Should I get a business credit card? What you need to know

A business credit card functions like a personal credit card but is designed specifically for business expenses. You receive a revolving line of credit to make purchases and get a monthly bill. The key difference lies in its intended use. These cards should be used exclusively for legitimate business expenses, not personal purchases.

Most business credit cards require a personal guarantee, meaning you as the business owner are liable if your company cannot pay the debt. This requirement applies even if your business is incorporated as an LLC or corporation. Card issuers typically evaluate your personal credit score during the application process, particularly for newer companies without established credit histories.

Business credit cards come in two main varieties. Traditional credit cards allow you to carry a balance from month to month, charging interest on unpaid amounts. Business charge cards require full payment each month but often come with no preset spending limit. Both types report to business credit bureaus, helping establish your company's credit profile.

The separation between business and personal expenses matters for both practical and legal reasons. Using a business card for personal purchases violates most card agreements and complicates accounting. For incorporated businesses, mixing personal and business expenses can weaken the legal protections that separate business entities from personal assets, potentially putting personal wealth at risk in lawsuits.

These fundamentals explain why business credit cards have become standard financial tools for companies of all sizes, from sole proprietorships to large corporations.

Business credit cards offer several advantages that can make running a company more efficient and financially rewarding. For established US businesses, these benefits often outweigh the costs when the cards are used wisely.

Separate business and personal finances

Keeping business expenses separate from personal ones simplifies accounting and tax preparation significantly. When all company purchases appear on one dedicated statement, tracking deductible expenses is more straightforward. This separation saves time during tax season and reduces the risk of missing legitimate business deductions.

The practice also reinforces professionalism. Paying vendors with a card bearing your company name projects legitimacy and establishes your business as a serious operation. This matters particularly for newer companies trying to build credibility with suppliers and clients.

For LLCs and corporations, maintaining separate finances is crucial for preserving liability protection. Mixing personal and business funds can “pierce the corporate veil,” potentially exposing personal assets to business liabilities. Even sole proprietors benefit from this separation, as it creates cleaner financial records and easier business analysis.

Tax time illustrates the practical advantage clearly. Instead of sorting through personal credit card statements to identify business purchases, owners have all expenses consolidated on business card statements. This ensures accurate deduction claims and simplifies the work for both business owners and their accountants.

Build your business credit score

Using business credit cards for building credit helps establish and improve your company's credit profile. When you make on-time payments, many card issuers report this activity to business credit bureaus such as Dun & Bradstreet, Experian Business, and Equifax Business.Over time, this positive payment history builds up your business credit score.

A strong business credit score opens doors to better financing options. Companies with established credit histories qualify for larger loans, business lines of credit, and more favorable vendor payment terms. These things become increasingly valuable as businesses grow and need funding for expansion, equipment purchases, or managing seasonal fluctuations.

The distinction between personal and business credit matters a lot here. While card issuers check your personal credit during the application process, especially for younger businesses, the goal is establishing a separate credit record for the company itself. This gradually reduces your reliance on personal credit for business borrowing.

Business credit represents your company's financial reputation. Regular, on-time payments demonstrate reliability to potential lenders and suppliers. A business that pays its credit card bill promptly each month shows it can manage debt responsibly. This track record proves invaluable when seeking larger forms of financing or negotiating payment terms with major suppliers.

The process does require patience. Building business credit takes months or years of consistent payments, but the investment pays off when your company needs substantial financing or wants to establish trade credit with suppliers.

Earn rewards and perks on business spending

Many business credit cards offer cash back or points tailored to common business expenses. These rewards programs often provide higher rates on categories like office supplies, telecommunications, advertising, and travel. A business already spending in these areas can earn significant returns without changing purchasing habits.

Sign-up bonuses for business cards frequently exceed those for personal cards. New cardholders might earn substantial points or cash back after meeting spending requirements within the first few months. These bonuses reflect card issuers’ expectations that businesses typically spend more than individual consumers.

Travel perks represent another valuable category of business credit card rewards for companies whose employees travel frequently. Benefits may include airport lounge access, free checked bags, travel insurance, and hotel room upgrades. Some cards provide cell phone protection plans or extended warranties on purchases, reducing business insurance costs.

For example, when researching the best business credit cards for rewards, you'll find that one popular option offers 3% cash back on office supply purchases and varying rates on other categories. Another might provide airline miles that accumulate quickly with regular travel expenses. The key is matching the card's reward structure to your company's spending patterns."

These rewards only benefit businesses that pay their balance in full each month. Interest charges on carried balances quickly negate any rewards earned. Treating the card like a charge card and paying the full balance monthly ensures rewards translate into actual savings rather than being offset by interest costs.

