Reasons to get a business credit card
Quick insights
- Business credit cards can improve cash flow, offer higher credit limits and allow you to earn rewards to offset costs among other potential benefits.
- Business credit card rewards programs often allow you to earn points or cash back on purchases such as travel, shipping and digital advertising.
- When evaluating business credit cards, you may want to consider your spending habits and the terms, rewards, benefits, credit limit and fee structure of the card.
Whether you have a side gig or run an established LLC, there are several potential advantages of business credit cards. These cards are designed to meet the needs of various business types and structures and often come with features that could help offset costs and drive growth.
However, there are potential drawbacks, like the risk of overspending. Plus, if you already carry a high debt load or lack a clear business budget, it might not be the right time to apply for a business credit card.
We’ve compiled a list of signs that your business could be ready for a business credit card, along with some tips for how to choose the right card.
4 reasons to consider applying for a business credit card
Here are some of the reasons you may want to consider applying for a business credit card.
1. You want to improve cash flow
If you’re facing cash flow constraints due to seasonal business fluctuations or delayed client payments, a business credit card might help alleviate these strains on your resources.
Business credit cards can help finance large expenses, and if the card offers rewards, you can use them to cover everyday expenses, reinvest in your business or serve as an emergency buffer for unexpected expenses.
Many credit cards offer a grace period—usually between 21 and 25 days—before a payment is due. Business owners can plan card payments to better align with their cash flow. If it helps, you may be able to get your bank to change your payment due date to more closely match your business’s cash flow cycles.
2. Your consumer credit card limit is too low for your needs
If your consumer credit card limit is too low to cover both personal and business expenses, a business credit card might be a suitable option. Business credit cards generally offer higher credit limits, potentially providing the purchasing power needed to keep your business running smoothly.
The higher line of credit that may be offered by these cards could help businesses make large purchases and manage unexpected costs.
3. You want to separate personal and business expenses
Separating personal and business expenses offers several potential advantages for business owners. This clear delineation might help with accounting, bookkeeping and tax reporting.
It may also help establish your business as a separate legal and financial entity. For certain business structures, such as LLCs, mixing personal and business finances could void the protections your business entity provides, potentially putting your personal assets at risk.
Using business bank accounts and credit cards solely for business expenses can help maintain a clear boundary between your personal and business finances.
4. Your business expenses match the rewards program
Some business credit cards offer rewards programs, typically providing points or cash back on eligible purchases. These programs are often designed to reward businesses for some common, everyday expenses.
You might find credit cards with accelerated rewards in categories such as:
- Travel
- Dining
- Shipping
- Digital advertising
- Utilities (phone, cable, internet, etc.)
- Gas
- Office supplies
It’s generally advantageous for businesses to choose a credit card that comes with rewards in their highest spending categories. The rewards may help offset operational costs and even help fund your next business trip or software purchase.
How to choose a business credit card
If a business credit card seems like a good fit for your business, the next step is to choose a card. Here are some factors to consider as you evaluate your options:
- Assess your spending patterns and future needs: Review your average monthly business expenses, identify the categories where you spend the most and note any upcoming major purchases.
- Consider your credit limit needs: While credit limits are based on various factors specific to the applicant, some banks list general information about the range of credit limits for specific cards on their website.
- Review the card’s terms: Understanding the fee structure and any charges you might incur can help you avoid unwanted costs.
- Compare rewards structures: Consider how your everyday and future spending needs align with the rewards programs.
- Review additional benefits: Some cards come with airport lounge access (typically offered by cards with an annual fee), expense reporting tools, complimentary employee credit cards and travel protection benefits.
Explore Chase for Business credit cards to see if their business-friendly rewards and benefits match your needs.
In summary
Some potential advantages of business credit cards include improved cash flow, the ability to separate personal and business expenses, higher credit limits and business-friendly rewards programs.
Business credit card rewards programs earn rewards on some of your everyday expenses as well as travel, utilities, office supplies and gas station purchases. If you determine that a business credit card is right for you, consider your spending habits and business needs, and the card’s rewards, benefits, terms and other features.
