening.
American Express Blue Business Cash™ Card
Why this is one of the best business credit cards: This card, which charges no annual fee, could appeal to business owners who want a simple way to earn and redeem cash rewards. Cardholders earn 2% cash back on the first $50,000 in purchases each year and then 1% cash back. Cash back is automatically redeemed as a statement credit.
U.S. Bank Business Cash Rewards World Elite™ MasterCard®
Why this is one of the best business credit cards: The U.S. Bank Business Cash Rewards World Elite MasterCard is designed for small and midsize businesses. The rewards program offers 3% cash back on cellular, gas and office supply store purchases and 1% cash back on all other purchases with no caps. You can also earn a 25% annual cash back bonus of up to $250 based on the previous year’s cash rewards. The card charges no annual fee.
Delta SkyMiles® Gold Business American Express Card
Why this is one of the best business credit cards: This card offers miles on both Delta purchases and everyday business spending. When you charge Delta purchases, you earn 2 miles per dollar and get the same number of miles for U.S. advertising, U.S. shipping and restaurant purchases. Spend $10,000 a year with your card and get a $100 Delta credit, plus free checked bags and priority boarding on every Delta flight. The card charges a $0 introductory annual fee for the first year, then $99.
JetBlue Business Card
Why this is one of the best business credit cards: If JetBlue is your airline of choice, you can use this card to earn 6 points per dollar on JetBlue purchases. Cardholders also earn 2 points per dollar at restaurants and office supply stores, plus 1 point per dollar on all other purchases. Perks include a free checked bag for you and up to three companions on the same reservation and an annual $100 statement credit for buying a JetBlue Vacations package with your card. The card’s annual fee is $99.
The Hilton Honors American Express Business Card
Why this is one of the best business credit cards: This card offers 12 Hilton Honors points per dollar for eligible Hilton purchases, making it attractive for business travelers who want to earn free nights at Hilton hotels. Complimentary Gold status in the Hilton Honors program is a card perk, and you can earn a weekend night award after charging $15,000 on your card in a calendar year. The card’s annual fee is $95.
The Business Platinum Card® from American Express
Why this is one of the best business credit cards: The Business Platinum Card from American Express is a top-shelf travel rewards option for businesses. Along with the rewards program, the card provides some generous travel perks, such as up to a $200 airline fee credit, Global Lounge Collection access and 35% of your points back when you redeem them for flights through amextravel.
Amazon Business American Express Card
Why this is one of the best business credit cards: The Amazon Business American Express Card offers 3% back or 60 days to pay, whichever better suits your business needs. Those terms apply to purchases from Amazon Business, Whole Foods, Amazon.com and Amazon Web Services. You also earn 2% back at U.S. restaurants and gas stations and on wireless telephone services purchased from U.S. providers. All other purchases earn 1% back, plus the card does not charge an annual fee.
Marriott Bonvoy Business™ American Express® Card
Why this is one of the best business credit cards: The Marriott Bonvoy Business American Express Card is a co-branded hotel business credit card. You’ll earn six points per dollar on purchases at participating Marriott Bonvoy hotels, four points per dollar on purchases in select categories, and two points per dollar on all other eligible purchases. A 75,000-point welcome offer is available once you spend $3,000 in purchases within the first three months.
What You Can Expect From a Business Credit Card
Here’s what you need to know about business credit cards.
Annual fee: More than half of business cards charge an annual fee, but about 29% of business cards that charge this fee waive it for the first year.
Introductory APR: About 32% of business credit cards offer a 0% introductory annual percentage rate. But these periods are often short. Few cards provide more than 12 months.
APR: A business credit card with a low APR is possible. About 32% of business cards offer a minimum APR of 14.99% or lower. A minimum APR between 15% and 18.99% is more typical, though a few cards charge APRs of 19% or higher. In some cases, the APR is listed as a range, which gives the issuer the flexibility to assign a higher APR to applicants who appear to be risky.
Rewards: All but one of the business credit cards surveyed earn rewards. About 76% of business credit cards earn at least two points per dollar or 2% cash back on purchases in bonus categories.
Credit needed: Most of the business credit cards surveyed require good or excellent credit. For FICO scores, this means at least 670 or higher.
What Are the Benefits of Business Credit Cards?
Business credit cards can be a source of fast and convenient capital that can be used for any business need. This could include:
- Working capital or cash flow management. Credit cards can bridge a gap between the need for a cash outlay and the receipt of payment by the customer.
- Startup capital. Business owners can use credit cards to pay for initial organization setup and expenses, such as signage, inventory and advertising.
