Business cards have their risks.
Because the consumer protections of the Credit CARD Act do not apply to them, issuers can levy harsh penalties on business cardholders. A single late payment can trigger penalty annual percentage rates (APRs) as high as 29.99 percent, and, unlike with personal credit cards, those rate changes apply retroactively to existing balances.
Still, business credit cards have their place. They typically give business owners access to larger credit limits, and they can make employee expense reporting easier. You can set an individual credit limit for each employee card and have easy access to online summaries of business spending by employee, spending category and amount.
Business credit cards also can help you build a separate credit record for your business. The more distinct credit accounts that a business has, the more substantial the credit report will be for that business, according to Adam Fingersh, senior vice president of marketing and products business information services at Experian.
“Establishing a strong commercial credit profile is very important for a business,” Fingersh says. “It makes it less likely that a prospective creditor will use your personal credit history to approve a loan and require personal financial backing when you apply for credit.”
And then there are the rewards. Here are CreditCardGuide.com’s picks for the best business credit cards of 2012.
Best business cards for cash-back rewards
A cash-back business credit card can be a great way to save on common business expenses. The Ink Cash business card from Chase lets your business earn 5 percent cash-back on purchases at office supply stores and for phone, internet and cable services, up to $25,000 annually. Cardholders get 2 percent cash-back on gas and restaurant purchases and 1 percent on everything else.
The Ink Cash card also features one of the better sign-up bonuses among business cards. New cardholders get a $100 cash-back bonus after the first purchase, and an additional $150 if they spend $5,000 within three months, for a total of $250.
An added plus is the 12-month 0 percent APR on both purchases and balance transfers, benefits that are hard to come by on other business cards. After the 0 percent APR promotional period, the card features a relatively low variable APR of 10.24 percent.
Just don’t fall asleep at the wheel with this card: One late payment could trigger a 29.99% penalty rate, applied retroactively on all card balances.
Best business cards for travel perks
Business travel rewards cards enable you to not just earn free travel, but can also make your travel experience smoother.
This category is a tie between the American Express Delta SkyMiles business card (Gold or Platinum) and the CitiBusiness AAdvantage MasterCard. The cards offer similar benefits, so the choice largely depends on your airline preferences.
For both cards, new cardholders can get 30,000 bonus miles in the first three months — after $1,000 in spending on the Citi card and $500 in spending on the AmEx card. Other perks include free checked bags for you and your traveling companions, priority boarding and much more.
Cardholders earn 2 miles per dollar spent on purchases with the card-affiliated airline and 1 mile on everything else. In addition to free flights, miles can be redeemed for car rentals, hotel stays, gift cards and more. The annual fee is $95 for both cards ($150 if you opt for the Delta Platinum), waived the first year.
There are some important differences between the cards: The AAdvantage card offers easier access to perks like priority boarding, which you have to reach Silver Elite status to get with the Delta SkyMiles card. On the other hand, the Delta SkyMiles card helps you earn frequent flier Elite status with Delta more quickly, which will give you access not just to priority boarding and check-in, but priority security clearance and complementary upgrades to business class seating, when available.
If you prefer the versatility of generic travel rewards cards, which let you redeem miles earnings for free flights and hotel stays on any airline and hotel, check out the Capital One Spark Miles card (formerly the Venture Rewards Business card), which lets you earn 2 miles per dollar on all purchases, equivalent to 2 percent cash-back. The $59 annual fee is waived the first year, and new cardholders get a signup bonus of 10,000 miles when spending $1,000 in the first three months.
Best business credit cards for carrying a balance
For business cardholders who wish to carry a balance from month to month, Bank of America business credit cards offer one advantage: The bank has pledged that it will apply the rules of the Credit CARD Act to its business credit cards, just as it does to personal ones.
This means that for Bank of America business cards, such as the Bank of America Platinum Visa Business credit card and the Bank of America Cash Rewards card, cardholders are not subject to the risk of retroactive interest rate hikes on existing balances. This policy is still in place, according to a Bank of America representative — yet card issuers often change their terms, so do your research before applying.
With APRs ranging from 9.24 percent to as high as 20.24 percent on the Bank of America Platinum Visa, your business has to have good credit to make the card worthwhile as a long-term line of credit. However, as a temporary source of cash, the card can come in handy in a pinch. The Bank of America Platinum Visa Business and Cash Rewards cards currently both feature a promotional 0 percent APR on purchases for seven and nine months, respectively.