How To Pick The Best Credit Card For Your Small Business

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It used to be that for the most part business credit cards weren’t competitive with personal credit cards. However, over the past few years I’d say that trend has changed significantly. Presumably this is because card issuers finally see the amount of potential in this space, especially since a lot of businesses put a lot of spend on credit cards.

For those new to business cards, though, picking a card can be a daunting task. So in this post I wanted to look at the thought process I recommend going through in deciding which business credit card to get.

There are quite a few factors to consider, so let’s go through some of those individually.

Do you want to earn points or cash?

In general you’ll be rewarded for your business spend in one of two ways — either with cash back, or with some sort of points currency. I’d say this is probably the biggest thing to decide upfront, because these are obviously very different ways of getting rewarded.

Some businesses like earning cash back that they can put back into their business. Meanwhile others prefer earning points rewards, either so they can use those points to pay for some business travel they’d take anyway, or to actually take the time to plan a great vacation.

For example, if you want to earn cash back, it’s tough to beat the Capital One® Spark® Cash for Business, which offers 2% cash back on all purchases, with no caps. The card has a $95 annual fee that’s waived the first year, and offers a bonus of up to $2,000 cash back (though with a significant spend requirement — you earn $500 bonus miles when you spend $5,000 within the first three months, and an additional $1,500 when you spend $50,000 within the first six months).

If you are going to earn a points currency through credit card spend, I highly recommend using a card that accrues a transferable points currency. These are points that give you a lot of flexibility, as they can typically be transferred to a variety of airline and hotel partners, or in some cases even be redeemed towards the cost of a travel purchase.

For example, the Ink Business Preferred℠ Credit Card offers points that can be transferred to about a dozen airline or hotel partners, or can be redeemed for 1.25 cents each towards a travel purchase.

Alternatively, the Capital One® Spark® Miles for Business offers two miles per dollar spent, and they can either be redeemed for one cent each towards the cost of a travel purchase, or as of December can be transferred to airline partners at a 2:1.5 ratio.

Are you willing to pay an annual fee?

Once you’ve decided how you want to be rewarded, the next step is deciding if you’re willing to get a credit card with an annual fee. I know a lot of people are hesitant to get cards with annual fees, though if you spend any sort of significant amount on credit cards, I’d highly recommend it.

Why? Cards with annual fees are likely to have much bigger welcome bonuses (which can offset annual fees), are more likely to have no foreign transaction fees, and are more likely to have better bonus categories (and earn you more points or cash back), etc.

But don’t worry, even if you’re not willing to pay an annual fee, there are still some good options out there. For example, The Blue Business℠ Plus Credit Card from American Express offers 2x Membership Rewards points on the first $50,000 spent every calendar year, so I actually consider that to be the single best credit card out there for the first $50,000 spent annually, bar none.

If you’re looking for cash back, the no annual fee Ink Business UnlimitedSM Credit Card offers 1.5% cash back (though you can potentially do better with that card — more on that below).

What categories do you spend most in?

Credit cards offer bonus categories, where you can earn 2-5x points for spend in select categories. Getting a credit card that has bonus categories that coincide with your business’ spend patterns can make a huge difference.

To give some examples of cards that offer big bonus categories on spend:

  • The $95 annual fee Ink Business Preferred℠ Credit Card offers 3x points on travel, shipping purchases, internet, cable, and phone services, and advertising purchases with social media sites and search engines (on the first $150,000 in combined purchases per account anniversary year)
  • The no annual fee Ink Business Cash℠ Credit Card offers 5x points on office supply stores, internet, cable, and phone services, and 2x points on gas stations and restaurants (on the first $25,000 in combined purchases per account anniversary year)
  • The $295 annual fee American Express® Business Gold Card potentially offers 4x points on airfare purchased directly from airlines, U.S. purchases for advertising in select media, U.S. purchases at gas stations, U.S. purchases at restaurants, U.S. purchases for shipping, and U.S. computer hardware, software, and cloud computing purchases made directly from select providers; the way it works is that you earn 4x points in the two categories you spend the most in each billing cycle, on up to $150,000 of spend in those categories each calendar year

In my opinion those are the three business cards with the best bonus categories, though as you can see, there are potentially significant differences between them.

Spend a lot on dining? One card offers 4x points in that category, while the others offer 1x points. Spend a lot at office supply stores? One card offers 5x points in that category, while the others offer 1x points.

Are you willing to get multiple cards?

I know a lot of people are hesitant to get more than one credit card, even though I think that’s a big missed opportunity. So when considering which business credit card is best, I’d recommend trying to decide whether you’re comfortable getting more than one card or not.