- Growth capital. Businesses can use business credit cards to put capital assets, such as machinery, furniture or electrical equipment, in place. This gives your business time to generate income while paying off the balance over time. Warning: Carrying a balance means paying interest on your purchases. Be sure you have a plan to pay off the balance sooner, rather than later. Getting a card with a 0% APR on purchases would be ideal.
If you have a retail business in a coastal tourist area, you’re bound to experience stronger cash flow in the summer. So, you might be tempted to use a credit card during the offseason as a loan to offset your decrease in cash flow.
But take a deep breath and pause for a minute. Interest rates on business credit cards are high compared with the rates of some other forms of financing, such as personal loans from a traditional bank. Credit cards are not meant to be long-term loans because you end paying so much in interest.
Do your best to pay off purchases before the end of the grace period. Carrying a balance effectively wipes out your rewards. If you are experiencing serious cash flow issues, then take a look at other options before using your credit card for financing.
Separation of business and personal assets
When used diligently, business credit cards can help you maintain a strict separation between your personal and business finances. It’s important to put restrictions in place to guard against commingling your finances. This ensures that you are personally protected from business liabilities.
If you are sued or go through bankruptcy, and your business records show that you have routinely mingled your personal and business accounts or used business assets for your personal benefit, you could endanger your limited liability protection. Without the limited liability protection you gain by operating your business as a corporation or a limited liability company, your personal assets are at risk.
Speaking of which, because business credit cards typically require a personal guarantee, make sure you know what credit score you (as an individual) fall into. Once you’ve established a business credit profile, the rules change. But until then, maintain a spotless credit report and a good FICO score.
Bookkeeping and accounting features
If you’re still trying to decide if getting a business card is necessary, look at the types of management tools that come with some of these cards. The features are helpful if you have employees and need to monitor their expenses.
You’ll need to research each card so you can compare the rates and benefits, but here’s a partial list of the tools you might come across:
- Viewing up-to-the-minute usage reports for each cardholder on the account
- Setting spending limits on individual cards
- Canceling or suspending credit cards
- Instantly retrieving historical activity for each card
- Setting up account alerts for individual cards
- Adjusting cash advance limits
- Reconciling transactions against statements
- Sending automatic data feeds to your bookkeeping/accounting software systems
- Automatically segregating expenses into categories to assist with expense management
- Providing access to account controls via mobile devices
The list is pretty appealing, don’t you think? There are also some tax-related benefits to think about, so let’s look at those now.
Maximizing tax deductions: Using business credit cards to purchase capital equipment may help you take advantage of tax-planning opportunities. For example, if you use a credit card to pay for equipment repair before the end of the year, you may be able to take advantage of a tax deduction in the current year while paying it off later. Your tax attorney or certified public accountant can help you make these decisions.
Tax simplification: Many of today’s business credit cards come with souped-up reporting and accounting features that make it easy to download detailed reports of all expenses charged using the card. This information can be automatically migrated to some small-business accounting software programs. If you face an audit, you don’t need to panic. Storing records of verified purchases your business has made is simple.
What’s the Difference Between Business Cards vs. Personal Cards?
Business credit cards differ from consumer credit cards in these important ways:
- Business credit cards may have higher limits.
- Business owners can distribute cards to employees, but the business owner retains responsibility for repaying charges on each employee’s card.
- Card-issuing banks may report credit usage and payment information to both personal and business credit bureaus.
- Business credit cards are not subject to the same consumer protection laws as personal credit cards under the Credit CARD Act of 2009. This means that the card-issuing bank could charge a late fee of more than $39 or impose a penalty APR after your first late payment. However, some major issuers have chosen to voluntarily extend some or all of the consumer protections under the act to their business credit card holders via their cardholder agreements. But remember, there’s no legal requirement that the banks have to honor those laws, so pay attention to all correspondence you get from your issuer. Read the cardholder agreement and terms and conditions thoroughly before applying for your business credit card.
- Rewards and discounts cater to business owners, such as discounts on FedEx shipping or office supplies.
Many small-business owners use personal credit cards to finance their businesses. Personal credit cards are usually much easier for owners of small and newly established businesses to qualify for, but the issuers don’t report to the business credit bureaus.
And as mentioned, mixing business and personal purchases on the same credit card could endanger your limited liability protection, putting your personal assets at risk in case of a lawsuit against your corporation or LLC.
What Should You Know Before You Apply for a Business Credit Card?
Eligibility and requirements
There are lots of different business types these days, and they don’t always resemble a traditional view of a business. You don’t need to have a storefront, a warehouse, or any major facilities or hard assets to be issued a business credit card.
