6 business credit card tips everyone should follow

Nov. 18, 2024

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11 min read

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Editor's Note

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When it comes to business credit cards, there's no set of absolute rules, a la TPG's 10 commandments for travel rewards credit cards. There are, however, a few business credit card tips every business owner should follow when applying for and using business credit cards. Call it the Bill of What's Right.

For example, you should never miss a payment or pay late. Although account activity on business credit cards often remains separate from your personal credit, failing to pay on time can wreak havoc on your business credit score. It might cross over to affect your personal credit as well. Your payment history is a top factor in your business credit score.

Read on to discover the six most important business credit card tips you need to know.

Use business cards for business expenses

Maybe our most important business credit card tip: Commingling your personal expenses with your business expenses is a classic faux pas. But it often happens as entrepreneurs use personal credit cards to jump-start their companies.

Are you guilty of putting business transactions on your personal cards? If you are, it's time to get a business credit card. Besides separating expenses, opening a business card can:

Help build your business credit score: A good commercial credit score might help you qualify for larger lines of credit as your business grows. Your vendors and potential customers may also look at your credit to gauge the risk of doing business with you. (Unlike personal credit information, which is protected, anyone can pay for access to your business credit data.)
Protect your personal revolving utilization ratio if you can't pay off the balance each month. Many business credit card issuers don't report information to the consumer credit bureaus as long as you pay your bills on time. If a business card doesn't show up on your consumer credit reports, it won't impact your personal credit utilization.
Write off interest payments on your business taxes. Business expenses are generally tax-deductible. The Internal Revenue Service says the purchase must be ordinary and necessary to qualify as a business expense.

The rule against commingling expenses goes both ways. You should also avoid using a business card to pay for personal expenses. Mixing expenses could cause tax headaches, and using a business card for personal transactions may also be against your card issuer's terms and conditions.

Here's the language included on the application for The Business Platinum Card® from American Express: "By submitting this application, you, as an individual and the Authorizing Officer of the Company… are REPRESENTING THAT ALL CARD(S) ISSUED ON THE ACCOUNT WILL ONLY BE USED FOR COMMERCIAL OR BUSINESS PURPOSES." (No emphasis added.)

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Besides incurring an issuer's wrath, there's another good reason to avoid using business cards for personal expenses. Business cards generally have fewer consumer protections and higher interest rates and fees.

Monitor employees' card use

If you have employees, you may want to make them authorized users on your business credit card. This choice is fine — and may be necessary to run your business effectively.

Adding employees as authorized users doesn't have to be an expensive proposition, either. Free employee cards are perks that some cards provide, including the Capital One Spark Miles for Business (see rates and fees).

Still, it would be best if you weren't hands-off about your employees' credit card use. Don't distribute cards without establishing proper controls. You don't want to be the business owner who loses a significant amount of money because of an employee's bad decisions.

You should monitor statements every month, set up spending alerts, and even set up spending limits — perks offered by cards such as the American Express® Business Gold Card. Terms apply.

Consider a card with no preset spending limit

Another big business card tip: If you use your card as a major way to finance your company expenses, you may need the flexibility of a card with an adaptable credit limit.

Some cards, such as the Amex Business Gold, have an adaptable spending limit. Your spending limit can change based on your credit score, payment history and spending history, among other factors. This spending freedom could help you when you need to make a large purchase. Terms apply.

If you're turned off by the big annual fees some of these cards levy, consider the no-annual-fee (see rates and fees) Blue Business® Plus Credit Card from American Express.

Although the Blue Business Plus has no flexible spending limit, it still allows you some spending flexibility. You can spend above your credit limit as long as you repay at least the overage plus your minimum monthly payment by the bill's due date. If you fail to do that, the account's penalty annual percentage rate may kick in for the full account balance.

The amount you can charge over your credit limit depends on factors like your credit score and payment history, among others. Terms apply.

Get a credit card that rewards your business spending

If your business doesn't require you to travel much — even if personal travel is a big deal to you — getting a business card that offers big rewards primarily on airfare or hotel spending makes little sense. You may be able to find a card that's better suited to your business spending habits.

The great thing about business credit cards is the diversity of bonus categories available. If you spend a bunch on advertising, there are cards for that. If you spend heavily on office supplies, you can choose great cards that will reward you well. Some business cards even offer better-than-average rewards for spending on non-bonus categories.

