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How Do You Pick the Right Small Business Credit Card?

Choosing the right credit card for your business and potentially your employees is important. Because offers change so frequently, we are not going to specify a particular product(s) below but instead, here are the questions or factors you should consider in determining which small business credit card is optimal for you. Of course, more than one of these questions may be important to you, but that generally means tradeoffs in your selection of a small business card as there is no card that is good on all levels.

  1. Do you pay your balance in full at the end of each month?
  2. Do you pay late sometimes?
  3. Do you need to transfer a balance?
  4. Do you carry a balance from month to month?
  5. Do you travel a lot?
  6. Do you have employees who you want to give cards to?

Do you pay your balance in full at the end of each month?

Not to beat a dead horse, but please try to pay your small business credit card balance in full every month. The annual percentage rate (APR) or interest rate on small business credit cards and credit cards in general are never particularly pretty.

If you do pay your balance off in full each month, small business charge cards may be worth a look. They typically have annual fees but usually have the more generous rewards programs. American Express is the leader in charge cards.

If you pay your balance off in full at the end of each month but are not interested in a fee-based card, there are many non-fee cards that have rewards (cash back or points) that may be worth a look. Your desire for the type of reward is driven by you and your needs, i.e., if you don’t travel for work, the travel points may be useless. If you travel, however, travel cards (the right ones) are generally better dollar for dollar than cash back cards.

If you don’t pay your balance off in full, look at the length of the grace period, the minimum payment requirements and the interest rate you’ll charged as the most critical levers to make your choice on which small business credit card to use.

Do you pay late sometimes?

If you occasionally pay late due to the frenetic entrepreneurial schedule you keep, you’ll want to look for cards that have low penalties and low APR. You’ll also want to see what their terms and conditions around escalation of fees is, i.e., if late once, does that increase your APR or fees the next time?

Common sense advice here but try your best to avoid late payments. The fees are no fun and that money would definitely be better spent by you than going to a credit card company.

Do you need to transfer a balance?

The obvious answer here is to look for a low APR/interest rate in the small business credit you are transferring a balance to. But you need to look past the interest rate. Many small business credit card companies charge a transfer fee usually based on the amount being transferred, i.e. $X per $1000 transferred.

Do you travel a lot?

Travel cards are the way to go if you travel a lot. If you have a specific airline you like and whose airline mileage program is attractive, most credit card companies have worked out co-brand deals with airlines.

Some programs let you translate points into miles across numerous travel service providers, i.e. multiple airlines, hotels, etc. The American Express Membership Rewards program is probably the most famous of these programs. We’re partial as discussed earlier in the cards we use to the Starwood Preferred Guest Business Card which gives you some cool travel conversion rates and incentives.

Do you have employees who you want to give cards to?

If this is the case, you want to ensure that your credit limit is sufficient to enable your own spending plus that of employees. You’ll also want to ensure that these supplemental employee cards are not fee-based. A credit card company should give them to you for free as it’s in their interest to get more people spending on their card.

Finally, you’ll want to see what capabilities exist to monitor and control employee cards. Can you set predefined spending limits (just in case one of your employees goes rogue)? Can you specify merchant types that the employee can spend at?