If you have good personal and business credit and otherwise meet the issuer’s criteria, you can get a business credit card issued in any industry. So don’t be discouraged if you’re self-employed or you fall into one of these nontraditional business categories:
- Etsy, Amazon or eBay sellers
- Independent contractors and consultants
- Self-published authors
You also do not have to be profitable or have a certain number of years that your business has been operating. The approval process is usually based on your personal credit history and your income.
If you’re a new business owner and your personal credit is so bad that you can’t qualify for a consumer credit card, you probably won’t qualify for a business credit card either. You may qualify for a secured business credit card, which could offer limited access to credit. But it is still a way to rebuild your personal credit history. In time, you’ll move up the credit ladder and qualify for better personal and business credit cards.
Although it’s a good idea to form a separate business entity before applying for a business credit card, it’s not necessary. It’s possible to obtain a business credit card even as a sole proprietor. Just be careful to maintain a way to track your business expenses and keep proper records.
Building your business credit history
Just as most of us have a personal FICO score, established businesses generally have one or more business credit scores that lenders use. Business credit scores generally range from zero to 100, with higher scores going to more creditworthy companies. Scores vary from credit bureau to credit bureau.
Your business creditors will report your payment history to one or more business credit bureaus, which collect your outstanding balance and payment history from the following types of sources:
- Business credit card issuers
- Trade associations and organizations
- Manufacturers that provide merchandise or inventory before payment
One of the most prominent business credit bureaus is Dun & Bradstreet, the developers and proprietors of the PAYDEX score. This score compares businesses’ payment histories on credit accounts to credit terms and rewards businesses for paying early. According to Dun & Bradstreet, companies that have a track record of not only paying credit accounts on time but also paying them 30 days or more ahead of schedule have the highest scores.
Like most other business credit scores, the PAYDEX score ranges from zero to 100, which Dun & Bradstreet characterizes as the following:
Significant to high risk of missed credit payments or default
Risk of late or missed payments on debts is moderate
Good to excellent business credit and payment history and outlook; risk of future late payments or defaults low
Experian’s business credit reports are similar to Dun & Bradstreet’s PAYDEX score and are scaled from one to 100. Experian’s scores differ from Dun & Bradstreet’s score because Experian looks beyond payment history to include total lines of credit in use, new lines opened in the last six and nine months, accounts in collections over the last seven years, percentage of available credit used, and the number of open credit lines subject to terms other than net-30 days, or when the buyer must pay by the 30th calendar day.
Regardless of your personal credit history, you can take steps to make yourself more attractive to business credit card issuers when you are ready to apply:
- Get an employer identification number. Not every lender requires this, but many do. This number indicates to potential lenders that you’re serious about treating your business as a separate entity from your personal assets.
- Develop a solid business plan, including a realistic monthly budget. Your business plan helps tell creditors and other investors where your business is going and lets them take a look at how realistic your assumptions are and how detailed your planning is.
- Start building a business credit history. Over time, as your business demonstrates responsible credit usage, it establishes credit history separate from your personal credit, which could help your approval odds. In the next section, you’ll find tips for establishing a business credit profile.
- Prepare beneficial owner information. Regulations require that card issuers collect personal information for anyone who directly or indirectly owns 25% or more of the business. Although their credit information won’t be pulled, they will keep records for informational purposes. You will need to provide names, birth dates, Social Security numbers, home addresses and percent of the business owned for each owner.
Know your issuer’s credit-reporting policies
To establish a separate credit history for your business, select a credit card issuer that reports your credit activity specifically to the business credit bureaus: Dun & Bradstreet, Equifax, FICO SBSS and Experian each maintain a business-specific database and sell credit background screening to lenders of all types. All major business credit card issuers report information to at least one business credit bureau.
Additionally, some card issuers will report all activity on business credit cards for your personal credit report. This can be good if your personal credit is weak, and you are building credit history with on-time payments. But it can go both ways and damage your personal credit if you’re not managing your business credit responsibly.
Each card issuer has different credit-reporting policies. For example, Capital One reports all business credit card activity to consumer credit bureaus, but Chase only reports to consumer credit bureaus if your account is more than 60 days delinquent. In the latter case, your personal credit doesn’t benefit from excellent credit behavior, but you might get penalized for irresponsible credit habits, such as defaulting on your account.
But if you exhibit responsible credit behavior, having your personal credit separate from your business credit has advantages. Your business can establish credit in its own name. It also keeps that activity off of your personal credit report. This benefits you if have to carry a balance and your utilization ratio goes up because it would not impact your personal credit score.
