A guide to low annual fee business credit cards
Quick insights
- Business credit card annual fees are based, in part, on the card’s benefits.
- Low annual fee business credit cards may help business owners manage expenses and earn rewards while paying less in fees.
- When choosing a low annual fee business credit card, you may want to consider factors such as interest rates, fees and the card’s rewards program.
Annual fees on business credit cards can vary widely, from small fees up to several hundred dollars, depending on the card and the benefits it offers. Low annual fee business credit cards often provide cardmember benefits and the ability to earn rewards on business-related purchases. These cards can be a worthwhile option for businesses that want to earn rewards without paying a high annual fee.
Read on to learn more about business cards with low annual fees and some factors to consider when choosing one.
Do all business credit cards have an annual fee?
No, not all business credit cards have an annual fee. Some credit cards may have very low fees, making them an attractive option for businesses that prioritize avoiding extra fees.
However, business credit cards that charge a higher annual fee often come with a more robust suite of benefits and rewards. These can include higher cashback rates, enhanced travel protections, airport lounge access, enhanced rewards or exclusive discounts on business purchases or access to exclusive business tools and services. These cards may also offer annual statement credits.
Benefits of having a low annual fee business credit card
Low annual fee business credit cards can help business owners avoid higher annual fees. However, they can still benefit from business credit card perks, including:
- Credit history: Opening a business credit card can help establish your business's credit score, which may help your business in the future by potentially opening it up to more financing options (provided you are using your card in a responsible way).
- Separate finances: If you're a small business owner or entrepreneur, a business credit card may make it easier for you to keep your personal and business expenses separate.
- Expense management tools: Many cards offer robust tools that can help businesses track and manage their expenses. These cards may also sync to business and accounting software, potentially facilitating more seamless bookkeeping.
- Employee cards: Card issuers may provide complimentary employee credit cards, allowing businesses to earn rewards for all their spending. Employee cards can also help to streamline employee expense reimbursement processes.
- Purchase and travel protections: Cards often include purchase protection and extended warranties. Some Chase business cards may offer travel protection benefits like Auto Rental Coverage, Baggage Delay Insurance, Travel Accident Insurance and more.
What is needed to apply for a business credit card
To get a business credit card, businesses typically need to meet certain requirements. Some cards may require the applicant to have an Employer Identification Number (EIN)—a unique identifier assigned to a business by the IRS—while others may only need the business owner's Social Security number (SSN). Businesses may also need to demonstrate during the application process that they have a good credit history and a stable business income.
Be prepared to provide information about your business and personal details, which can include:
- Business name, address and contact information
- Number of years in business
- Industry
- Number of employees
- Annual revenue
- Tax ID (EIN)
- Personal information about the business owner such as name and SSN
Some credit card issuers may require additional documents, such as financial statements, to verify your business's creditworthiness.
Factors to consider when choosing a low annual fee credit card
When selecting a low annual fee business credit card, there are several factors you may want to consider, including:
- Interest rate: Businesses may want to look for credit cards with competitive interest rates to avoid paying high interest when carrying a balance on their card.
- Fees: In addition to an annual fee, businesses may want to take note of any fees associated with the credit card such as late payment fees or foreign transaction fees.
- Rewards: Business owners may find it advantageous to get a card with a rewards program that aligns with the business's needs. For example, if a business frequently purchases travel, a credit card with travel rewards may be a fitting choice. You may also want to consider how your rewards can be redeemed. Cash back, statement credits, travel and gift cards are common redemption options.
- Credit limit: Credit limits can be an important consideration. They may directly impact your business's purchasing power and financial flexibility. A higher credit limit can be beneficial for managing large or unexpected expenses.
- Payment terms: Payment terms outline the conditions under which you must pay your credit card balance. Some cards require that the card’s balance be paid in full each billing cycle while others may allow businesses to carry a balance. Of note, carrying a balance on your card can incur interest charges.
- Sign-up offer: Many cards provide a welcome bonus offer to new cardmembers. These offers can include statement credits, cash back or points if you spend a certain amount of money in a specific period of time.
- Introductory APR: Like a sign-up offer, business credit cards may provide introductory low APR periods on purchases, providing a way for businesses looking to finance expenses over time.
When choosing a business credit card, it can be helpful to consider your business's spending patterns, the rewards structure and any potential fees. This can help you select a card that aligns with your financial goals and business needs.
In summary
Low annual fee business credit cards can be a less expensive option for businesses that want to manage their expenses and earn rewards. By considering factors such as interest rates, fees and rewards programs, businesses can choose a credit card that meets their needs. With the right credit card, businesses may be better able to manage their cash flow while also increasing their purchasing power.