Higher credit limits

Business credit cards typically offer larger credit lines than personal cards. Issuers consider both business revenue and personal income when setting limits, often resulting in high limit business credit cards that can facilitate major purchases like inventory or equipment that might exceed personal card limits.

This increased borrowing capacity helps smooth cash flow fluctuations. The grace period on purchases, usually around 25 days before payment is due, provides short-term, interest-free financing. This feature proves valuable when expenses come due before revenue arrives, a common scenario for businesses with net-30 or net-60 payment terms from clients.

Some business cards feature introductory 0% APR periods on purchases for 6-12 months. These promotional rates allow businesses to finance large purchases or startup costs without immediate interest charges. However, regular interest rates apply once the promotional period ends, making it essential to have a repayment plan in place.

Consider a business that wins a large project requiring $5,000 in materials upfront, but the client won’t pay you for 60 days. A business credit card enables the immediate purchase while providing time for the revenue to arrive. This flexibility prevents cash flow constraints from disrupting operations.

Higher limits also require disciplined use. The increased credit line serves as a financial safety net, not an invitation to overspend. Successful businesses use these limits strategically, maintaining the ability to pay balances in full to avoid interest charges that can quickly accumulate on larger balances.

Employee cards

Most business credit card accounts allow owners to issue additional cards to employees under the main account. This feature eliminates the need for expense reimbursements and gives team members purchasing power without using personal funds.

Business owners maintain control through spending limits and restrictions on each employee card. A sales representative might receive a card with a $1,000 monthly limit for travel expenses, while an office manager's card could be restricted to specific merchant categories like office suppliers. These controls prevent misuse while empowering employees to make necessary purchases.

Modern card programs provide detailed expense tracking and reporting features. Monthly statements break down spending by employee, category, and merchant. Many issuers offer integration with accounting software, automatically categorizing expenses and simplifying bookkeeping. This visibility helps business owners monitor spending patterns and identify areas for cost reduction.

Security features protect against fraud and misuse. Business owners can instantly freeze or cancel individual employee credit cards without affecting other cards on the account. Credit cards generally offer zero liability protection for fraudulent charges, providing better security than giving employees access to debit cards linked to company bank accounts.

Reporting capabilities transform expense management from manual to automated. Year-end tax preparation becomes simpler when all employee expenses are consolidated and categorized. Real-time alerts notify owners of transactions exceeding preset amounts, ensuring no spending surprises appear at month's end.

While business credit cards provide numerous benefits, they come with risks and costs that require careful consideration. Like any financial tool, their value depends on how they're used. Knowing the potential downsides helps business owners make informed decisions and avoid common pitfalls.

High interest rates and fees

Business credit cards carry high annual percentage rates, typically ranging from 15% to 25% or more. These rates often match or exceed those of personal credit cards, making carried balances expensive. Even though interest on business purchases may be tax-deductible, it remains a cost that reduces profits.

Annual fees add another expense layer. While some business cards charge no annual fee, those with premium rewards or benefits can cost $95, $250, or even $500 annually. Business owners must calculate whether rewards and perks justify these fees based on their spending patterns.

Additional fees compound costs for unwary users. Late payment fees, foreign transaction fees for international purchases, and balance transfer fees can accumulate quickly. Cash advance fees and rates typically exceed those for regular purchases, making this an expensive way to access funds.

The math favors those who pay monthly. A card with a $95 annual fee makes sense if it generates $300 in annual cash back, but only if balances don't accrue interest. Businesses planning to carry balances should prioritize low interest rates over rewards, or seek introductory 0% APR business credit card offers while developing a concrete repayment timeline.

Reading the fine print before applying prevents surprises. Fee structures and interest rate calculations vary significantly between issuers and card products.

Personal guarantee and credit impact

Business owners must treat business credit cards with the same diligence as personal financial obligations. The business name on the card doesn't shield personal credit from the consequences of missed payments or excessive debt. A personal guarantee means business financial problems can become personal ones. For companies seeking to avoid this personal liability, business credit cards with no personal guarantee are available, though they require established business credit and substantial revenue to qualify.

Applying for some business cards can trigger a hard inquiry on your personal credit report. This inquiry can temporarily reduce your personal credit score by a few points. However, soft pull business credit cards offer an alternative that checks your credit without affecting your score. Card issuers evaluate personal creditworthiness because the personal guarantee makes you ultimately liable for the debt.

