Best ways to compare business credit cards

Small Business Tips

Holly Woodward Engagement & Communications Associate at Capital on Tap

Holly Woodward Last updated: 17 February 2022 minute read

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As a small business owner, you're probably constantly looking for ways to simplify your expenses. Opening a small business credit card offers several benefits for you and your business.

And there are several types of business credit cards, many of which offer various perks, such as cash back or rewards points for every dollar you spend. The benefits often make it challenging to choose which business credit card is right for you. There isn't one 'perfect' card for every business, but you can compare business credit cards to find the one best suited to your business.

Before you apply, remember to check your business credit score. A strong business credit score can open the door to many opportunities for your business.

How do business credit cards work?

Before you apply for a credit card, you should have a good working knowledge of how these financial instruments work. Some of the main aspects of business credit cards include:

You're personally liable. Even though you are separate from your business, you can still be held personally responsible for all charges made to your business account, including those made by employees.
Fewer protections compared to personal card accounts. Personal credit cards are protected by provisions in the CARD Act; business credit cards aren't. So, it's crucial that you pay your bill on time every time. If you miss just one payment, your interest rate could increase, or the card company could shorten any grace periods previously offered.
Charge cards and credit cards aren't the same. Business charge cards don't have preset spending limits, so you must pay the entire balance every month. Plus, having no spending limit doesn't necessarily mean you can spend as much as you want. On the other hand, business credit cards do have spending limits, and you can carry your balance forward each month as long as you make your minimum monthly payment. If you pay off your balance each month, you won't accrue any interest. Some business credit cards even offer 0% intro APR; this isn't an option with a business charge card.
Employee credit cards. One benefit associated with most business credit cards is that they allow you to get company credit cards for your employees. Capital on Tap offers up to 20 employee cards. Employee credit cards help you streamline your expense reports and negate employee reimbursements.

Review your business expenses

Once you understand the way a business credit card works, take a look at your spending. Evaluate your books for the last 12 months and identify where and what you spend on categories like travel, marketing, and eating out. If any of these categories have significant spending, you can look for a business credit card that offers perks for those types of purchases.

Ask yourself these questions:

Does your business require frequent travel? If so, you might want a business credit card without foreign transaction fees plus the opportunity for points towards travel rewards.
Do you take clients out for meals? If so, search for a card that has rewards points or cashback for dining establishment purchases.
Do you or your employees have to drive for company business? If so, look for a card that offers cashback or rewards for gasoline purchases to help offset your fleet fuel costs.
Do you have other types of expenses, like shipping costs or phone service fees? If your spending is confined to primarily general business categories, look for a business credit card that rewards this type of spending. For instance, some cards offer rewards for spending on shipping, internet, cable, phone, and advertising costs.
Is your typical spending not covered by the categories above? If yours is a new business and you're unsure of your expenses, or you spend in various categories, look for a simple business credit card that offers flat-rate rewards regardless of categorical spending.

Look at additional benefits

Aside from monitoring and tracking your expenses and spending, as well as rewards, a business credit card may also offer special financing, account management, warranties, and much more.

Here are a few other benefits you should consider as you compare business credit cards:

Special financing. Some business credit cards offer 0% introductory APR on all new purchases; some periods can last up to 15 months. During this period, you don't have to pay your balance in full each month to enjoy no-interest financing. This is especially beneficial if you have several large purchases you need to make, such as office equipment.
Purchase protection. Some small business credit cards offer purchase protection, like extended warranties, cell phone insurance, and travel insurance. Some may even offer car rental damage insurance.
Luxury amenities. If you opt for a high-end, premium business credit card, you might face some pretty hefty yearly membership fees; some are more than $400. But the perks that come with these premium cards often offset this fee, such as airfare credits and elite airline and hotel status.
Account management. Most business credit cards offer tools that help you track your business spending. You might opt for a card that provides quarterly or yearly reporting, itemization of receipts, or export to Excel functionality.