What are the Different Types of Business Credit Cards?

In today's business landscape, even the smallest enterprises and individual entrepreneurs can often meet the criteria for obtaining business credit cards. Whether you're a freelance writer or the owner of a publishing company employing 30 people, it's highly likely that you'll find a suitable business credit card for your specific needs.

However, selecting the right business credit card can be overwhelming. The market offers a diverse range of cards, each with its own unique benefits, terms, and conditions. These differences exist for a purpose: the nature of your business may align best with the benefits and terms offered by one particular business credit card, while another business just down the street could find an entirely different approach more advantageous.

To assist small business owners in making an informed decision, this article presents an overview of the following aspects:

Numerous types of business credit cards exist in the market, and here we'll explore some of the most popular options. Discover which one best suits your business needs.

Most business credit cards require a good to excellent credit score. In cases where your business doesn't yet possess its own credit score, such as during the early stages of establishment, your card issuer may consider your personal credit score instead. While certain credit card providers may accept lower credit scores, they often impose higher interest rates and fees due to the elevated risk associated with lower scores.


By considering these factors, you can make a more informed decision when comparing business credit cards and selecting the one that aligns best with your business's unique requirements.

Valuable Insights for Comparing Business Credit Cards 

When faced with the decision of selecting a business credit card, it's wise to begin by examining the fundamental aspects of each card.

Interest charges are applicable to all business credit cards. These interest rates are usually presented as an annual percentage rate (APR). The specific APR offered to you will depend on your business's credit score and potentially your personal credit score as well. APRs can vary significantly, with higher rates often associated with cards that offer a wider range of rewards.


Certain business credit cards may provide an introductory 0% APR period for purchases. This feature can prove cost-effective for your business's cash flow if you manage to pay off the balance within the interest-free period. It's important to review the card's terms and conditions to determine the duration of this interest-free period. 


Some cards offer an initial period of up to a year, which can be advantageous for startups requiring upfront expenses to purchase essential equipment or stock. However, it's crucial to consider the potentially high interest rate that may apply once the introductory period ends.


When assessing interest rates on business credit cards, it's essential to evaluate your business's operations and cash flow patterns. If you anticipate paying off your balance each month within the interest-free grace period, you might find a card with various rewards appealing, as it can help reduce your business costs. 


Conversely, if you expect to carry balances from month to month, a basic card with a low APR may better suit your needs compared to rewards cards with higher rates.


Furthermore, some cards offer bonuses for purchases made during an initial qualifying period, typically ranging from three months to a year. This can be particularly beneficial for businesses that require significant inventory restocking or investment in equipment.

Varieties of Business Credit Cards

Cashback cards 

Opting for cash-back business credit cards is a smart move for entrepreneurs seeking to earn cash rewards on their expenses. These cards provide the opportunity to receive flat-rate cash back on business purchases, while others offer varying levels of returns based on different spending categories.


Travel rewards cards 

For businesses that frequently incur substantial travel expenses, a travel rewards business card can be an excellent choice. These cards often come with enticing perks such as access to airport lounges or travel insurance, enhancing the overall travel experience.


Charge cards 

A charge card functions similarly to a credit card but has a distinctive feature. Unlike most credit cards with preset spending limits, charge cards do not impose such constraints. Instead, the approval of your purchases is based on factors such as your payment history and previous spending patterns. This flexibility allows for greater purchasing power while still maintaining responsible financial management.


By exploring these different types of business credit cards, entrepreneurs can identify the one that aligns with their specific financial needs and maximize the benefits offered.


Comparing Business Credit Cards: Fee-Based vs. No Annual Fee

When it comes to business credit cards, some charge an annual fee while others do not. However, cards without an annual fee may come with higher interest rates compared to those with a fee. If you're confident in your ability to consistently pay off your card balance within the interest-free grace period, opting for a card without an annual fee could be a favorable choice. On the other hand, if you anticipate carrying balances beyond the interest-free period, a card with an annual fee but a lower interest rate might provide better value for your business.


Many business credit cards with annual fees offer a wide range of rewards, including cash back. The benefits derived from rewards and cash back cards depend on your card usage, making it worth considering a card with an annual fee if it provides rewards that align particularly well with your business needs.


Some cards even waive the annual fee for a certain period, often a year or more. This can be beneficial, especially for startups, when combined with lower interest rates and/or introductory bonuses. Comparing the package as a whole, including fee waivers, interest rates, and bonuses, allows you to make an informed decision.

It's also worth comparing the value of rewards programs on cards that do not offer cash back.

Understanding Cash Back Business Credit Cards 

Cash back business credit cards provide a monetary return on purchases made using the card. Typically, this entails a percentage of the purchase amount, ranging from 1% to 5%. 

Certain business credit cards offer higher cash back percentages for specific categories, such as office equipment. There may be a limit on the total value of purchases eligible for cash back within a specific period, like a year, or the cash back percentage may decrease once the total value exceeds a predetermined amount.

Some business credit cards combine cash back with rewards programs, as described in the following section. Evaluating the overall value of a card's rewards program is important, as a card with a lower cash back percentage but a well-suited rewards program may prove more advantageous to your business than a card solely focused on cash back or with a less suitable rewards program. 

Assessing Business Credit Card Rewards Programs

Business credit cards typically offer rewards programs that fall into three main categories:


Travel Rewards: 

Business travel credit cards often provide discounts or points for purchases such as airfare, train tickets, car rentals, fuel, hotels, and on-the-go meals. Co-branded cards associated with specific hotel chains, airlines, or gas station chains may offer substantial points or discounts. However, using these cards may limit your flexibility when it comes to using other providers. 


Some cards may also offer additional travel-related perks like car rental insurance, airport lounge access, concierge services, and fee-free foreign currency exchange. If your business involves frequent travel, these cards can be highly beneficial, but infrequent travelers should consider whether they can fully benefit from the rewards.


Office Supplies and Marketing Expenditures: 

Cards that offer discounts on office supplies, equipment, or marketing expenditures like social media advertising are advantageous for minimizing business costs, particularly if your business has frequent supply needs. These cards may also be co-branded, so it's worth evaluating the range of goods and services provided by the partner to ensure they meet your requirements.


Manager and Employee Perks: 

Some cards provide a variety of personal treats and perks, such as weekend getaways, restaurant meals, and theater tickets. These can be used to reward high-performing employees or indulge yourself and your dedicated family after working diligently.


Assistance in Business Management

Many business credit card issuers offer features to help you manage your business effectively. For example, some cards provide itemized statements that can be directly downloaded into your accounting software. Others offer tools to link your itemized statement with corresponding receipts.


If you have employees, you might consider a card issuer that provides multiple cards under the same account, pooling spending across all cards when calculating cash back or reward points. Certain issuers allow you to set individual spending limits for each employee's card. Employee spending is typically reflected on your itemized statement, enabling you to track expenses directly without waiting for expense reports.


In conclusion, with the extensive range of small business credit cards available today, selecting the right one may seem daunting. However, dedicating time to evaluate the various types of cards is worthwhile, as it allows you to find the best business credit card that aligns with your specific needs.