[DISCLOSURE: Cards from our partners are mentioned below.]
Businesses elect to use credit cards for a number of different reasons. To start, they can be an easy way to establish cash flow during the early years. By using the card, the business can build its credit, which can help when looking to receive other types of financing in the future. Small business owners also elect to use credit cards for the same reasons that the average person might do so: They want to earn the rewards on their expenditures.
But there are a few caveats to consider when thinking about a business credit card. First, they often require a personal guarantee, meaning you’ll be on the hook for any debts on them — and will likely take a credit score hit, if you miss a payment or your balances climb too high. (You can view two of your credit scores, updated every 14 days, for free on Credit.com.) Also, business credit cards are exempt from the CARD Act, so certain protections personal credit cards tout — like advance notice of an annual percentage rate hike — won’t apply. That’s why it doubly important to read the fine print of any business credit card you’re considering to be sure it’s right for you.
With that in mind, here are four of great credit cards for starting a business.
1. Chase Ink Business Preferred Credit Card
If you are not familiar with the Ink Business Preferred credit card, that’s because it’s new. While it hasn’t been available for very long, it’s quickly become one of the best business cards to carry. The reasons are simple: It has a massive signup bonus, the reward earnings potential for purchases is high, and the annual fee is $95. Plus, if your business has several employees, each of them can have a card at no additional cost.
When you sign up for the Ink Business Preferred credit card, you can receive 80,000 bonus Chase Ultimate Reward points after spending $5,000 within the first three months (the equivalent of $1,000 in travel if you redeem through Chase’s portal). You will then earn 3x points on travel, shipping, internet, phones, cable, and advertising made through search engines or social media websites. There is a combined limit of $150,000 per year that can earn those bonus 3x points. Over that amount and for all other purchases, you will earn 1x points. The card carries a variable APR between 16.24% and 21.24%, depending on your creditworthiness.
One unique feature that comes with the Ink Business Preferred credit card is that it includes cell phone protection. You will receive up to $600 worth of protection in case your phone or any of your employees’ phones are stolen or damaged. Your employees phones must be listed on the billing statement and the bill must be paid with your Ink Business Preferred credit card. There is a $100 deductible and you can’t submit more than three claims per year.
Because your business is just getting off the ground, you might be trying to keep a handle on all unnecessary expenses. If that’s the case, you’ll likely be looking for a credit card without an annual fee. The SimplyCash Plus Business Credit Card from American Express fits that bill.
This card is really good with the rewards you can earn on purchases. You will receive 5% cash back on purchases made at office supply stores and on phone service through U.S. service providers. You will then receive 3% back on your choice of one of the following categories: airfare purchased directly from airlines; hotel rooms purchased directly from hotels; car rentals purchased from select car rental companies, U.S. gas stations, U.S. restaurants; select U.S. advertising purchases; U.S. shipping purchases; select U.S. computer hardware, software, and cloud computing purchases. You get a 0% for 15 months on purchases; after that, your APR will be 13.74% - 20.74% Variable.
Having this kind of flexibility can allow you to assess your spending habits and choose the best category for your business. The 3% bonus applies to an annual maximum of $50,000. All other purchases will receive 1% back. One handy feature for your business is that you will have access to OPEN Savings. When you use your card at select Amex OPEN partners, you can receive an additional 5% back.
3. Chase Ink Cash Business Credit Card
Another credit card from Chase that has been a favorite for business owners is the Ink Cash Business card. This card is slightly different than the Ink Business Preferred credit card because, instead of earning Ultimate Reward points, you earn cash back. When you use your card at office supply stores, or on phone service, internet, and cable, you will receive 5% cash back on up to $25,000 per year. You will also earn 2% back at gas stations and restaurants for the first $25,000 purchases in those categories annually. Any other purchase made will receive 1% back. If the earning potentially isn’t enough, you will receive a $300 bonus after spending $3,000 within the first three months of being a cardholder.
This card tends to be a good fit for many new businesses because of a few reasons. It’s doesn’t have an annual fee, and it offers employee cards at no cost as well. But the thing that really can help a business get off the ground is that the Ink Cash Business credit card offers an introductory 0% annual percentage rate on both purchases and balance transfers for the first 12 months. (After that, those APRs will be a variable 13.49% to 19.49%.) That means you will have a little extra time to pay off any large purchases before being charged interest. Think of this card as a one-year interest free loan.
There are times when managing your credit card rewards might not be a big deal. But when you’re running a business, the last thing you might want to worry about is which card earns more for different purchases. That’s why a card like the Capital One Spark Cash for Business can be useful. Instead of a bunch of categories that earn bonus rewards, you will earn 2% back on everything. In addition, you will receive a $500 signup bonus after spending $4,500 within the first three months. This is a very generous bonus, but it does require a relatively high initial spend. The card carries a $95 annual fee, waived the first year. Employee cards are free. It carries a purchase APR of 18.49% (Variable)
To help simplify your business, you can download your purchase records to Quickbooks, Quicken, or Excel. You will also receive a year-end statement that can help with tax preparation. If you frequently travel overseas, there are no foreign transaction fees.
At publishing time, the Capital One Spark Cash for Business is offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.