Day-to-day business card activity generally doesn't appear on personal credit reports, provided payments are made on time. However, serious delinquencies or defaults typically get reported to personal credit bureaus. A business card default can damage your personal credit score just as severely as defaulting on a personal loan or credit card.

The connection between business and personal credit creates a double-edged sword. Responsible use builds business credit without affecting personal scores. Mismanagement threatens both credit profiles simultaneously. Some issuers report positive payment history to personal credit bureaus, potentially helping personal scores, though many report only negative information.

All in all, business owners must treat business credit cards with the same diligence as personal financial obligations.

Temptation to overspend

Credit cards make spending easier, and business cards with high limits amplify this psychological effect. The ability to charge thousands of dollars with a single swipe can lead to purchases that seem justified in the moment but strain budgets later. Business owners might buy premium equipment, upgrade travel arrangements, or invest in expensive software because the credit is available, not because the purchases fit their financial plan.

Managing multiple cards adds complexity. As businesses grow and issue cards to employees, total spending across all cards can quickly exceed what the company can afford to repay monthly. Without careful oversight, individual reasonable purchases accumulate into unmanageable debt.

The minimum payment trap affects businesses just as it does personal finances. Paying only the minimum during a slow month seems manageable, but interest charges compound the balance. This cycle becomes harder to break as balances grow, potentially creating a debt spiral that threatens business stability.

Practical safeguards help control spending. Setting internal budgets for credit card use, restricting cards to planned expenses, and reviewing statements weekly rather than monthly can prevent surprises. Many cards offer spending alerts that notify owners when charges exceed preset amounts.

Employee card policies require special attention. Clear guidelines about acceptable purchases, spending limits, and approval requirements prevent misuse. Implementing these guidelines through a formal employee credit card agreement ensures all parties understand the rules and consequences of policy violations. Regular monitoring ensures all charges align with business needs. The convenience of giving employees purchasing power must be balanced with controls that keep total spending within sustainable levels.

No, you don't need an LLC or an Employer Identification Number (EIN) to get most business credit cards. Sole proprietors and freelancers can apply using their Social Security Number. When applications ask for a business tax ID, sole proprietors simply use their SSN.

Any legitimate business activity qualifies, regardless of size or structure. A freelance graphic designer, independent contractor, or side business owner has the same access to business credit cards as incorporated companies. Banks evaluate your personal credit score and income more than your business structure when making approval decisions for most cards.

However, some business credit cards allow established businesses with strong revenue and credit histories to apply using only their EIN. These cards don't require a personal guarantee or personal credit check, meaning application and usage won't affect your personal credit score at all. These EIN only business credit cards typically require substantial business revenue, several years in operation, and an established business credit profile.

For most small businesses, standard business credit cards requiring personal guarantees remain the primary option. If you have an EIN for your established business, you'll use that number on applications. Most will not check your personal credit, but there are some business credit cards that will still do a personal credit check. The EIN-only cards represent a goal for businesses seeking complete separation between personal and business credit, but they're not necessary to access business credit card benefits.

You technically can use personal cards for business expenses, but it's not recommended for several reasons.

Mixing business and personal expenses complicates accounting and tax preparation. You'll spend hours sorting through statements to identify deductible business expenses. For LLCs and corporations, commingling funds can weaken liability protections, potentially exposing personal assets to business risks.

Many personal credit cards prohibit regular business use in their terms of service. Violating these terms could lead to account closure. You also miss business-specific rewards, higher credit limits, and expense management tools designed for companies.

A dedicated business credit card keeps finances organized and provides benefits tailored to business spending patterns. While using a personal card might seem simpler initially, it creates complications that grow with your business.

Every business has unique financial needs and management styles. The decision to get a business credit card depends on your specific circumstances, spending patterns, and financial discipline. These key questions can help you evaluate whether a business credit card makes sense for your company.

Assess your spending habits

Examine your current expense patterns and payment cycles. Businesses that frequently need to cover costs before revenue arrives benefit most from credit cards. If you regularly face 30- or 60-day gaps between paying suppliers and receiving customer payments, a credit card provides valuable breathing room.

Consider your monthly business spending across categories like supplies, travel, advertising, and utilities. Companies spending several thousand dollars monthly on credit-card-eligible expenses miss potential rewards by using cash or debit cards. However, if your business rarely incurs expenses that could go on a credit card, the benefits diminish.

Your payment discipline matters most. Business owners who consistently pay bills in full maximize credit card benefits through rewards and interest-free grace periods. Those who regularly carry balances face interest charges that can outweigh any rewards earned. Be honest about your financial habits before adding a high-limit credit card to your wallet.

