What Is a Business Credit Card and How Does It Work?
Business credit cards help manage cash flow and build business credit by earning rewards on expenses and offering employee cards with spending controls. They operate similarly to personal credit cards: you charge expenses, pay down your balance, and continue using the card.
Most business cards have a set credit limit and require a minimum monthly payment. It's advisable to pay the balance in full to avoid interest charges, which typically range from 18% to 28% annual percentage rates. In contrast, business charge cards have no preset credit limit but require the full balance to be paid each month, making them ideal for companies with strong cash flow focused on maximizing rewards.
Benefits of Using a Business Credit Card
- Earn cash back or travel points on every dollar spent, which can be used personally or for the business.
- Receive discounts on business expenses from brands like Adobe, Dell, Lyft, and Apple.
- Obtain statement credits for travel-related costs such as flights and checked bags with many business travel cards.
- Access higher credit limits, often starting at $10,000, and enjoy larger sign-up bonuses compared to personal cards.
- Build a strong business credit profile.
“Business credit cards earn rewards on business expenses and offer free employee cards and spending controls.”
Overall, business credit cards provide valuable perks and financial tools tailored to support and grow your business effectively.
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