You can also find a trio of Chase cards to ensure you earn attractive rewards on just about every business transaction you make. The trio includes the Ink Business Unlimited® Credit Card, Ink Business Cash® Credit Card, and Ink Business Preferred® Credit Card.

Here's how to use these three cards to get the most bang for your business buck:

The Ink Business Unlimited earns 1.5% cash back on all purchases, plus 5% cash back on Lyft rides through March 2025. This card has a number of flexible redemption options, such as cash back, gift cards, and travel. If you also hold an Ultimate Rewards-earning card, you can transfer your Business Unlimited rewards to that card and take advantage of Chase's numerous transfer partners. Since TPG's November 2024 valuations deem Ultimate Rewards points worth 2.05 cents per point, this card has some powerful potential.
The Ink Business Cash pays 5% back on the first $25,000 spent in combined purchases at office supply stores and on phone, internet, and cable TV services each account anniversary year. You'll also earn 5% back on Lyft rides (through March 2025), 2% back at gas stations and restaurants on the first $25,000 spent in combined purchases each account anniversary year, and 1% back on all other purchases. Like the Business Unlimited, this card has flexible redemption options such as cash back, gift cards, and travel. You can also pair it with an Ultimate Rewards-earning card in the same fashion as the Business Unlimited.
The Ink Business Preferred, an Ultimate Rewards points-earning card, earns 3 points per dollar on the first $150,000 spent in combined purchases on travel, advertising purchases (made with social media sites and search engines), shipping purchases, internet, cable and phone services each account anniversary year, as well as 5 points per dollar on Lyft rides (elevated earning on Lyft through March 2025). Then, the card earns 1 point per dollar spent on all other purchases.

If the card's not right, don't simply cancel it

Just as closing a personal credit card might harm your personal credit score, closing a business credit card can potentially harm your business credit score.

Closing a card reduces your available credit. If your credit report shows you're carrying a balance on any credit card, closing a card increases the overall percentage of credit you're using — your credit utilization ratio.

Let's say your credit report shows you have $20,000 in credit card balances and $100,000 of available credit (aka, total credit limits). In this scenario, your credit utilization rate is 20%. Now, imagine canceling a card with a $40,000 limit and a $0 balance. Your utilization rate would jump to 33% because your available credit is now $60,000 instead of $100,000.

Now, business credit scoring is typically less transparent than personal credit scores. We don't always know precisely how much utilization affects business credit scores. (Utilization influences 30% of personal FICO Scores.)

With some business credit-scoring models, like Dun & Bradstreet's Paydex Score, your company's credit utilization rate doesn't influence its credit score at all.

However, business credit card utilization is a factor (among others) listed by at least one of the major business credit bureaus — Experian.

Experian's business credit-scoring model assesses the following factors:

Historical payment behavior with previous creditors
Derogatory public records on the business profile, such as collections, liens, judgments and bankruptcies
The status, recent status, frequency and dollar amounts of any applicable liens, judgments or bankruptcies
An increased trend in slow payment of obligations
An increase in the number of business credit inquiries or applications generated by the business or owner
The number of trade experiences, balances outstanding, payment habits, credit utilization and trends over time
Years in business, line of business or Standard Industrial Classification, business size and other demographic data

In general, you shouldn't cancel a business credit card unless you know it won't create a material change in your utilization rate. Also, use all your earned points and miles before you cancel any card. Otherwise, you will forfeit the rewards.

Related: How to cancel a credit card

Take advantage of welcome offers

Depending on the size of your business, you may spend more on your business credit card than your personal credit card. Several business credit cards require some hefty spending requirements to earn big rewards. If your business spends thousands of dollars a month, take advantage.

Along with welcome bonuses, you could earn big rewards by getting a business credit card that rewards you for annual spending. You'll typically find such threshold bonuses on airline or hotel rewards cards.

You should only aim to take advantage of these bonuses if your business can justify this amount of spending and you frequently travel for work.

Bottom line

Using business credit wisely could help you grow your business, save your company money and earn rewards as a bonus. Combine the six business credit tips above with the 10 commandments for travel credit cards mentioned at the top of this post, and you'll put yourself and your business in a great position.

For rates and fees of the Amex Blue Business Plus card, click here.

Featured image by IGOR ALECSANDER/GETTY IMAGES

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.