Should I Get a Business Credit Card? 7 Good Reasons to Go for It

By Julija A.

June 19, 2023

Business credit cards offer a number of perks to business owners, regardless of the size of their operation. In addition to rewards and welcome bonuses, business credit cards also tend to have higher credit limits than personal ones.

The obvious benefits lead many professionals to ask one simple question: should I get a business credit card? In this article, we will tell why it’s a good idea to apply for a business credit card and walk you through the eligibility requirements.

You May Be Eligible and Not Know It

You may have convinced yourself you can’t possibly obtain a business credit card because you don’t own a large company or even a small business in the traditional sense. But do you need a business to get a business credit card? 

When you hear the term business owner, you probably think of someone running a company with a number of employees. However, you don’t need to be incorporated or have a formal business structure to qualify for a business credit card. You are eligible even if you are self-employed and working as a freelancer from home.

That said, the options offered to a contingent worker, for example, are bound to be limited. As such, you need to do your homework on what cards are available to you. On the other hand, if you own a company and need a business credit card, you can explore the list of the top business credit cards on the market. 

It Can Help You Boost Your Credit Score

So why get a business credit card in the first place? Getting a business credit card is a great way to raise your personal credit score. A business credit card enables you to reduce spending on your personal one and use less of your available credit. This and covering any work-related expenses with a separate card will boost your credit score.

However, keep in mind that when you apply for a business credit card, you may initially lose anywhere between two to five points on your credit score. That’s because financial institutions usually evaluate your creditworthiness by pulling your personal credit report when you’re applying for a card. 

This is done to determine whether you’re eligible for a new credit card, and it’s the only part of the process that negatively affects your credit score. After the credit inquiry, your personal and business lines of credit are kept separate, and your score won’t be affected by your credit utilization ratio. 

This doesn’t mean that you can afford to be irresponsible about your spending with your business credit card. If the card is tied to your Social Security number and your business defaults, you’ll still be held personally responsible for the money spent.

It Allows You to Separate Your Business Expenses From Your Personal Ones

Using a business credit card for personal purposes is usually considered bad practice. It can be quite a hassle when the time comes to file your taxes and sort through your credit card statements.

Choosing a business credit card over a personal one for your business allows you to have a clear insight into your business expenditure. Furthermore, you will save on accounting expenses, as there will be less work for the accountant since they will have fewer expenses to go through. 

That’s not all. Many business credit card issuers allow you to export your expenditure details to accounting software such as Quickbooks. This can exponentially speed up the accounting process.

It Enables You to Improve Your Cash Flow

One of the main reasons to have a credit card is to gain access to a line of credit. It’s also easier to qualify for than a bank loan. Since even a new business can get a business credit card, this is an ideal option for startups to secure the necessary cash flow to expand their operations.

Having a business credit card enables you to pay your contractors and suppliers upfront while simplifying the transaction process. Some vendors offer discounts for those who have a good track record when it comes to making payments early or on time.  

To avoid high-interest payments or other more extreme unpleasantries like having to file for bankruptcy, make sure to cover your entire balance on time. 

It Offers Many Convenient Rewards

Regardless of whether you get a business credit card or a personal credit card, you’ll likely be treated to a few generous rewards. There are typically three kinds of rewards:

• Miles
• Cashback
• Points 

If you aren’t sure how to use business credit cards in order to make use of these rewards or you find the rewards programs too complicated, you’re not alone. A lot of cardholders don’t actually know how rewards on credit cards work. The important thing to remember here is that these programs reward you for the money spent through your line of credit.  

Some business credit card issuers offer rewards in the form of discounts on everyday purchases, while others offer discounted flights, hotel stays, and gift cards. Therefore, if this is something you need for your business, such rewards can be very valuable.

It Comes With More Generous Sign-Up Bonuses

A major difference between a business credit card and a personal credit card is that the business ones usually offer bigger welcome bonuses. Given that you’re likely to spend more for business purposes than you would for your personal expenses, these bonuses can really come in handy.

For example, with the Ink Business Preferred Credit Card, you can earn a 100,000 bonus for spending $15,000 within the first three months. You can redeem the points by getting $1,000 cash back or spending $1,250 on travel expenses.

To put things into perspective, a similar personal credit card, the Chase Sapphire Preferred Card, gives you 80,000 bonus points as a welcome offer after spending $4,000 in the first three months. The maximum bonus value for the Ink Business Preferred card is 1,250, while for its personal counterpart, the maximum value is $750.

Many business credit cards have 0% APR for a certain period of time, which can exceed 12 months in some cases. This can be very helpful for small startups, which often need to cover a range of investments on a limited budget. Not having to pay the interest rate for at least a year gives them time to get their business up and running.

You Can Get Free Employee Cards

Finally, many business card issuers offer free employee cards, which can significantly simplify making business-related purchases. For instance, employees can use the card for business trip expenses. 

With employees having their own business cards, the business owner won’t have the extra task of repaying the employees, and the workers won’t have to use their personal cards. The employer can set the limit on these cards to prevent overspending.

Final Comments

As you can probably tell, business credit cards are a great asset to keep your business running smoothly. If you’re still wondering do I need a business credit card, remember that this is a great way to boost your personal credit score, separate your business expenses from your personal ones, and take advantage of some generous rewards and bonuses.