Glossary Terms

Annual Percentage Rate
The cost of credit, including the interest and fees, expressed as an interest rate. APR was created to make it easier for consumers to compare loans... <a href='/glossary/what-is-annual-percentage-rate' title='See the full definition of Annual Percentage Rate'>read more</a>
Business Credit Card
A business credit card is a credit card issued by a financial institution to a business so that it may borrow funds when making purchases. <a href='/glossary/what-is-business-credit-card' title='See the full definition of Business Credit Card'>read more</a>
Credit Card Receivables
Credit card receivables, also known as credit card factoring, is a type of financing available to businesses that are paid by customers with credit... <a href='/glossary/what-is-credit-card-receivables' title='See the full definition of Credit Card Receivables'>read more</a>
Intro Period
The intro period, also called the introductory period or initial rate period, is the time from the day an account is opened, when a promotional... <a href='/glossary/what-is-intro-period' title='See the full definition of Intro Period'>read more</a>
Intro Rate
A favorable interest rate that applies during a special promotion. The period of time from the day an account is opened until the promotion expires is... <a href='/glossary/what-is-intro-rate' title='See the full definition of Intro Rate'>read more</a>

There are a lot of great choices when it comes to choosing business credit cards. Business cards and consumer credit cards share some of the same features, but there are also some major differences. Let's take a look at what business cards offer and what it means for the small business owner.

Snazzy Management Tools

With some business credit cards, you can set up a budget and track and categorize expenses. This capability is very valuable at tax time because it's easy to get itemized annual reports. The reporting tools vary by card, of course, so call the issuer if it isn't clear what management tools are available.

Keeping track of expenses is more complex when there are employees involved. Sometimes, additional cards for employees are offered for free. Many of these credit cards allow the business owner to set individual spending limits on employee credit cards and monitor employee spending.

Business-related Rewards

When it's time to choose a business card, decide which kinds of rewards match up well with your biggest business expenses. Owners who don't travel much but have a lot of everyday expenses, for example, might do best with a cash rewards card. With research, the choices can be narrowed down even further. For example, if your biggest expense is the cellular bill, you can zero in on a card that offers cash back in that particular category.

There are also many business credit cards that focus on travel rewards, and these rewards are offered in a variety of ways. So take the time to focus on the best business card that will help lower your business expenses the most.

Credit Card Sign-up Incentives

There are several different ways that credit card issuers make business cards attractive. Sign-up bonuses are a common marketing strategy. If you choose a card that's a good match, earning the sign-up bonus is an excellent way to get more cash back or miles. There's usually a required spending threshold, but if meeting the amount is done via purchases that the business needed to make anyway, it's a real bonus for you.

Business cards also might offer zero percent introductory purchase APRs for a period of 12 to 18 months. If a major purchase is needed, this is an opportunity to buy the item, spread the payment out over time, and avoid paying interest if the balance is paid in full before the introductory offer ends.

Another incentive often offered by business card issuers is a higher credit limit. It still isn't a good idea to carry a balance, but it's nice to have extra credit available in the event of an emergency.

Business Cards and the Credit CARD Act of 2009

The CARD Act offers consumers protection against sudden rate increases, universal default rates, expensive billing practices and a whole lot more. However, the Credit CARD Act covers consumer credit cards, but it doesn't cover business credit cards. This a very important fact to remember. Because business credit cards aren't covered by the CARD Act, you need to be on your toes and alert to changes in terms.

One of the protections offered by the CARD Act is that rate increases can't be retroactively applied to an existing balance. Rate increases (with a few exceptions) are applied to new purchases only. With a business credit card, however, a rate increase can indeed be applied to an entire balance. That makes it very important to pay the bill in full every month and avoid carrying a balance.

Business credit cards are popular because they offer unique features that business owners need. Just be sure to read any correspondence that comes from the issuer so any changes to the terms won't be a surprise.