This can impact which card makes the most sense, since if you’re getting just one card, you’re going to want for it to be really well rounded.

But if you’re willing to get two cards, there are so many more opportunities. For example:

  • If you’re thinking of getting the Ink Business Preferred℠ Credit Card for the no foreign transaction fees, airline and hotel transfer partners, 3x points in select categories, cell phone protection plan, etc., there’s huge value to complementing that with the Ink Business UnlimitedSM Credit Card, which offers 1.5x points on all purchases; then you could use the Ink Preferred for the 3x points categories, and the Ink Unlimited for all non-bonused purchases so you’re earning 1.5x points per dollar spent, and then you can pool points.
  • Similarly, if you’re thinking of getting the American Express® Business Gold Card, I’d recommend complementing that with The Blue Business℠ Plus Credit Card from American Express; you can take advantage of the 4x points categories on the Gold Card, and then put your first $50,000 of spend every calendar year that wouldn’t be eligible for a bonus on the Blue Business Plus, so you earn 2x points, and then you could pool points

Do perks matter to you?

So far the focus has been on maximizing the points you can earn with your business credit card, and that’s for good reason, since that’s where you’ll get the most value.

However, some businesses may be very focused on getting cards with perks instead. This could come in a few different forms. For example:

These are all perks that everyone is going to value differently, so you need to decide what’s most important for your business.

Do you need credit card financing?

Whether we’re talking personal or business credit cards, in general I recommend only using credit cards if you’re going to be able to pay off your balance in full each month. While you can finance credit card charges, the interest rates are typically very high, and will more than negate any rewards you might earn.

However, some businesses are growing and could use some financing, in which case there are some credit cards offering 0% financing as an introductory offer. If that’s something that could be useful to you, that’s not a bad option.

If that’s something you’d get value out of, the Ink Business UnlimitedSM Credit Card and Ink Business Cash℠ Credit Card offer 0% intro APR for the first 12 months on purchases and balance transfers, while The Blue Business℠ Plus Credit Card from American Express offers 0% intro APR for the first 15 months.

In a bind that could be a useful feature to take advantage of. Just make sure you pay that off before the rates go up.

Which business card is best?

As you can see, there are lots of different factors to consider here, and there’s no “one size fits all” answer. However, for someone just getting started with credit cards, I’d say the following are my general thoughts on the best place to start:

  • If you want to earn cash back for your business, get the Capital One® Spark® Cash for Business; the card offers unlimited 2% cash back, a welcome bonus of up to $2,000 after completing minimum spend, and a waived annual fee for the first year
  • If you want to earn points, get the Ink Business Preferred℠ Credit Card; the card offers a welcome bonus of 80,000 points upon completing minimum spend (the biggest welcome bonus of any credit card, by my valuation), offers 3x points in select categories, and offers car rental coverage, cell phone protection, and more
  • If you’re willing to get a second card, pick up The Blue Business℠ Plus Credit Card from American Express; the no annual fee card offers 2x Membership Rewards points on the first $50,000 spent annually, and I value each point at 1.7 cents, meaning I think the return is worth 3.4%

Bottom line

There are so many great business credit cards nowadays, so there’s no “one size fits all” answer as to which card is best. As outlined above, there are certainly some cards that are better than others, and also some cards that just about anyone can’t go wrong with, in my opinion.

Ultimately which card is best comes down to what you value most — is it the best card bonus categories, perks, financing, or something else?

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Comments

  1. I was approved for an AMEX Business Platinum card even though I have a dormant unincorporated company here in Canada. I couldn’t get the personal Platinum card with the 50,000 bonus as I had one previously but the rep. suggested that I get the Business Platinum.
    The Business Platinum had the welcome bonus of 40,000 points and lounge access etc.
    I’ll probably keep my AMEX Gold Rewards card to determine which card is better.

  2. @Lucky, can points earned on Ink cards be pooled with points from your personal CSR/freedom cards? Is it a difficult process to combine, seeing as how it’s so simple to do with multiple CCs on the personal side?

  3. A major consideration I see missing here is the American Express Business Platinum Card offers 1.5x MR points on any purchase of $5,000 or more, with a cap of 1 million bonus points. This is great for any business who can ask vendors to consolidate multiple purchases into larger charges.

    I’ve had success getting both Facebook and Google to charge us in $5k increments to ensure we can take advantage of this bonus. Just ask.

  4. Hey lucky, quick question I haven’t been able to find an answer to but figured if anyone knows it would probably be you. When buying airline miles with the Amex platinum do you receive 5x points on those purchases or just 1x? I am considering buying a set of Alaska miles and want to know which card would be best to make that purchase with.

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