Credit cards can offer access to necessary spending power exactly when and how a business needs it. Some business credit cards offer rewards on spending, too, such as the Discover it® Business card. Using a dedicated business credit card can help keep expenditure records separate and easily accessible, making accounting easier. Since business needs and card benefits can vary, it’s important to understand exactly how a business credit card can be used as a powerful financial tool for small businesses.

Here are a few key considerations to keep in mind when choosing a business credit card to help ensure you get the features you need:

  1. Understand the Benefits
  2. Costs of Having the Card
  3. Card Benefits to Support Your Needs
  4. Using a Business Credit Card for Day-to-Day Expenses

1. Understand the Benefits

Choosing the right credit card for your business means understanding the benefits of the card, and how they might dovetail with your business needs. Focusing on the way your business needs to use the card may also help keep potentially questionable habits in check. For example, if you know your business card serves as quick access to financing to cover supply chain hiccups, maybe you’ll think twice before pulling the card out for something less financially necessary. Consider these common benefits of business credit cards:

  • The credit is there if you need it.While you should try to keep your balance at a comfortable level, having a card can give you peace of mind in knowing there’s money available should you need it.
  • It’s easier to qualify.If you don’t have an extensive or strong credit history, you may not qualify for a bank loan. But you may be able to procure a business credit card, which can help you build better credit over time.
  • It can free up cash.For short-term needs, using a business card enables you to use cash on hand to pay for other, more immediate expenses.
  • You can rack up bonuses.If your business card has a rewards structure, you can earn points or miles or cash back simply by using the card for business purchases. 
  • The turnaround is quick.If you need instant financing, your credit card is always available. The application process for a small business loan might entail a time bind that could lose you a big opportunity.
  • You could pay low interest.If you’re using a business credit card at the start of your business life, you may be able to take advantage of a 0 percent interest introductory offer for 12 months or more. That will allow you to float a balance for a few months if necessary to get your business off the ground.

2. Costs of Having the Card

There are costs involved with having a business credit card, and the important one that most people pay attention to is the annual percentage rate (APR). At those times when you need to carry a balance, what interest rate will you have to pay on the card?

You should also consider the broader picture of the full costs of carrying that business credit card. For example, does the card have an annual fee? It might be worth getting a card with a lower APR and a small annual fee, instead of a no-fee card with a higher APR. Plus, fees you incur on the card may be considered tax deductible. Consider the pros and cons of each option, based on how you plan to use your business credit card.

3. Card Benefits to Support Your Needs

Some business credit cards, like the Discover it® Business card, offer rewards such as cash back for making purchases with the card. Consider which rewards offer the best overall deal. Some cards offer 1.5 percent cash back on all purchases, or a higher cash back percentage on certain specific categories of spending, like gas. Decide which one best suits your company’s needs and spending habits.

How do you most frequently use your credit card for your business?

  • Travel?
  • Entertain clients?
  • Big purchases that need financing?
  • Allow employee purchases?

When the card will be used for travel-related purchases or entertainment, find a card that has rewards suited to travel — such as frequent flyer miles or extra rewards points, such as extra cash back for purchases made at certain restaurants or for certain categories of entertainment-related spending.

Or look for special APR offers, like a 0 percent introductory APR, that can help you pay for a big one-time purchase for your business without racking up lots of interest charges.

Some business credit cards offer a few other specialized perks, like free airline lounge membership, free airport WiFi hotspots and more.

Another perk to look for is extra bonus points: Some cards will offer you bonus points if you spend a certain amount on the card within the first few months. If you know you’re going to have some big purchases coming up, it might be worth getting a new business credit card and putting those purchases on the new card to reap the rewards.

4. Using a Business Credit Card for Day-to-Day Expenses

Once you have a business credit card, you’ll want to use it responsibly. Consider these tips:

  • Put a system in place. A business credit card is an excellent way to keep track of business expenses — if you have an established way to track them. If your business is just you, that’s not so hard — use the card’s export tools to download expenses to tracking software. If you have employees using business credit cards, you’ll have to put more thought into how you want it all to come together.
  • Set rules and boundaries. Again, if you’re the only one using your card, this is a moot point. But make sure employees know what kind of expenses they can put on their cards and how much they can spend. Put your agreement in writing and have employees sign it to ensure that they understand how it will work.
  • Keep expenditures reasonable. Business credit cards work best for expenses that can be paid off within one billing cycle. For larger capital expenses, you may want to consider alternative funding.
  • Use it responsibly. Utilize your business card for business expenses only, to make things easier at tax time. Pay bills on time, keep your balance low or pay your balance in full each month, and don’t go over any credit limits to build your credit score over time.

Used prudently, a business credit card can be a handy tool for your small business, allowing you to track business expenses, free up short term cash and build credit over time. For best results, make sure you establish a system for usage and pay off your balances quickly.

Published June 7, 2017.

Updated March 27, 2020.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.