BACK

Business

Credit card issuers take aim at small business owners

Summary

Small business credit cards represent a great market for issuers, but business owners need to consider certain factors before signing up for a business credit card.

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Credit card issuers are targeting small business owners with a wealth of new card products.  Small business credit cards represent a great opportunity for issuers at a time when the broader corporate market has been sluggish.

Small businsesses pay more than 45 percent of the total U.S. payroll, and card companies have taken notice, offering an array of credit card products in hopes of luring business owners to use their cards.

Small business owners should comparison shop and consider a variety of products before they apply, just as consumers should do when looking for a personal credit card.  There are a number of factors to consider with business credit cards:

• Interest rates — While cardholders may not be concerned with the APR on a personal credit card if they pay off their balances each month, business owners might need to revolve sizable balances occasionally if revenue slows.  For businesses that make purchases costing several thousand dollars, and then pay them off over several months, fixed-rate credit cards provide greater stability than credit cards whose variable rates change with short-term interest rates.
• Cash-back rewards — Business credit cards offer cash-back rewards just like consumer credit cards do.  But before small business owners are drawn in by cash back offers such as 5 percent on office supplies, 2 percent on gas, and 1 percent on all other purchases, read the card’s terms carefully.  Often, carrying a balance at a high interest rate erases any savings such a credit card provides.


• Foreign exchange fees — Business owners often place orders for items from overseas suppliers, meaning they are more likely than consumers to get hit with these fees, which often amount to 3 percent of the purchase cost.  But there are credit card issuers that leave off foreign transaction fees (sometimes callled currency conversion fees).  Consumer Action urges small businesses to learn how large foreign purchases are treated by the credit card issuer.
• Universal default — Certain credit card issuers will instantly boost interest rates by up to 31 percent if a consumer makes lake payments on other borrowed money, such as a car payment.  Business credit card customers are not exempt from universal default.

See related story: “5 ways to avoid being stung by small business credit cards

What’s up next?

In Business

Credit cards for wealthy consumers become even more rewarding

Card issuers hope to get wealthy shoppers to charge more of their holiday purchases. Learn more at CreditCards.com.

Published: December 13, 2006

See more stories
Credit Card Rate Report Updated: April 26th, 2019
Business
15.32%
Airline
17.50%
Reward
17.58%
Cash Back
17.60%
Student
17.79%

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.