Introduction
Starting a new business is an exciting and challenging endeavor, and one of the crucial aspects of establishing a solid financial foundation is acquiring a business credit card. A business credit card not only helps separate personal and business expenses but also provides access to a credit line, rewards, and valuable perks tailored to support the unique needs of startups and new businesses. In this comprehensive guide, we’ll explore the best business credit cards for startups and new businesses in 2024, their features, benefits, and how to choose the right one for your business.
The Importance of Business Credit Cards for Startups and New Businesses
Separating Personal and Business Finances: One of the primary advantages of having a business credit card is the ability to keep personal and business finances separate. This separation is essential for accurate record-keeping, tax preparation, and maintaining a clear financial picture of your business’s performance.
Establishing Business Credit
As a new business, establishing a solid credit history is crucial for future financing opportunities, such as loans or lines of credit. By responsibly using a business credit card, you can build credit in your company’s name, which can significantly benefit your business in the long run.
Access to Revolving Credit
Startups and new businesses often face cash flow challenges, especially during the initial stages of growth. A business credit card provides access to a revolving line of credit, which can be a lifeline during times of inconsistent revenue or unexpected expenses.
Rewards and Perks
Many business credit cards offer attractive rewards programs tailored to the spending patterns of businesses. By strategically using a business credit card for your purchases, you can earn cash back, points, or miles that can be redeemed for travel, merchandise, or statement credits, effectively reducing your business expenses.
Additional Benefits
Beyond rewards, business credit cards often provide additional perks and benefits, such as purchase protection, extended warranties, travel insurance, and employee card options, which can help streamline operations and save your business money.
READ ALSO: Top Balance Transfer Business Credit Cards for Consolidating Debt
Top Business Credit Cards for Startups and New Businesses in 2024
U.S. Bank Triple Cash Rewards Visa® Business Card
The U.S. Bank Triple Cash Rewards Visa® Business Card stands out as an excellent choice for startups and new businesses due to its generous rewards program and no annual fee. With this card, you can earn:
- 5% cash back on prepaid hotels and car rentals booked directly through the Travel Rewards Center
- 3% cash back on eligible purchases at gas stations, EV charging stations, office supply stores, cell phone service providers, and restaurants
- 1% cash back on all other eligible purchases
Additionally, the card offers a $500 cash back welcome bonus after spending $4,500 within the first 150 days of account opening and a 0% introductory APR on purchases and balance transfers for the first 15 billing cycles.
Capital One Spark Miles Select for Business:
For businesses seeking flexible travel rewards without an annual fee, the Capital One Spark Miles Select for Business is an excellent option. This card offers:
- Unlimited 1.5 miles per dollar on every purchase
- A one-time bonus of 50,000 miles after spending $4,500 within the first 3 months of account opening
- No foreign transaction fees, making it an ideal choice for businesses with international spending
Capital One miles can be redeemed for travel expenses or transferred to various airline and hotel partners, providing flexibility and value.
Ink Business Unlimited® Credit Card
Simplicity is the hallmark of the Ink Business Unlimited® Credit Card from Chase. With this card, you can earn:
- Unlimited 1.5% cash back on every purchase made for your business
- A $750 bonus cash back after spending $6,000 within the first 3 months of account opening
- No annual fee
This straightforward rewards structure makes it an excellent choice for businesses that don’t want to juggle multiple bonus categories or rotating rewards.
Ink Business Cash® Credit Card
The Ink Business Cash® Credit Card from Chase caters to businesses with significant spending in specific categories. With this card, you can earn:
- 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable, and phone services each account anniversary year
- 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
- 1% cash back on all other purchases
Additionally, the card offers a generous welcome bonus and no annual fee, making it an attractive option for startups and new businesses looking to maximize their earnings in relevant spending categories.
The Blue Business® Plus Credit Card from American Express
The Blue Business® Plus Credit Card from American Express (terms apply, see rates & fees) is a versatile option for businesses with moderate spending levels. With this card, you can earn:
- 2 Membership Rewards® points per dollar on the first $50,000 in purchases each year
- 1 point per dollar on purchases beyond the $50,000 limit
The true value of this card lies in the flexibility of American Express Membership Rewards® points, which can be redeemed for travel, merchandise, gift cards, or transferred to various airline and hotel partners.
Ink Business Preferred® Credit Card
For startups and new businesses with significant travel and advertising expenses, the Ink Business Preferred® Credit Card from Chase is an excellent choice. This card offers:
- 3 points per dollar on the first $150,000 spent on travel, shipping purchases, internet, cable, and phone services, and advertising purchases with social media sites and search engines each account anniversary year
- A remarkable 100,000 bonus points after spending $8,000 within the first 3 months of account opening
- Chase Ultimate Rewards® points, which can be redeemed for travel, merchandise, or transferred to various travel partners
While the card comes with a $95 annual fee, the rewards and benefits can easily outweigh the cost for businesses that can maximize the bonus categories.