Improving your business credit score
Just as you should work to maintain and protect your personal credit score and ensure that the information in your credit report is accurate, you should do the same with your business credit score.
How Can You Evaluate a Business Credit Card?
The decision-making process starts with your business plan. Based on your plan, how do you expect to use your business card? Your plan also gives you insights about what type of credit card – and rewards – you’d benefit from.
1. Types of business cards
Credit cards are revolving credit accounts in that they are designed to allow cardholders to carry a balance over time. You only have to make a relatively low minimum monthly payment to keep the account current and in good standing.
Charge card accounts, on the other hand, are paid off each month. There are no preset spending limits within reason, and businesses are expected to pay off their balances before the end of each billing cycle or the following one.
Business Credit Cards vs. Charge Cards
|Business Credit Cards||Business Charge Cards|
|Strict spending limit||No preset spending limit|
|Revolving credit – you can carry a balance||Must be paid off each billing cycle; no revolving credit; substantial penalties for late payments|
|Pay what you want (subject to minimum)||Must be paid off every month|
|Affects credit utilization ratio||Does not affect credit utilization ratio|
|May be issued to applicants with moderate credit scores||Stricter credit underwriting standards – you must generally have good to excellent credit to qualify|
|Can be used to build credit history||Can be used to build credit history|
|No penalties as long as minimum payments are made each month||
Late fees can be up to 3% of balance, or $40 + penalty rate as high as 29.99%
Charge cards typically have somewhat strict credit requirements to qualify, but they also often come with a relatively rich set of perks. The disadvantage is that your credit account could be shut down if you miss a payment, and outstanding balances are charged a high penalty rate after just one or two late payments.
Charge cards have less overall impact on your business or personal credit score because the usage is not counted as part of your overall utilization ratio. However, payment history with your charge card is factored into your personal and business credit.
In practice, charge cards can be great for businesses with steady cash flows or substantial reserves, whose owners want to maximize their cardholder perks and who don’t want to have to worry about preset spending limits.
2. Business rewards cards
Depending on the type of business card you select, you can earn cash, trips and other rewards for regularly using your card for business purchases. Card issuers structure their rewards and incentives programs differently to attract different customer segments.
Cash back rewards are generally straightforward and easy to use. They allow you to earn back a percentage of your spending, usually 1% to 5%, depending on the card and spending category.
Many programs reward users with points or miles. You can exchange these for goods and services, including airfare and travel accommodations and sometimes cash and gift cards through the card’s rewards program.
While a cash back program is much easier to grasp, in many cases, it’s often possible to get greater rewards value from a well-chosen points or rewards card compared with a pure cash back model. The value you receive really depends on the specific details and needs of your business.
Co-branded or loyalty cards
Co-branded or loyalty credit cards offer bonuses for spending and redemption with a specific brand. These types of cards tend to offer deeper discounts and better perks as a reward for staying loyal to that business. Popular types of co-branded cards include:
To predict your potential rewards and discounts from having a business credit card, estimate your most likely future expenses, especially in the following areas:
- Air travel
- Hotel stays
- General travel and entertainment
- Telecommunications, including mobile devices, cable and satellite, internet, landline phones and VoIP
- Shipping and mailing
- Computer hardware and software
- Office supplies
If one of these categories is especially significant for your business, that will help you decide which business credit card might be the best fit for you.
To recruit new customers, credit card issuers offer lucrative sign-up bonuses designed to jump-start card usage.
Annual fees for business credit cards can be as high as $550, but many cards don’t charge an annual fee at all. Of those that do charge fees, some waive the fee for the first year. Some cards will issue a statement credit offsetting the annual fee or waive the fee if you use the card enough over the course of the year.
A high annual fee shouldn’t keep you from the card if you know the rewards are a good match for your expenses. Do a cost-benefit analysis and you’ll get an idea of whether the cost of the card outweighs the rewards and benefits.
If your business has employees, you may want them to have access to the business line of credit so they can make business-related purchases. Some issuers don’t charge for additional cards for employees. But others do charge an extra fee for each card added to an account, so be aware of that and check the fine print. As the account owner, you can earn bonus rewards for employee spending as well.
Foreign transaction fees: Some credit card companies charge up to a 3% fee for transactions completed in a foreign currency. Cards with foreign transaction fees may be a poor choice for business owners with frequent overseas travel or who often make purchases with foreign suppliers.
Cardholder benefits: Most business travel cards come with a basic package of perks and benefits that may include emergency roadside assistance, extended warranties on purchases, and travel insurance. Most business cards also offer snazzy management reports that help you organize your business, track costs and simplify tax reporting.