Business credit cards can help you rethink how your business handles money. You can use them to acquire short-term funding, track expenses, and access exclusive perks that save time and money. A credit card can bolster your business strategy and help you refine your cash flow, build credit, and gain benefits from ordinary expenses. Below, we’ll discuss how you can use a credit card to drive growth for your business.

What’s in this article?

• Why should businesses use a credit card for expenses?
  
• How do you choose the right business credit card?
  
• What are the risks of using credit cards for business expenses?
  
• What tactics help businesses maximize credit card benefits?
  

Why should businesses use a credit card for expenses?

Using a credit card for expenses can benefit your business in several ways:

• Cash flow management without delays: With a credit card, you're effectively buying yourself extra time. Instead of immediately pulling from your bank account, you can take advantage of the billing cycle (often 28–31 days) to cover expenses and still have time to generate revenue before the payment is due. This can be especially helpful in scenarios in which income doesn’t always align with expenses.

• Easier expense tracking: Business credit cards often provide detailed expense reporting that categorizes your purchases automatically. This can save time during tax season or when you reconcile accounts. Many cards integrate with accounting software, which simplifies bookkeeping.

• Rewards: You can earn money back when you purchase essentials (e.g., travel, supplies, advertising). Many business credit cards offer cash back, travel points, or discounts on specific business services. Over time, these rewards can turn into real savings or perks that increase your profit.

• The chance to build business credit: As with personal credit, establishing and maintaining a solid credit history for your business can create opportunities. A strong business credit score can help in securing a larger credit line or negotiating better terms with vendors. Using a business credit card responsibly is one of the simplest ways to build that score.

• Improved security and fraud prevention: Using a credit card adds a layer of protection between your business and potential fraud. Most cards have zero-liability policies and fraud detection tools to catch unauthorized charges. In contrast, debit cards pull funds directly from your account, and disputes can take weeks to resolve.

• Access to perks and protections: Many business credit cards offer benefits including travel insurance, extended warranties, and purchase protection. These can save you money if something goes wrong, such as damage to equipment or a flight cancellation for a work trip.

• Separation of finances: Using a credit card strictly for business helps draw a clear line between personal and business finances, which is necessary for tax purposes, audits, and professional integrity. It also makes it easier to budget and explain expenses, and it shows you take your operations seriously.

How do you choose the right business credit card?

Choosing the right business credit card is less about picking the “best” one on paper and more about finding the one that matches your business’s spending habits, goals, and needs. Here's how to decide on one:

Analyze your spending patterns

First, look at where your business spends the most:

• If travel is a big expense, look for cards with travel rewards, airline points, or perks (e.g., free checked bags, lounge access).

• If you spend a lot on everyday expenses (e.g., fuel, office supplies), cards that offer cash back on purchases across related categories might be a better fit.

• If your spending is spread across various categories, you might find value in a card that offers cash back at a flat rate.

Determine your timing needs

If your cash flow fluctuates, a card with a long grace period or a 0% intro annual percentage rate (APR) can be a lifesaver. It can give you time to pay off balances without interest. But if you pay off balances monthly, you should prioritize rewards and perks over APRs.

Look for rewards that matter

A card with rewards you’ll never use is useless. Focus on cards that offer points or cash back in categories you spend on most, redeemable rewards (ideally across multiple categories, such as cash, statement credits, and specific business perks), and valuable sign-up bonuses that are attainable based on your expected spending.

Consider fees in the context of benefits

Some of the best business credit cards have annual fees, but those fees can pay for themselves if the benefits outweigh the costs. For example, the card might offer perks that you’d otherwise pay for separately, such as travel insurance, purchase protection, and extended warranties. But if you’re a small operation with lower spending, consider a no-fee card to avoid unnecessary overhead.

Account for employee needs

If you have employees who also need spending power, find a card that enables free employee cards with customizable spending limits. These make tracking and managing team expenses easier.

Don’t overlook credit requirements

Your personal and business credit scores will often determine which cards you qualify for. Some premium cards require excellent credit, while others are more lenient. If you’re starting out, consider cards designed for newer businesses or for those with limited credit histories.

Compare additional perks

Perks can make the difference between two similar cards. Look for these features:

• Expense management tools, such as integrations with QuickBooks or Expensify

• Fraud and purchase protections

• Insurance benefits, such as travel accident insurance and car rental coverage

• Concierge services or exclusive event access

Read the fine print

• APR: If you plan to carry a balance, compare interest rates to avoid surprises.

• Foreign transaction fees: If you operate internationally or travel often, find a card with no foreign transaction fees.

• Reward caps and expirations: Some cards cap earnings or require you to use rewards within a specific time frame.

Don’t settle for one card

It’s often smart to pair cards to maximize rewards. For instance, you might use one card for travel rewards and another that offers cash back at a high rate for everyday expenses.

What are the risks of using credit cards for business expenses?