Cash-positive businesses with minimal expenses might find less value in business credit cards. But companies managing inventory, traveling frequently, or dealing with seasonal revenue fluctuations often discover that strategic credit card use significantly improves their financial flexibility.

Consider your creditworthiness (personal and business)

Is your personal credit score in good shape to qualify, and are you prepared to put your credit on the line?

Business credit card approval depends heavily on personal credit scores, especially for smaller companies. A score in the good range, typically 670 to 700 or above, improves your chances of approval for cards with favorable terms. Excellent credit scores above 750 open access to premium cards with the best rewards and lowest interest rates.

Poor personal credit creates obstacles. Low credit scores may result in denials, high interest rates, or minimal credit limits that reduce the card's usefulness. In these situations, improving personal credit first or considering secured business cards that require deposits might be better options.

The personal guarantee requirement deserves serious consideration. By accepting this liability, you agree to pay business debts from personal assets if necessary. This commitment should align with your risk tolerance and confidence in your business's stability. Some owners find this personal exposure uncomfortable, preferring to wait until their business has stronger, more predictable cash flow.

Checking your credit score before applying helps set realistic expectations. Free credit monitoring services and annual credit reports provide insight into where you stand. Any errors on credit reports should be disputed and corrected before submitting applications.

Established businesses with solid revenue and good personal credit face the easiest path to approval. Newer businesses or those with credit challenges need not be discouraged but should approach applications strategically, perhaps starting with cards designed for fair credit and building from there.

Weigh the pros and cons for your business

Reviewing the specific benefits that appeal to your situation against the risks that concern you clarifies the decision. A business that values financial organization and needs cash flow flexibility might find the separation of expenses and credit access outweighs fee concerns. Conversely, a business owner worried about overspending might decide that the risks exceed potential rewards.

Creating a simple comparison helps. List potential benefits you would actually use in one column and risks or fees that concern you in another. Include specific items like "earn 3% back on our $2,000 monthly office supply spending" rather than generic "rewards." Similarly, note concrete concerns like “$250 annual fee” rather than vague “expensive fees.”

Common hesitations deserve examination. Business owners using personal rewards cards for business expenses might question the need for change. Yet the benefits of expense separation, business credit building, and liability protection often justify the switch, especially as businesses grow. The tax simplification alone can save hours of accounting work.

Size concerns arise frequently. Very small businesses sometimes assume business credit cards are only for larger companies. In reality, even sole proprietors benefit from financial separation and rewards. The decision hinges more on spending volume than company size. A one-person consulting firm spending $5,000 monthly on travel might gain more from a business card than a five-person company with minimal credit-eligible expenses.

Established businesses with solid revenue and good personal credit face the easiest path to approval. Newer businesses or those with credit challenges need not be discouraged but should approach applications strategically, perhaps starting with the easiest business credit cards to get, which are often designed for fair credit, and building from there.

For most US businesses, a business credit card can be a valuable financial tool that simplifies operations, builds credit, and provides rewards. The benefits of separating business and personal finances, establishing company credit history, and earning returns on necessary spending often outweigh the potential drawbacks. However, success depends on responsible use and careful management of the risks we've discussed.

The decision ultimately comes down to your business's specific needs and your financial discipline. Companies with regular expenses, cash flow gaps between payables and receivables, or substantial monthly spending on supplies and travel typically benefit most. Those confident in their ability to pay balances in full each month and manage employee spending can maximize the advantages while minimizing costs.

At Brex, we designed our corporate cards specifically for modern companies. Unlike traditional bank cards that rely heavily on personal credit checks and guarantees, we evaluate businesses based on cash flow and bank account balances. This approach makes our card particularly attractive for startups, technology companies, and businesses that maintain healthy cash reserves but may lack extensive credit histories.

We built our card with the challenges of business spending in mind. We charge no annual fees, provide higher credit limits based on your business's cash position, and deliver straightforward rewards without complicated categories. Your business earns points on every purchase, with enhanced rewards on recurring software subscriptions and travel expenses. Our integrated expense management software automatically categorizes spending, generates real-time reports, and eliminates manual expense reports.

Our modern approach extends throughout the entire experience. You can create virtual corporate cards instantly for online purchases or specific vendors, improving security and spending control. Integration with popular accounting software streamlines your bookkeeping, while customizable spending controls for employee cards prevent unauthorized expenses. These features directly address the concerns raised in this guide about overspending and expense tracking.

For businesses ready to move beyond personal credit cards or upgrade from traditional business cards, we provide a compelling alternative that aligns with how modern companies operate. Sign up for a Brex business credit card today and experience firsthand how the right financial tools can transform your business operations.