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Pros and Cons of Business Credit Cards

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pros cons business credit cards

Imagine your business in five years, where do you want to be and what do you want to see your company become? Whatever your vision, having financing will turn your hopes into reality. Getting a business credit card can be a great option, but before you commit, you’ll want to know the benefits and disadvantages so you can choose whether it’s the best path for you and the business you’re growing.

Consumer vs. Business

Individuals use consumer credit cards to access revolving lines of credit. In order to keep your business and personal expenses separate, though, you’ll want to access a business card. Like consumer cards, small business credit cards allow you to make purchases and charge interest when the balance is not paid each billing cycle. Depending on the size of your company, you may be able to get a credit card through your bank, credit union, or by applying online.


There are many benefits to using a small business credit card. From taking out a cash advance to making a balance transfer, credit cards offer a lot of flexibility for how your business handles expenses, and can really help keep a business afloat. Utilizing employee cards can help you keep a handle on employee expenses, and having all your business expenses reported in one place makes financial record keeping easier.

Business Credit Card Pros

Now let’s take a look at some pros of getting a business credit card. Here are five to consider:

  1. Helps Build Credit
    When applying for your first business credit card, your personal credit score is used to decide whether you’re approved or denied. Once you open your first business credit card, you’re one step closer to building a solid business credit history, and the card’s history is not connected to your personal credit.
  2. Qualify for Business Loans
    Having a business credit card strengthens your business credit history. Remember your vision of where your business would be in five years? Did your dream and vision include the ability to buy large purchases, like equipment or real estate? Business loans will get you there when the time comes. And the interest rate for a loan will be based on your business credit history, not your personal credit history.
  3. Separation of Personal and Business Expenses
    The business bank account and business credit card work well together to help you create separation of personal and business transactions. Use your business credit card for all your business transactions, then pay your expenses with your business bank account. Doing this has a twofold advantage: while building a relationship with your bank, you also are also earning rewards and lowering business expenses, which leads us to our next pro…
  4. Lower Business Expenses
    Do you spend a lot of money on office supplies, cellular phones, land lines, internet, and cable TV services for your business? Once you’ve established your credit and grown your business, these cards will help offset those expenses. Before applying for a business credit card, decide which rewards will benefit you the most, and research the the best business card for you and your business.
  5. Get Rewards
    Business credit cards offer a variety of rewards programs with business owners in mind – from travel to cash back rewards, your rewards can help offset your business expenses. If you have a personal credit history with average credit or are just starting to establish your business credit history, you may want to choose from one of the best secured business credit cards or a non-secured business credit card.
  6. Easy Taxes
    Come tax time, your business credit card becomes your ally. Most business credit cards come with an end of the year account summary and online tools for managing your account. Your monthly statements will hold all the information you will need for calculating your business-related expenses, especially if you’ve been paying for all expenses with your business credit card and then paying off your card balances with your business bank account. This makes tax time easy.

Business Credit Card Cons

There are two things you should consider before getting a credit card for your business:

  1. Not Covered by the Credit CARD Act of 2009
    Business credit cards are not covered by the Credit CARD Act of 2009. This means your business credit card’s interest rate can change at anytime without notice. If your business credit card came with an introductory rate, it does not need to be in place for a fix period of time. Business credit cards also do not have any limits on fees.
  2. Credit Challenges
    Your business credit history is separate from your personal credit history. However, if you are late on paying for your business credit card or stop paying for it, your personal credit history will still be impacted.

5 Strategies to Establishing a Business Credit History

Securing a credit card for your business starts with building a solid business credit history. Having an established credit history for your business will increase your chances of getting a business credit card. If you do not already have one, here are five steps to building one:

  1. LLC or Inc. Structuring and setting up your business as a LLC or Inc. ensures legal separation between business and owner.
  2. Federal tax identification number. Getting a federal tax number will give you the power to open a business bank account, and serves to identify your business when filing taxes.
  3. Business bank account. Having a business checking account will provide a separation between personal and business monetary interactions.
  4. Contact credit reporting agencies. Confirm that you have a business credit file open with Experian, Equifax and TransUnion.
  5. Open a business credit card. We’ve reviewed this in detail, but if you can’t do this for some reason, there are alternatives…


There are many types of small business financing, offering you a few alternatives to getting a business credit card.

  1. Small Business Loans: Many lenders offer loans to small businesses with competitive interest rates that usually beat credit card rates.
  2. Small Business Administration Loans: These loans and their funding are backed by the SBA. This encourages lenders to take risks knowing no matter what they will be paid back.
  3. Acquisition Loans: These loans are useful if you are trying to acquire a preexisting business.
  4. Startup Loans: These loans are useful for when you are in the beginning stages getting your business up and running.

More Information

Here’s more info on business credit cards and loan options:

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