How business owners chose their credit cards
Travel, small business and consumer credit expert
Whether you’re launching a startup, leading a growing company or running a gig on the side, choosing the right credit card for your business can earn points for travel and cash back to trim your costs.
A business credit card also can make tax time easier, provide organizational tools to help you track profit and expenses, and help you build business credit separate from personal.
How can you find the right business credit card for you? Business owners we spoke with suggest you weigh these six factors:
1. New business? Think small (no annual fee, low APR)
Mark Aselstine had two primary concerns when choosing a credit card for his new business, Uncorked Ventures: “I didn’t want the thing reporting on my personal credit, and I wanted the most credit card rewards possible.”
Aselstine knew his big expense was going to be shipping wine to subscribers, so he looked for a business credit card that would reward that.
He went with the American Express Business Gold Rewards credit card and scored a 50,000-point sign-up bonus with the annual fee waived for the first year. Now that his business is taking off, the $175 annual fee is paying for itself, Aselstine says.
He’s also getting the rewards he sought. Business Gold offers 3 Membership Rewards points per dollar for the first $100,000 spent in a choice of five categories and 2 points per dollar on the remaining four.
Aselstine chose shipping as his 3x category. “For me, that’s huge,” Aselstine says. “I spend about $15 in UPS fees for every wine-club shipment, so those points add up quickly.”
Business credit card tip: If you’re starting out, you likely want to minimize expenses while building business credit. A card with a low or no annual fee will keep costs down. Premium rewards cards, on the other hand, require excellent credit and often come with hefty annual fees. Oh, and if you can snag a sweet sign-up bonus with a business card without stretching to meet the card’s minimum spend, do it.
2. Decide which type of rewards you want
David Parker, owner of Parker’s Crazy Cookies in Northern California, chose Citi Double Cash Card as his dedicated business card. Double Cash delivers just what he wanted: 2 percent cash back (half at purchase, half on payment) with no annual fee.
Parker makes personalized cookies for special ocassions. Think cookies shaped like a loved one’s face for that person’s birthday or cookies resembling team members for an office recognition event.
“I run a bakery with seven employees, and this card is great,” Parker says. “They give us a check at the end of the year.”
The check for 2017 was close to $7,000.
When David Waring was searching for a business credit card for FitSmallBusiness.com, he wanted maximum cash back.
Waring uses the Capital One Spark Cash for Business card for all expenses related for the New York City-based digital publishing company.
“The sole reason we chose this card is the 2 percent cash back on all purchases, with no cap on spending,” Waring says. “This was the best cash back offer we could find. We don’t carry balances on our cards so we’re not concerned with rates.”
The only downside Waring has found with the card is the lack of choice in redemption options.
“If you want to use the cash back for anything besides a statement credit, you have to do it via gift cards,” Waring says. “But they have a ton of different retailers you can request gift cards from, including Amazon, so it's just a minor inconvenience.
“We are fine dealing with that in order to get the 2 percent.”
Business credit card tip: Many small-business owners prefer to keep their business credit card as simple as possible. They want maximum cash back or miles, period – and that doesn’t necessarily entail a card marketed as a business credit card. As for redemption options on business cards, you can find that and more in our business credit card reviews.
3. Financial tools with business cards are a plus for busy executives
Deborah Sweeney, CEO of MyCorporation.com and a Los Angeles mother of two teen sons on travel sports teams, uses the financial tools she gets as an American Express Plum cardholder.
“We provide each manager with a card for expense charging and use these documents to track their expenses,” Sweeney says.
She pays a $250 annual fee but no additional cost for the cards she provides her employees. She also earns 1.5 percent cash back with no cap on spending.
That all adds up to “thousands every month” in savings, she says.
Business credit card tip: If you’re a business owner doling out credit cards to employees, be sure you trust those employees. To be safe, check out the expense-tracking tools and spending controls that some card issuers let you put on business credit cards. And always monitor employee charges on the company cards.
4. Choose a card that matches your spending
Julia Nickerson, a professional foodie in Boston, wanted a business card that would reward her primary business expense: food. She chose the Blue Cash Preferred card from American Express as the dedicated card for her website savorytooth.com.
“Since my business is about recipe development and food photography, most of my expenses are food-related and incurred at grocery stores,” Nickerson says.
“The Blue Cash Preferred card made sense because it provides 6 percent cash back for purchases at supermarkets. That was my primary reason for choosing it.”
With Blue Cash Preferred, the 6 percent cash back is earned at U.S. supermarkets (on up to $6,000 per year in purchases, then 1 percent).
Business credit card tip: Bonus rewards in business spending categories can boost your rewards, but category cards require more work to maximize your cash back or miles. For example, if your business expenses are distributed between travel, internet and Facebook ads, the Chase Ink Business Preferred might be a good choice. It awards 3 points per dollar on the first $150,000 spent on travel, social media advertising.
5. Flexible business credit card rewards can help offset travel expenses
Sydney Lynch sells her jewelry at trade shows across the country and spends a lot of time on the road as a result. She uses Capital One Spark Miles for Business as her business credit card because it earns two miles for every dollar she spends.
Lynch notes that the miles are flexible, which comes in handy when your destinations vary widely and your base of operation is not a travel hub. Lynch can redeem her Spark miles on any airline or hotel stay, and miles don’t expire, as long as she doesn’t cancel the card.
“Flying out of Nebraska, it’s difficult to get good schedules and prices a lot of the time,” she says. “I always shop around, and I don’t especially adhere to loyalty programs.”
Business credit card tip: Choose a business card that fits your needs. Flexibility of flights has its advantages, but if you live near an airport that is a hub for an airline, that airline’s business credit card might be worth adding to your wallet. If your company gets discounts booking with a particular hotel group, that hotelier’s business credit card may be worth a look to maximize rewards on your stays.
6. Determine how you want to redeem your business card rewards
Uncorked Ventures’ Aselstine was more interested in accruing miles so he and his wife could take their young children on vacation without depleting their personal savings. “Those miles add up quickly enough to pay for a family vacation every summer,” he says.
Aselstine used the rewards from his first year in business to cover two weeks of exploring the Pacific Northwest with his wife and children. This year, they plan to hit New York City and Washington, D.C.
Aselstine loves the fact that he can use Membership Rewards points to pay directly for Airbnb rentals at 0.7 points per dollar or trade them for Airbnb gift cards. “We have small kids that aren’t really fit for hotel living right now,” he says. “So, it’s especially nice to have the Airbnb exchange.”
Business credit card tip: As a business owner, you have the option of using your miles or points to reduce your travel costs for your business or your family. Whether picking a business credit card or a consumer credit card, experts recommend choosing a card that rewards your everyday spending and fits your lifestyle, and having a goal in mind for how you’ll spend your cash back, miles or points.
See related: Infographic: How small-business owners use business credit cards, 7 things to know about business credit cards, How to qualify for credit as a small-business owner, My business card makes me feel like a grown-up, How many business credit cards should you have?
- Getting a business credit card is easier than you may think – Whether you have a small business with a few employees or you're a gig economy worker, you shouldn't have much trouble getting a business credit card ...
- Getting your business ready for the holidays using rewards cards – If you have a small business, it's time to get ready for the holiday shopping season. Credit cards can save you money on expenses like advertising, shipping and even system upgrades to avoid fraud and chargebacks ...
- Does your company need a business credit card? – Reasons you need a business card include you travel a lot. Reasons you don't include your finances are already stretched thin ...