Pick a Business Credit Card in 5 Simple Steps

Lindsay Konsko
By Lindsay Konsko 

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If your small business is growing, it’s probably time to consider getting a business credit card. Choosing one might seem overwhelming, but the Nerds have boiled it down to 5 simple steps. Let’s get started:

1. Know the basics of business credit cards

First, it’s important to be aware of some business credit card basics. For instance:

  • Business credit cards should be used only for business expenses. Do not put any personal spending on your business credit card.

  • CARD Act protections don’t apply to business credit cards. This makes it especially important to pay your bills on time and in full.

  • Business credit cards often come with higher credit limits than personal credit cards, which is helpful if you need to make a lot of purchases each month.

  • In most cases, you’ll be able to issue credit cards to your employees and track their spending individually.

  • In most cases, business credit cards require you to make a personal guarantee. This means that you’re promising to pay off your balance with your own funds if your business revenue won’t cover the charges.

These are just the basics. Making an informed credit card decision for your business relies on having a strong knowledge base, so be sure to do some deeper reading if need be.

2. Examine your business’s expenditures

Looking over your books for the past six months and identifying your two or three biggest operating costs provides a window into the type of rewards you should be looking for in your business credit card. Then, start searching for a credit card that provides big rewards in these categories.

3. Examine your business’s 'lifestyle'

Aside from looking at where your company spends its money, picking the right rewards program also requires you to consider your business’s “lifestyle.”

To get started, ask yourself a few questions:

  • Does my business require me and/or my employees to do a lot of long-distance travel? If so, a card that allows you to redeem rewards for flights and hotels is probably a good choice.

  • Does my business keep me behind the wheel a lot? If so, a card that offers good rewards on gas might be just the ticket.

  • Do I frequently need to entertain clients at bars or restaurants? If so, a card that offers good rewards on restaurant spending is probably in order.

4. Weigh the pros and cons of paying an annual fee

Rewards shouldn’t be your only consideration when picking a business credit card – you’ll also need to think about expenses. We don’t think you should automatically disqualify cards that charge an annual fee. Here’s why: Since they often come with higher rewards rates and higher signup bonuses, this means forking over the fee is sometimes worthwhile.

The key takeaway here is to do the math. Consider your business’s annual spending and the rewards rates of the cards you’re considering. It’s a good way to open up more card options, or alternatively, eliminate a few.

5. Consider fringe benefits

By now you’ve probably narrowed the decision down to just a couple of cards. To finalize your choice, it’s smart to think about fringe benefits offered by your top contenders. Sometimes it’s these additional perks that really make a card sing.

For instance, if you need to make a large purchase for your business and aren’t sure how to finance it, picking a credit card that offers an introductory 0% APR deal might be the way to go. Or, if you’re spending a lot of time in airports, getting a card that provides lounge access might make your trips more comfortable.

These might not be your top priorities in choosing a card, but they could make it easier to arrive at your final decision.

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