Should You Use a Business Credit Card?

business credit card

When I first started working as a freelancer, I was thrilled to call myself a “business owner.” All I could think of were all the cool loans, opportunities, and credit cards I could get with my own company…of sorts. Thus I went in search of the biggest business credit card I could find so I could rack up tons of rewards and get money back at the end of the year. What did I get? A $60 annual fee that wiped my minimal rewards out completely. But that didn’t mean I didn’t get any benefit out of having my business credit card. I’ll tell you what those are later, but first, to help you evaluate whether a card makes sense for your particular situation, I’m going to lay out all the reasons why a business credit card may or may not work for a small business.

Why business rewards don’t work for small businesses recently published an article that showed the hard numbers behind the best business credit cards. In it, they discovered that the average business owner could get $1,750 back a year using the Chase Ink Classic card – deemed the overall winner in that article. This sounds great, but there’s one big problem – their study assumes that you’ll spend $55,000 a year on your credit card. This reveals one big issue with business credit cards—as far as rewards go, they’re really not designed for a lot of small business owners, who typically spend only a couple hundred bucks a month on business expenses, if that much. Thus the rewards might not add up to anything when the time comes because you won’t spend enough to see huge financial gains.

The real reasons to use business credit cards

You can’t rely on cash back bonuses or rewards points as a small business owner, but you can still benefit from having a credit card for your work. Here are some reasons why:

  • Building business credit: Your business credit is different than your personal credit, and you’ll need the first one if you ever want to get a loan for your business. Sure, the bank can look at your personal income and credit, but that will make it harder for you to get the money you need. Make regular payments on a business credit card, and your score will go up.
  • Managing expenses: It’s easy to keep track of your overhead when you put all of the transactions on one card. Rather than buying office supplies with the same money you use for Cheerios and toe socks, you can separate your money to budget better in the future.
  • Preparing taxes: If you keep all of your costs on one credit card, all you need is a copy of your card statements to total your loss for the year. Then you’ll easily be able to figure out your profit level, taxable income, and all that other fun stuff that can be a nightmare with mixed money usage.
  • Sharing funds: If you are in a partnership or you have a couple employees working for you, you can give them access to your company’s money by way of a business credit card. You can still get the card in the other person’s name so you know who’s spending what. Then you can spot any problems that may arise.

What to Look for in a Business Credit Card

If the info above has convinced you to apply for a business credit card, here are some things to watch out for:

  • Intro rates vs. Actual rates: A lot of card companies will offer low APRs and annual fees at first, but then they increase those rates after a year or so. Don’t get stuck with a card that you can’t afford long-term.
  • Annual fee: This is money that you have to pay every year just for using the card. If you don’t earn enough rewards to cover the cost, you’re essentially losing money by keeping the card around.
  • APR: This is the annual percentage rate, or the interest you’ll have to pay if you don’t pay off your balance. If you do manage to pay this off every time you buy something, your APR won’t matter at all.
  • Balance transfer fees: These fees occur when you move a balance from one credit card to another. You should only have to worry about this if you’re trying to consolidate your debt.
  • Foreign transaction fees: These fees happen when you buy items from another country. If most of your business involves drop shipping or travelling overseas, look for the lowest foreign transaction costs possible.
  • Credit acceptance: If you know your credit is bad, don’t apply for a card that requires excellent credit. This will make someone pull your credit report for no reason, and excessive pulls can lower your score over time.
  • Rewards: Even though the rewards you get will probably be minimal, you should look for a card that complements your spending. If you mostly drive for your job, don’t get a card that offers great flight rewards. You won’t need them.

Don’t get fixated on the way a card looks or the money it has to offer. Compare all the terms to find the best one for your situation.

There is a lot more to business credit cards than meets the eye. You may not be able to fully enjoy the rewards from them, but you can at least build your credit and save some headache meds when tax season hits. I use my card to pay for every single thing I need for my business, which allows me to see how much I need to save for the next month. Simply put, I use my card as a wallet-sized accountant, keeping me in line from month to month.

If you don’t want to get a formal “business credit card,” get a really nice personal card that you use only for business expenses. If you find a rewards program that suits your monthly expenses, you might get something special at the end of the year. You won’t know until you apply!

About the author: Heaven Stubblefield is the content director for, one of the leading credit card comparison sites on the internet. You can see more helpful tips and tricks from her on the site’s blog, CompareWallet.


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  • joshaidan

    You forgot no per transaction service fees. Most chequing accounts will charge you a per transaction service fee (which can be very expensive), but as long as you don’t keep a balance on your credit card then you won’t have to worry about paying per transaction service fees.

    • Heaven

      With traditional credit cards (Visa, MasterCard, etc….not bank issued), the transaction fees are passed onto the merchants. That means every time you swipe your card, the business you pay is responsible for the fees associated with the transaction, not you. Of course, keep an eye on the fine print no matter what. Can’t hurt! :)

      • joshaidan

        Yes, that is why businesses don’t pay expensive transaction fees when using a credit card to make purchases.

    • FreshJustine

      Thank you so much for adding to the conversation Josh, great addition to the list!

  • Complete IT Services

    Your article contains really great information!!

  • cedric

    impossible to enter credit card expenses in freshbooks and assign category to credit card expense. what a mess

    • merylmanning

      Hi Cedric,

      Thank you so much for reaching out! I am so sorry to hear you are having some issues with the expenses section. You should definitely be able to assign a category to all your expenses, and we normally recommend to place the credit card number in the notes field to ensure you have a record of which account the expense was made to.

      I would love to talk with you further, see if this is something we can fix. If you could e-mail me your details at, it would be great to chat!

      • Dan Knauss

        How about the last four digits only? Putting a whole card number in the record is not a good idea.

  • Dan Knauss

    The Chase Business Ink card offers much larger reward multipliers for business and tech related purchases. That’s why I put my monthly phone and internet bills on that card and always get around $30 back per month.

    My wife and I use Amazon Prime a lot, and all our rewards cards are hooked up with Amazon. It’s nice having the rewards credit right there for the next purchase, plus free shipping and 2 day delivery. The only downside is it creates a challenge for expense tracking and tax reporting when I use reward credits for business purchases.

  • JR

    Can you put annual fees under business expenses??

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