What Is a Business Credit Card and How Does It Work?
Business credit cards are financial tools that help companies manage expenses, establish credit history, and improve cash flow. They function similarly to personal credit cards: you make purchases, pay down the balance, and repeat the cycle. Most cards have a fixed credit limit and require at least a minimum monthly payment.
Paying the full balance each cycle prevents interest charges. If not, interest applies on the remaining amount, with typical annual percentage rates ranging from 18% to 28%.
Business Credit vs. Charge Cards
Business charge cards differ by having no preset credit limit, but they require full payment every month. These cards suit companies with steady cash flow and those looking to optimize reward earnings.
“They’re best for businesses with robust cash flow that want to maximize rewards.”
Key Benefits of a Business Credit Card
- Earn cash back or travel points for every dollar spent, redeemable for personal or company use.
- Access discounts from major brands such as Adobe, Dell, Lyft, and Apple.
- Receive travel perks like statement credits for flights and baggage fees.
- Obtain higher credit limits, often starting around $10,000.
- Enjoy larger sign-up bonuses than those offered by personal cards.
- Establish and strengthen your company’s credit profile through responsible use.
Overall, business credit cards offer tangible rewards along with financial flexibility, making them valuable for companies of all sizes.
Author’s summary: Business credit cards streamline expense management and provide valuable rewards, helping firms build credit and increase purchasing flexibility.