Bank of America® Business Advantage Customized Cash Rewards Mastercard® Credit Card:
The Bank of America® Business Advantage Customized Cash Rewards Mastercard® Credit Card allows businesses to customize their earnings by choosing a preferred 3% cash back category from a selection that includes gas stations, office supply stores, travel, TV/telecom & wireless, computer services, or business consulting services. Additionally, the card offers:
- 2% cash back on dining purchases
- Unlimited 1% cash back on all other purchases
- A $300 online statement credit after spending $3,000 within the first 90 days of account opening
- No annual fee
For businesses that qualify for the Bank of America Preferred Rewards for Business program, the rewards can be boosted by an additional 25% to 75%.
Capital One Spark Cash Plus
The Capital One Spark Cash Plus is a unique charge card option for businesses with high spending levels. As a charge card, it requires the full balance to be paid off each month, but in return, it offers:
- Unlimited 2% cash back on all purchases
- A $1,200 cash bonus after spending $30,000 within the first 3 months of account opening
- No preset spending limit
While the card carries a $150 annual fee, it can be recouped if the business spends more than $150,000 annually. Additionally, the card offers free employee cards and no foreign transaction fees.
Factors to Consider When Choosing a Business Credit Card for Your Startup or New Business
When evaluating business credit card options for your startup or new business, it’s essential to consider several factors to ensure you choose the card that best aligns with your specific needs and goals. Here are some key considerations:
1. Rewards Structure and Categories: Analyze your business’s spending patterns and identify the categories where you incur the most expenses. Look for a card that offers bonus rewards in those categories, such as office supplies, advertising, travel, or gas. Additionally, consider whether you prefer a straightforward cash-back program or a more flexible points-based rewards system.
2. Annual Fees: Many premium business credit cards come with annual fees, which can range from modest to substantial. Evaluate whether the rewards and benefits offered by the card justify the annual fee or if a no-annual-fee card would be more suitable for your startup’s budget.
3. Welcome Bonuses and Introductory Offers: Lucrative welcome bonuses and introductory offers can provide a significant boost to your rewards earnings, especially during the initial stages of your business when spending may be elevated. However, ensure that you can meet the minimum spending requirements comfortably without overspending.
4. Interest Rates and Introductory APR Offers: If you anticipate carrying a balance on your business credit card, pay close attention to the interest rates and introductory APR offers. Some cards offer 0% APR on purchases for an introductory period, which can provide valuable breathing room for your cash flow.
5. Employee Card Options: As your business grows, you may need to provide employees with access to the company credit card for business-related expenses. Look for cards that offer free employee cards and the ability to set individual spending limits, which can help you maintain better control and accountability over your business expenses.
6. Additional Benefits and Perks: Beyond rewards, consider the additional benefits and perks offered by business credit cards, such as purchase protection, extended warranties, travel insurance, and access to airport lounges. These perks can provide added value and convenience for your business operations.
7. Foreign Transaction Fees: If your business involves international travel or purchases from overseas vendors, pay close attention to foreign transaction fees. Many business credit cards waive these fees, which can result in significant savings, especially for businesses with frequent international transactions.
8. Business Credit Reporting: Some business credit cards report your payment history and credit utilization to commercial credit bureaus, helping you establish and build your business’s credit profile. This can be beneficial for future financing opportunities or securing better terms with vendors and suppliers.
READ ALSO: Top 0% APR Business Credit Cards for 2024: Save on Interest Charges
Conclusion
Choosing the right business credit card for your startup or new business is an important decision that can have a significant impact on your financial success. By carefully considering factors such as rewards structures, annual fees, welcome bonuses, and additional perks, you can find a card that aligns with your business’s spending patterns and provides valuable benefits.
Remember, building a strong business credit history and managing your credit card responsibly can open doors to future financing opportunities, better terms with vendors, and a solid financial foundation for your growing business. With the right business credit card, you can streamline your operations, reduce expenses, and position your startup or new business for long-term success.
Frequently Asked Questions (FAQs)
Can startups and new businesses qualify for business credit cards?
Yes, startups and new businesses can qualify for business credit cards, even if they have limited or no business credit history. Most issuers primarily consider the personal credit history and income of the business owner or authorized officer when evaluating applications.
Do I need an Employer Identification Number (EIN) to apply for a business credit card?
While an EIN is not always required, having one can streamline the application process and help establish a separate credit history for your business. Obtaining an EIN is free and can be done through the Internal Revenue Service (IRS) website.
Will using a business credit card affect my personal credit score?
In most cases, using a business credit card responsibly can positively impact your personal credit score, as many issuers report payment history and credit utilization to personal credit bureaus. However, missed or late payments can negatively affect your personal credit score as well.
Can I use a business credit card for personal expenses?
While it’s technically possible to use a business credit card for personal expenses, it’s generally not recommended. Mixing personal and business expenses can lead to accounting and tax complications. It’s best to keep personal and business expenses separate for better record-keeping and financial management.
How can I maximize the rewards and benefits of my business credit card?
To maximize the rewards and benefits of your business credit card, focus your spending on the bonus categories that earn the highest reward rates. Additionally, take advantage of welcome bonuses, introductory offers, and additional perks like purchase protection or travel insurance. Regularly review your spending patterns and adjust your card strategy accordingly.
In another related article, How to Handle an Unpaid Balance on a 0% APR Business Credit Card
