How Do Business Credit Cards Work?

Credit1 year ago
Women standing in a bedroom

If you are a new business owner or are growing your side hustle into a full-time concern- you may be considering whether you should apply for a business credit card. You probably already have experience with personal credit cards but may be wondering about the benefits of business credit cards, and how exactly applying for business or startup business credit cards can help to improve your organization.

Below we will talk you through everything you need to know about the benefits of business credit cards, the best business credit cards rewards which can help your business, and how to decide which small business credit cards are best for you.

The American Express Blue Business Cash™ Card

Best for Beginners

Intro offer


Annual Fee


Recommended Credit



AE Blue Business Cash.png

What is a Business Credit Card?

Before we look at the benefits of business credit cards, we need to establish exactly what business credit cards are and how they differ from your personal card from American Express or Chase.

Business credit cards and credit cards for startups have been specifically created to support the financial operations of businesses. Because of this they usually come with an increased line of credit, business-oriented reward schemes, and issuing of employee cards to ensure that all business spending is covered from the same account.

You can use your business credit card to help you to keep your personal and professional spending separate, access extra funds to cover unexpected expenses, and collect reward points on eligible purchases within a specific spending category such as office supplies and gas purchases.


How Do Business Credit Cards Work?

In terms of day-to-day purchasing, a business credit card offers the same service that your personal card does. You make your business purchases using your startup business credit cards and each billing cycle you will receive a statement detailing the balance you owe and the minimum amount due on your bill.

When you pay your balance off each month, on time you won't have to face any interest on those debts. If you choose to let the debt carry forward into the next billing cycle, (if your card allows this), you will face interest charges on your balance. Business credit cards come with various levels of interest and variable APR depending upon your company credit history and business credit score.

Business credit cards can be either charge cards where you are expected to pay in full each month or traditional credit cards which will enable you to spread costs over several months of your card membership.

One of the benefits of business credit cards which allow you to spread the costs is that new business owners can spread the costs of larger purchases they may not be able to buy outright initially.


The Benefits of Business Credit Cards


Many Startup Business Credit Cards Offer $0 Annual Fees

When you first open your business, you will find that some of the small business credit cards best annual fees are $0. For the first year, many card issuers won't charge you a fee leaving you more money to cover your business expenses.


Enjoy Generous Signing On Bonuses

The best business credit card rewards can include hundreds or thousands of loyalty points, air miles, and discounted memberships for gyms, office supplies, and car rentals. You will also often be offered a large number of bonus points if you hit a certain amount of spending within a certain number of months from account opening.


Access Higher credit Limits to Grow Your Business

You may be able to access a larger amount of business credit than you will find on your personal card. If you need to buy equipment or inventory to get your business to the next level, this could be a valuable benefit.


Keep Your Professional and Personal Spending Separate

Tracking your business spending will become a lot easier when your personal payments separate. This will help you to accurately track your monthly outgoings, how much profit you are generating, and make your tax filings a lot less stressful!


Start Building Up Your Business Credit Score

If you keep your monthly balance healthy and don't fall into a cycle of delinquent payments, you will be able to start building up a good business credit score. This will unlock larger lines of credit, more benefits, and lower APR rates.


Access Longer Levels of Interest-Free Spending

Some business credit cards offer an extended period of interest-free financing which is longer than those offered on personal cards. This may offer you some much-needed breathing room and extra time to wait for incoming funds from invoices.


Earn Points and Air Miles With Your Business Purchases

You can access the best business credit card rewards to help you make the most of your business spending. If you regularly need to take flights for business meetings, you can start to build up air miles to cut ticket prices for future flights. Each card will have a set point per dollar rate for qualifying purchases in restaurants, on travel, or with partner retailers.


Access Discounts with Software, Accounting Services, and Other Business Related Services

One of small business credit cards best benefits is that you can often access discounted services with accounting software, office supplies, car rental, or related services your business needs. Most business credit cards will partner with a variety of different partners which may help you to cut operating costs for your daily business operations.


What to Think About Before You Apply for Small Business Credit Cards

Before you get carried away with the benefits of business credit cards and start applying for startup business cards there are some things you need to consider.


Make Sure You Choose the Small Business Credit Cards Best for Your Organization

Make sure you take the time to do your research and pick the best business credit cards rewards for you. Look through the small business credit cards' best benefits and assess how each applies to the everyday operation of your company.

The value of each benefit is only relative to how much they can be utilized by your company, so make sure not to be blinded by the major value benefits of business credit cards which really have little practical value when it comes to the running of your company.


Business Credit Card Issuers Can Change Interest Rates Without Prior Warning

When you apply for small business and startup business credit cards you need to be aware that they are not covered under the 2009 CARD Act (Credit Card Accountability, Responsibility, and Disclosure Act.) This means that business card issuers are allowed to raise interest rates without prior notice.


You May Need to Offer a Personal Guarantee for Start Up Business Credit Cards

When you apply for small business or startup business credit cards, then creditors will check your credit score and credit history. If you don't currently have a business credit history, then your personal history needs to be good to excellent if you want to increase your chances of being judged as creditworthy for a business card. You may also be asked to put up a personal guarantee which will make you personally liable for business debts and defaults.


What Do You Need to Apply For a Business Credit Card?

Once you have decided on the small business credit cards best for your company, have checked that you are eligible against the criteria of the card, and have ensured that your credit score is up to par - it is time to apply!

You will be expected to provide proof and paperwork along with your application, this can include:

  • Personal details and addresses of business owners.
  • Registered business address.
  • TIN (Tax Identification Number.)
  • The structure of the business.
  • Information about business finances, monthly income, and expenses.

If you are uncertain about what information you need to provide. contact the issuer beforehand to make sure you have everything you need so that the process is as quick and smooth as possible.


How Do Business Credit Cards Work?

As you can see the benefits of business credit cards can help you to either establish or grow your business. But before you apply you need to make sure that you are choosing startup business credit cards that offer the best business credit cards rewards for you. Take your time and do your research and you discover how to make business credit cards work for you. 

A girl paying at a store cash register with a credit card