Credit cards can be powerful tools for covering business expenses, but they can pose risks. Here are potential downsides and ways to mitigate them:

Debt accumulation and interest costs

Credit cards can quickly become liabilities if you don’t pay off the balance in full each month. High interest rates can turn even small balances into substantial debts over time. In late 2024, US credit cards had an average interest rate of 21.47%.

How to mitigate this risk

• Use credit cards only for expenses you’re confident you can pay off each month.

• Implement reminders or automatic payments to avoid missed due dates.

Impact on credit scores

Missed payments or high balances relative to your credit limit (i.e., high credit utilization) can hurt your personal and business credit scores. That can make it harder to secure loans or negotiate favorable terms.

How to mitigate this risk

• Use at most 30% of your credit limit.

• Monitor your credit regularly to ensure your activity is reported accurately.

Overspending

Having access to credit can create a false sense of financial flexibility, leading to overspending on unnecessary or low-priority expenses. This is particularly risky if you rely on expected future income to pay off the balance.

How to mitigate this risk

• Set strict budgets, and only use credit cards for planned business expenses.

• Review your statements regularly to confirm spending is aligned with your goals.

Mixed personal and business finances

It’s easy, especially for small-business owners, to accidentally use a business credit card for personal expenses or a personal one for business expenses. Doing so can complicate bookkeeping, lead to tax issues, and cause corporation owners to lose their limited liability.

How to mitigate this risk

• Dedicate a credit card solely to business expenses.

• Use expense tracking tools or apps that separate personal and business purchases.

Fees and penalties

Business credit cards often have fees such as annual membership fees, foreign transaction fees, and penalties for late payments. If you don’t fully understand the terms, they can erode your profits.

How to mitigate this risk

• Choose a card with fees that match your spending habits. If you operate internationally, avoid cards with high foreign transaction fees.

• Read the terms and conditions thoroughly before signing up.

Fraud and security risks

Though credit cards often have strong protections against fraud, unauthorized transactions can still disrupt your business operations.

How to mitigate this risk

• Monitor your statements regularly for suspicious activity.

• Use cards with strong fraud detection and liability protection.

• Choose virtual cards or advanced security features for online transactions.

Potential for dependence

Relying too heavily on credit cards can mask underlying cash flow issues or give the illusion of financial stability when revenue is inconsistent. This can lead to larger financial problems.

How to mitigate this risk

• Treat credit cards as a backup tool, not a primary funding source.

• Build a cash reserve to cover operating expenses.

Limited protections for personal guarantees

Most business credit cards require a personal guarantee, which means you’re personally liable for the debt. If your business struggles or closes, your personal assets could be at risk.

How to mitigate this risk

• Take on only debt you’re confident your business can handle.

• Look for corporate cards that don’t require a personal guarantee—if your business qualifies.

Reward misalignment

Though rewards programs can be enticing, they might encourage spending in ways that don’t benefit your business. For example, you might overspend to hit a sign-up bonus or use a card for purchases that don’t maximize rewards.

How to mitigate this risk

• Focus on earning rewards through planned expenses.

• Choose a rewards structure that serves your business’s spending habits.

What tactics help businesses maximize credit card benefits?

Using credit cards strategically can increase your profit and protect you from financial pitfalls. Here’s how to get the most out of your business credit cards:

• Time big purchases for bonuses: Sign-up bonuses usually require you to hit a spending target quickly. Plan to use a new card for major expenses such as inventory and equipment to hit it. If you fall just short of the target, prepay recurring expenses such as software subscriptions to close the gap.

• Use perks that save money: Lots of cards offer credits for things you’re already paying for (e.g., advertising, shipping, business software). They might offer annual travel credits or free memberships as well. These perks are basically discounts you don’t have to negotiate.

• Earn rewards from employee spending: If your team travels, entertains clients, or buys supplies, let them use employee cards tied to your account. Their purchases earn rewards, and you can stay in control using spending limits and expense tracking.

• Avoid carrying a balance: Credit card rewards mean nothing if you’re paying interest, so pay your balance in full every month. If you know a big purchase will take time to pay off, consider a card with a 0% intro APR but plan to pay it off before the rate applies.

• Don’t let rewards expire: Check expiration dates on points or miles so they don’t go to waste. If you’re not a big traveler, look for flexible redemption options, such as cash back and statement credits.

• Obtain protections: Use your card for travel or big-ticket purchases to tap into protections such as insurance, extended warranties, and purchase coverage. These perks can save you thousands if something goes wrong. Ensure you know how to use them.

• Sync with your accounting tools: Most business credit cards integrate with software such as QuickBooks or Xero. This speeds up accounting and helps you see spending trends so you can adjust your budget or switch cards, if needed.

• Redeem strategically: Not all rewards are equal. Flights and hotel bookings often give you the most value per point. Research where your points give you the greatest benefit.