Business credit cards can be some of the most valuable everyday tools for managing your small business expenses. Finding the right card can be challenging, though, as no one card works best for everyone, and every business owner's situation is different.
Here are three key strategies to help you choose the best small business credit card for your business — whether you have very good credit or you're looking for business credit cards for fair credit.
Find a Card That Fits Your Overall Business Spending
Track your business spending and pay closer attention to how you're already spending money — both your monthly spend and the specific categories of expenses — to gain insights into choosing the best business credit card for your needs.
"If you have a current credit card for your business, you should be using it for all purchases for your business," says Jeff Cisewski, Head of Payments at First Horizon Bank. "For at least two reasons—the opportunity to earn rewards and to take advantage of any promotional APR. Both of these things can help your cash flow."
Just as with personal credit cards, business credit cards have a few key features that can help you determine which card is right for you:
- APR. The Annual Percentage Rate is one of the most important aspects in determining the total cost of a card, especially if you carry a balance from month to month. "Try to get the best rate possible, and look for whether there's a promotional APR or balance transfer deal at the start," Cisewski says.
- Annual Fee. Many business credit cards charge an annual fee, and often the cards that offer more generous rewards will tend to have higher annual fees. Some cards may waive the annual fee for the first year as part of an introductory deal. "Ideally, you want the card's annual fee to be zero or modest," says Cisewski.
- Rewards. This is the area where credit cards tend to have the most complexity, with different rewards depending on the card. "With small business credit cards, you should expect that the rewards will be greater than for a personal card, and there will probably be an annual fee," Cisewski says.
Making the right decision is all about looking at the total package of what the business credit card can deliver for your business, based on your overall spending patterns and your individual circumstances.
Get Smart About Business Credit Card Rewards
Small business credit card rewards programs are surprisingly varied, with different rewards and benefits depending on the cardholder's preferences and interests. Various cards offer free travel bonuses, discounts, or cash back on purchases — often delivering extra rewards for categories of spending that are important to small business owners, such as business travel or restaurant meals.
Make sure you understand the total rewards package for your card, and weigh the rewards against the overall cost of having that card in your wallet — for example, make sure that the card rewards outweigh annual fees or interest charges you might incur.
Cisewski says that business owners should consider choosing cards with cash back rewards, since cash is the most flexible form of reward. Different credit cards have different limitations and fine print to their rewards programs, so make sure you understand the structure, redemption details, and possible limits on the rewards.
"Make sure there is no expiration date to the rewards, whether it's cash back or points, and make sure you have the ability to quickly and easily redeem the rewards," says Cisewski.
"For example, find out whether the cash back rewards will be applied to your account statement or go directly to your bank account."
In addition to rewards, some business credit cards offer extra benefits, like extended warranty protection for purchases made with the card, or rental car insurance.
Make the Most of Your Local Banking Relationship
There are plenty of credit card comparison sites that offer to help you find the "best" business credit cards. But before you assume that only a national credit card issuer can offer you the best deal, try the bank where you currently do your banking business.
"Talk to your local bank, whether it's First Horizon Bank or someone else, because your local or regional bank can also make some compelling offers on business credit cards," Cisewski says.
If you already have a business banking relationship with a local or regional bank, you may be able to get a better deal on a business credit card — such as a higher percentage for cash back rewards — if you also have several components in your banking relationship, such as:
- Minimum average monthly balance in your business bank account(s)
- Total volume of banking business across multiple accounts
- Minimum amount of monthly recurring deposits
- Length of relationship with your bank
"Having multiple accounts and product relationships with one bank tends to provide additional cost savings and other benefits, so it's important to have that conversation with your local bank to understand what kind of savings they can provide on the business credit card," Cisewski says.
You may be able to identify the best business credit card just by building on the banking relationship you already have. "The more of a relationship you have with your bank," says Cisewski, "the more value you can get from your business credit card."
Are you ready to expand your business or simply want to manage your everyday spending more effectively? First Horizon Bank's business credit cards and financing solutions can help put your small business on track for continued growth and success.
