By Max Anderson


Business credit cards, while not quite the same as personal credit cards, aren't completely unlike them either. There's the pros and the cons, but in the business world the pros of business credit cards significantly outweigh the cons.

If you want to know the ins and the outs of the business credit card world and if you want to put business credit cards to work for your business, you need to know the basics.

1. Don't Do Business Without One

Business credit cards are not a luxury for business owners -- they are a vital necessity. If you want your business to succeed, you're going to need to look into business credit cards sooner or later (and preferably sooner rather than later).

The reasons for having business credit cards are numerous and the fact of the matter is that the sooner you apply for business credit cards, the sooner you begin building your business's credit history.

2. Keep It Simple

One of the best things about business credit cards is the fact that they can significantly simplify your bookkeeping and expense accounting. By keeping all business-related purchases on a single business credit card, you'll be able to track your business spending effortlessly.

3. Bask in the Rewards

When your business gets to the financial point where you can pay your credit card balance off in full each and every month, you may want to look into business credit cards that offer rewards. These credit cards can help you stretch your business's dollars further, by allowing you to redeem points for business supplies, services and even cash back.

Just remember, business credit cards with rewards usually carry a higher interest rate. Because of this, they are only good for those who pay their balances off in full and don't accrue any interest charges.

4. And The Benefits Keep Coming

In addition to rewards, business credit cards often come with other perks and privileges for your business. Many business credit cards offer advantages, such as travel accident insurance, purchase protection and other helpful benefits.

5. Make Life Easy for Yourself and Your Employees

If your business employs individuals other than yourself, business credit cards can be important. If your employees must travel for business reasons or if you need them to run errands, issuing them a business credit card will make life much easier.

Your employees won't have to put cash out up front and you won't have to deal with expense reports and employee reimbursement.

Realize, however, that you are ultimately responsible for paying the bills, so issue employee credit cards with care.

6. Building a Credit History

Not only are business credit cards wonderful tools for your business to use, they are also instrumental in building your business's credit history. The longer you use your business credit cards, the higher your business will rank in the eyes of lenders.

7. Manage Them Wisely

When you do obtain business credit cards for your business, just remember that you need to manage them wisely and pay them on time just as you would your personal credit cards. Just like with personal credit cards, business credit cards carry heavy penalties for late payments and over-the-limit transactions.

And remember -- while business credit cards may be similar to personal credit cards, you should understand two very distinct differences. It is possible (although not easy) to live without personal credit cards; however, it is even more difficult for your business to thrive without the proper use of business credit cards in the day to day expense management.

By Rebecca Lindsey


The freedom to be the boss is just one of the perks sought after by business owners. But along with this freedom comes the concern of fulfilling responsibilities to customers, employees and lenders. Chief concerns are usually those dealing with money.

Small business owners frequently borrow funds and often use credit cards to get their business off the ground. The most frequently used kinds of credit were personal and business credit cards, lines of credit and vehicle loans according to a study published in 2003 by the Small Business Administration. In fact, 46% percent of small firms used their personal credit cards and 34% used business credit cards to help in their business matters.

While it is sometimes necessary to utilize personal credit cards during the start-up phase of a business, continuing to use a personal credit card may not be the wisest choice once a business is established.

‘It’s not personal. It’s just Business.’

Tee Dunn, a small business owner for four years and a member of CreditBoards.com, says that like many, she utilized her personal credit cards in the early days of her business. As her business grew and continues to grow, she finds her needs changing.

“It was becoming hard to gauge how much money I was making while using my own credit cards and cash; I needed to separate my business and personal cash flow,” she says.

There are distinct advantages to having a credit card in your business’ name.
# Build credit history in the business’ name
# Capacity to account for expenditures accurately, and to
# correctly gauge income
# Easy itemization for tax purposes
# Vendor discounts
# Concierge services offered by the lender
# Financial consulting services

According to Gerri Detweiler, a credit expert and author of “The Ultimate Credit Handbook", unless the business has been incorporated for at least two years, has about 25 employees, and a large revenue (around $2 million per year), then a business credit card will have to be personally guaranteed. This means that the issuer will base its decision in large part off the credit history of the person signing for the credit card.

What this means for most small business owners is that they have to start small and build a credit history for their business. For those trying to re-build their credit, a credit card secured by and equal to a collateral deposit may be necessary.

Much like her business, Tee built her business credit line from the ground up. She started small by applying for a card from Office Max with a $250 limit; she also obtained lines of credit from Federal Express and Staples. While some of these credit cards did require a personal guarantee to prove her ‘credit-worthiness,’ Tee has quickly managed to establish credit for her business. With good credit management, she reports offers coming in from larger lenders within six months – some offering credit limits of $10,000.

Tee states, “The perks are great, too. With a business credit card, you get discounts from wholesalers who wouldn’t give a second glance to a personal credit card.”

There are many other perks afforded to business card holders, including travel accident insurance, collision coverage on rental card, free or inexpensive additional cards for employees, individual credit lines on each card, and detailed monthly, quarterly and annual transaction reports.

Playing Your Cards Right

Lenders have good reason to be interested in the small business owner- owners represent an estimated $75 to $100 billion market. Choices such as cash-back incentives, free additional cards for employees, and free online account management are all perks that indicate increased interest in the small business segment.

Tom Sclafani, spokesperson with Open for American Express, says that Open: The Small Business Network, offers a variety of features specifically relevant to the business owner, including online account management and discounts from partner vendors. “With Open, cardholders receive automatic discounts from Open partners which include Staples, AT&T, and FedEx.”

Open also offers expense reporting tools and online account management for all the credit cards tied to the account. Says Sclafani, “not only does this allow the owner to manage cash flow and budget, they are able to compile expenditure information to leverage with their suppliers.”

CitiBusiness Mastercard offers an "Ask the Experts" business consulting program. Owners can ask specific business-related questions and within two business days receive a personalized answer that includes information, ideas and suggestions.

(These are just a few of the incentive offers and business management tools offered. For more information on these and other business cards, visit the business credit section of CardRatings.com.)

What to Look for When Shopping for a Business Credit Card
# Annual Percentage Rate. It’s a competitive market; make sure you are getting the best interest rate you can.
# Fees. Are there annual fees or other types of fees? If so, will you gain enough incentives to justify the fees?
# Perks.What kind of perks will benefit your company the most? If you travel a lot, then look for cards that earn miles with no blackout dates. If you make lots of business purchases look for the cards that offer cash back incentives or vendor discounts.
# Ability to monitor spending. How often does the issuer send reports on spending and how detailed are the reports? Can you monitor individual employee expenditures? Can you view spending online? Can you download the reports into your accounting system? Are you able to code certain types of expenses and set limit on those expenses?
# Flexibility. Can you set different credit limits for different employees? Can some employees have access to cash while others don’t?
# Card acceptance. If you travel a lot, make sure to get a card that is widely accepted such as MasterCard, Visa, Discover, and American Express.
# ATM. Look for a national ATM network if you or your employees travel frequently.

Comparison shopping is always a good idea. Perusing our ratings and reviews of business credit cards (includes online application links) will help to simplify this process. Good luck!