Whether you have your own small business or simply want to keep your work purchases separate from personal ones, you might want to consider opening a business credit card.
Many business credit cards offer the same, if not better rewards compared with their personal counterparts so you can rack up extra points, miles or cash back on the types of purchases you need to make anyway.
These business products also typically include additional benefits specifically geared to professionals’ needs, not to mention the added financial flexibility that carrying a business credit card can confer. Here are eight reasons to consider a business credit card instead of a personal one.
1. You May Qualify, Even if You Don’t Own a Traditional Business
You might be wondering whether you are even eligible for a business credit card if you don’t have your own business (at least in the traditional sense). For many people, the answer is yes.
It’s true, these products are targeted toward small business owners and those who work at larger corporations. However, you may still qualify if you are self-employed, do business under your own name as a sole proprietor or even just have a side hustle that earns you extra money.
That’s not to say that your dog-walking business is going to qualify you for a top-shelf card like The Business Platinum Card® from American Express right off the bat. But if you can demonstrate that the business for which you want to open a card generates income and that you are likely to use your card for purchases (and pay it off responsibly), banks are willing to give your application a second look.
After all, by the Small Business Administration’s last estimate, there were 33.2 million small businesses in the U.S. as of March 2023, accounting for 99.9% of enterprises in the country. So issuers take applications from sole proprietors and self-employed individuals seriously, and you can use your personal social security number to apply for a business credit card anyway. For that reason, it might also help to file an application for a card from a bank that you already do business with so that they have a full perspective of your finances and credit history.
2. More Valuable Welcome Bonuses
Many business credit cards offer even more lucrative introductory bonus terms than their personal counterparts. That makes them great both as alternatives to personal cards, but also interesting as second choices if you already have a card with your main loyalty program and are looking for a second one to rack up even more points or miles.
Take, for instance, the United℠ Explorer Card. It’s currently offering a welcome bonus of 50,000 bonus miles after spending $3,000 on purchases in the first 3 months of account opening. By contrast, the United℠ Business Card is offering a welcome bonus of 75,000 bonus miles after spending $5,000 on purchases in the first 3 months of account opening. Plus, the United Business Card offers members 5,000 anniversary bonus miles if they also carry a personal United credit card such as, you guessed it, the United Explorer.
This pairing is the rule rather than the exception, so before you submit any applications, research your particular card’s history of introductory bonuses and make sure that it is currently and has consistently offered better terms than any comparable personal versions before clicking that apply button.
Aside from extra points or miles, some business credit cards include low or 0% APR on purchases or balance transfers for a period of time after account opening. For example, The American Express Blue Business Cash™ Card is currently offering a 0% intro APR on purchases for 12 months from the date of account opening, then a 18.49% - 26.49% variable APR applies. (Terms apply. See rates & fees). Carrying balances and making late payments can negatively impact your credit score, so think carefully before you pursue this course. However, leveraging such an opportunity can give startups the breathing room they need to put off some payments while waiting for their cash flow to commence.
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3. More Lucrative Earning Rates
One of the major ways business credit cards blow personal ones out of the water is by fielding better earning rates in more bonus categories. With some cards, these categories are specifically business-related, while with others, you can use them for a variety of everyday expenses. Here are two examples to prove it.
One of the most popular personal rewards cards, the Chase Sapphire Preferred® Card will earn 5 points per dollar on travel purchased through Chase Travel℠, 3 points per dollar on dining, select streaming services, and online grocery purchases (excluding Walmart, Target and wholesale clubs), 2 points per dollar on all other travel purchases and 1 point per dollar on other purchases.
Chase’s comparable business credit card, the Ink Business Preferred® Credit Card, earns an even better 3 points per dollar, up to the first $150,000 in combined purchases each calendar year, on:
- Travel
- Shipping purchases
- Internet
- Cable
- Phone services
- Advertising purchases made with social media sites
So if you regularly spend a lot in any or all of these categories, but not so much on dining, your earning could be much higher with the Ink Business Preferred Credit Card than with the Chase Sapphire Preferred.
It’s not just strictly business categories that get a boost with some cards, though. The Hilton Honors American Express Business Card (terms apply, see rates & fees) earns 12 Hilton Honors Bonus Points per dollar on eligible purchases at participating hotels and resorts within the Hilton portfolio and 5 Hilton Honors Bonus Points per dollar spent on the first $100,000 in purchases each calendar year, 3 points thereafter.
