Plan carefully before opening multiple small-business credit cards

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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Question Dear Your Business Credit,
This is Ashok from India. Your website has amazing information on corporate card programs, which we are looking into for our organization for travel spending, so thank you.

One question we have for you is what would be the limitations or cons if we have multiple company corporate cards for our travel and entertainment expenses. For instance, we want to have an American Express Corporate Card, a MasterCard cash card and, say, a Citibank card. One card will be used by our employees in the U.S., another card will be used for business travel, and another card will be used for getting cash advances. -- Ashok

Answer Dear Ashok,
I don’t see many downsides to having multiple business credit cards. Many small businesses have several. However, you should consider your ability to stay organized in managing them before you start opening the credit accounts. Otherwise, you could find yourself dealing with a big financial mess in the future.

Let’s look at the positives first.

If you’re thinking of applying for U.S. cards, we’ll assume that you are already a U.S. resident with a Social Security number or other Taxpayer Identification Number (TIN), or that someone else in the company is. You need one of those numbers to apply for a U.S. credit card.

One advantage of having several cards is that it will allow you to reduce your credit utilization on any single card. If you have only one card and you use most of your available credit, it can hurt your credit score. In contrast, if you have several cards and are using only a small percentage of your credit on each, that should help you improve your credit profile. A better credit score will help you win lower interest rates from lenders.

Another benefit of opening multiple cards is that you may qualify for a wider variety of rewards. For instance, one card may offer you more points for air travel, while a different one may offer more points for gasoline purchases.

The challenge with opening multiple cards is keeping track of all of them. Assuming that you have several authorized users on each card, it may be difficult to keep a close eye on spending unless you assign someone, such as your CFO, to keep careful records. Even then it may be difficult.

Once businesses lose track of employees’ credit card use, it’s easy for workers to misuse the cards. Some business owners have written to me recently because members of their teams have used company cards to make personal charges, for instance.

If you do let several employees use the cards, make sure you put into place a written policy detailing what charges are allowed on the cards and the consequences if your employees violate your rules. I would suggest you have a labor attorney review your policy to make sure it is airtight.

As owner of the firm, remember that you will generally have to personally guarantee the debt on any company cards. Make sure you are never in a position where your team has run up so much debt that you cannot pay it off yourself. I would be particularly careful about taking out cash advances. You will eventually have to pay them back, and cash advances carry extra costs when compared with regular credit card purchase transactions. You are far better off financing the business out of cash flow if you can.

That said, credit cards can be a valuable tool for a business. Start slow by taking out a single card, see how that works out for you, and then consider getting a second card. That way, you and your team will have a chance to work out any kinks in the system -- before you’re on the hook for a bunch of debt that’s hard to pay.

See related: How many cards is too many?, Used wisely, small-business cards can keep business afloat

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Updated: 04-21-2019