If you don’t pay the entire balance, you can also make minimum payments, but you’ll probably pay some interest. Business credit cards function similarly to consumer credit cards, and allow you to make purchases on credit and earn valuable rewards and benefits. If you’re a small-business owner or an employee looking to augment your company’s savings, it’s worth looking into a business card. With higher credit limits and business-specific perks, the right card can help your business make a significant dent in its next expenditures report. The best business cards also offer enhanced earnings rates on business expenses as well as business-related perks like free access to business tools and discounts on certain services. Navigating the financial landscape as a small business owner or startup entrepreneur can be challenging, with unending decisions to make.
- However, it’s essential to know their potential drawbacks, such as personal liability and high interest rates.
- You’ll be charged interest each month if you don’t pay off the card in full.
- Charge cards aren’t always the right choice for your business, especially if you need the option to carry a balance month-to-month for more flexible and long term cash flow.
- We believe everyone should be able to make financial decisions with confidence.
- This compensation may impact how and where products appear on this site, including, for example, the order in which they appear within listing categories.
- Business credit cards are one of the easiest types of business financing to qualify for.
- Sole proprietors, freelancers and partnerships can all qualify for a business credit card.
Can you use personal credit cards for business?
- Many also will offer 0% interest as an introductory rate for a short period of time.
- While many business cards have no annual fees, there are also premium business cards that offer exceptional sign-up bonuses, rewards and perks.
- Check your credit card agreement to find out who they report your debts and payments to and when.
- A business credit card might offer rewards for specific business-related purchases, such as advertising or office supply expenses.
- For small business owners, business credit cards can be a useful tool to help you grow your enterprise.
However, paying off the entire balance is advisable to avoid interest charges, which can accumulate quickly. But what exactly is a business credit card, and is it the right choice for you? Let’s break down business credit cards by explaining what they are, how they operate, their advantages and disadvantages, and how to select the best one for your needs. Keep reading to understand more about business credit cards and how they may be able to support your business. Business credit cards are offered by a wide range of lending institutions. The process for applying is similar to a standard credit card application.
Business Cards May Have Different Payment Terms Than Personal Cards
These may include cash back, with higher percentages offered on frequent business expenses such as wireless phone services, office supplies, shipping, and advertising. Paying the balance before its due date also may trigger a higher cash back with certain cards. A business credit card is a credit card intended for use by a business rather than for an individual’s personal use. They are available to businesses of all sizes and can help them build a credit profile, separate personal and business expenditures, and improve future borrowing terms. Just like credit cards, charge cards come in all different shapes and sizes. Some types of business credit card definition business charge cards include rewards, travel points, cash back, or other free perks.
Featured Business Credit Cards
Applying for too many cards in a short period of time can reduce the applicant’s credit score, making it harder to qualify for a different card or other type of loan. Obviously, you cannot use your business credit card to buy anything illegal. And while it’s not illegal to use your business credit card for personal spending, it’s definitely not advisable. In practice, you would use a business credit card in much the same way as a personal credit card, but just for your business transactions. Yes, you can get a business credit card with EIN, but there aren’t too many options where you don’t also need to use your Social Security number as well.
Many cards allow the primary cardholder to oversee employee spending by setting spending limits, alerts for card activity and even card limits. Keep in mind that employee business cards may have joint and several liability, which means the employee and business owner may be equally responsible for the card’s debt. You can spend on your business credit card (up to your credit limit) to cover your business expenses. As you spend on your business credit card, your balance (what you owe) will increase. If your application is approved, your lender will grant you a credit limit, which is likely to depend on your personal and financial circumstances.
What’s the difference between a business credit card and a personal credit card?
Business credit cards come with their own limit, interest rates, and rewards programs. Charge cards have no credit limits, but you’ll need to pay them off in full every month or face stiff penalties. They’re best for businesses with robust cash flow that want to maximize rewards. But for bookkeeping and liability purposes, you should only use a business credit card for your business expenses.
Small business credit cards also often require a personal guarantee from the cardholder, meaning the business owner may be held personally responsible for the card’s outstanding debt. That can be true even if the credit card offers employee cards and the debt comes from employee spending. This differs from personal credit cards, where the cardholder is solely responsible Accounting For Architects for the debt.
Even gig workers, freelancers, and others doing work without forming a separate legal entity may be eligible. If you pay your bill in full each month, you typically aren’t charged interest on those purchases. If you carry a balance past your grace period, though, you begin accruing interest on your balance based on your card’s interest rates. Generally, the more creditworthy your business, the more likely you are to get ledger account a favorable annual percentage rate (APR) when approved for your card. Business charge cards offer spending flexibility but must be paid off in full each cycle. ADVERTISER DISCLOSURE CreditCards.com is an independent, advertising-supported comparison service.