On the other hand, the personal Hilton Honors American Express Surpass® Card (terms apply) earns the same 12 points per dollar on Hilton purchases, but 6 points per dollar only at:
- U.S. gas stations
- U.S. restaurants
- U.S. supermarkets
It earns 3 points per dollar on all other purchases. The difference between the two cards is that the personal card earns a supermarket bonus while the business card earns a bonus on a variety of expenses. So if you want more flexibility with bonus categories instead of just groceries, you could really up your earning with The Hilton Honors American Express Business Card.
4. Better Business-Related Perks
As these cards are actually meant for small businesses, many of them extend work-related perks. Some allow you to add employee cards for free, and thus earn rewards even faster from your employee’s spending. Others come with enhanced purchase protection with larger dollar maximums or cell phone coverage, specifically, that personal versions might not.
The Business Platinum Card® from American Express (Terms apply. See rates and fees) is a good example of a variety of business card perks. It earns 5 Membership Rewards® points per dollar on flights and prepaid hotels through American Express Travel, 1.5 points per dollar on eligible purchases at U.S. construction material & hardware suppliers, electronic goods retailers and software and cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year and 1 point per dollar on other eligible purchases. These rewards can come in handy if you have some big work expenses to charge. It also comes with up to $400 in annual statement credits toward U.S. Dell purchases with enrollment through 12/31/24. Terms apply.
5. Higher Credit Limits
This will, of course, depend on your specific financial outlook and credit report, but banks tend to approve higher credit limits on business cards than personal ones. That’s because they know businesses might require more budgetary leeway with their purchases. Even a small business that spends relatively little on an ongoing basis might have a month (perhaps around the holidays) where it needs to spend a lot more than usual on purchased or rented equipment or temporary needs like increased shipping costs. Having a few extra thousand (or tens of thousands) of dollars to work with can be just the kind of lifeline these businesses need.
6. Raise Your Personal Credit Score by Separating Your Expenses
One of the best reasons to get a business credit card is to start separating your business purchases from your personal ones. Doing so will make tax time a lot easier. But it also usually means that your work financial activity sits on a separate credit report from your personal activity.
This can even raise your personal credit score over time. By using your personal cards less, your credit utilization ratio—one of the most significant factors in determining your credit score—will go down. In turn, that can lift your personal score because it looks like you’re using less of your available credit.
Don’t be irresponsible, though. Remember how you usually have to include your Social Security number in business credit card applications? That means your personal credit remains tied to your business account and you will ultimately be responsible for any spending you do on these cards if your business defaults.
7. Establish Your Business Credit History
Just as opening a business credit card is one of the first steps of building your business, it can also help you establish a credit history for that business. Having a good business credit rating can help you secure financing and negotiate payment terms with vendors in the future. Further down the line, when you might need to take out a loan or mortgage for the business, banks will look specifically at your business’s credit report and history, and a positive overview can help you secure better interest rates.
8. More Opportunities for Personal Cards
Most issuers limit the number of credit cards you can either apply for or have open during a specific period of time. The best-known of these restrictions is Chase’s 5/24 rule. If you apply for five or more cards from any and all banks within a 24-month period, Chase is likely to reject your next application. However, business credit cards do not tend to be counted toward many of these limits. So opening them should not preclude your eligibility for future personal credit card applications.
That said, certain families of cards, such as the Marriott Bonvoy products from American Express and Chase, do have complicated eligibility rules and exclusions, so be sure to read the fine print before sending in those applications.
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Bottom Line
There are plenty of excellent reasons to open a business credit card. Doing so will help you keep your work and personal expenses separate and enable you to build a credit history for your business. But business credit cards also present excellent rewards opportunities with high introductory offers, numerous bonus spending categories, and other perks that can save you time and money.
To view rates and fees of The American Express Blue Business Cash™ Card, please visit this page.
To view rates and fees for The Hilton Honors American Express Business Card, please visit this page.
To view rates and fees of The Business Platinum Card® from American Express, please visit this page.
To view rates and fees for Hilton Honors American Express Surpass® Card please visit this page.
