Business credit cards can be helpful tools for small business owners for a number of reasons. They can offer a convenient payment option and help with cash flow management when paying vendors or purchasing supplies. Business credit cards can also help with business expense tracking and can provide an effective way to manage employee spending. And, with some business credit cards, you may be able to earn rewards, cash back, travel perks, and other benefits.
The question then becomes: How many business credit cards should I have? Just like with personal credit cards, it really depends on your needs as a business owner, the type of spending you do, and what benefits you hope to gain from the cards. For some people, it can make sense to start off with just one business credit card. But over time, there may be advantages to having two or more types of business credit cards.
Learn more about the various credit card benefits for businesses, the considerations you should make if you’re considering applying for a new card, and ultimately, how to decide on the right number of credit cards for your business.
How do business credit cards work?
Business credit cards are like personal credit cards in that you’ll receive a revolving line of credit if your application is approved. The main difference is that when you apply, you’ll have to share both your personal and business details. Also, some card terms and features may be more business oriented.
Why choose a business credit card?
The main purpose of business credit cards is that they allow small business owners to keep their business spending separate from their personal spending. This is important for tax and accounting use, but there are other advantages to having business credit cards if you’re a business owner or entrepreneur.
Business cards can help you manage employee spending, streamline business expenses, extend your purchasing power, and build your business credit. When you use them strategically, you may also earn rewards and enjoy perks offered by business credit cards.
Different types of business credit cards
There are different types and levels of business credit cards that accommodate different spending styles, so you may consider having more than one business credit card. For example, you may use one card primarily to book business travel and earn rewards to offset those costs. Meanwhile, another card may provide cash back or allow you to set spending limits on employee cards.
When comparing business cards, some of the features to look at include annual fees, financial organization tools, business card signup bonuses, business travel perks, interest rate comparisons, and bonus categories for rewards.
Why should I have more than one business credit card?
Owning more than one business card can make sense for some business owners. With so many different types of business expenses, leveraging different types of business credit cards at once can help you maximize each purchase. Plus, additional credit lines can provide more flexibility.
In some cases, opening more than one business credit card is an alternative to taking out a small business loan. Credit cards can provide business owners with a backup payment option in the event of an unexpected business expense.
Also, as credit needs change over time, business owners have the option to open new accounts that correspond to their new ventures. For example, you may start off as a solo practitioner, but then hire employees whom you’d like to equip with employee cards. Or you may find a card that rewards a particular purchase category such as online marketing or shipping.
Improve business credit score
As your business scales, your business’s credit score impact may become more important to your operation. Your business credit score can help you down the line if you intend to seek new partnerships, vendor relationships, or lending products. With a healthier business credit score, you may be more likely to qualify for lower interest rates, lower insurance premiums, and better terms for supplier and vendor payments.
A business credit score is similar to a personal credit score in that it’s a snapshot of your business’ creditworthiness based on factors like your payment history. Business credit scoring models factor in the age of your business and your financial accounts. Credit utilization for businesses is another important consideration.
Signing up for business credit cards that report to the major business credit bureaus may help your business credit building. Not all credit issuers report to every business credit bureau. If you have multiple cards with different issuers, you may increase the likelihood that your healthy credit behavior factors into your business credit score.
Access different rewards tiers
If you’re interested in credit card rewards, you may be able to maximize your earning potential by opening more than one business credit card. Rewards cards sometimes offer bonus points for specific spending categories, and they can vary from card to card. There are also flat-rate rewards cards that offer a rate higher than 1% or 1 point per dollar spent across all categories.
For example:
- Card A may offer 3 points per dollar spent on travel, 2 points per dollar on dining, and one point for other eligible purchases.
- Card B may offer a flat-rate 2 points per dollar on eligible purchases.
- Card C may offer 3% cash back on cell phone bills, social media advertising, and office supplies, and 2% back on gas.
- Card D may be an airline card that offers specialized perks and the opportunity to earn miles tied to that airline’s loyalty program.
Let’s say you do a fair amount of business travel by car or plane, take clients out to dinner, invest in online marketing, and provide employees with cell phones. Theoretically, you could find value in any one of these cards. Or you may decide that owning two, three, or all four cards makes the most sense for your needs.
Access more credit if you need it
Credit can provide business owners with a safety net if unexpected expenses arise, or it can help to purchase extra inventory, upgrade a storefront, or ramp up marketing efforts. Multiple business credit cards may allow you to spread out your spending without maxing out an entire credit line. Or, you could have a card or two available just for emergencies.
As long as you’re able to manage your credit cards responsibly and make on-time payments without letting your balances grow too high, owning more than one business credit card may provide flexibility and other benefits.
What to consider before getting more business credit cards
There are several considerations to make before opening a new business credit card. Ask yourself what you’re looking for from another business credit card and see if there are products that can meet your needs. For instance, if you and your sales team spend a lot of time staying at a particular hotel chain on business trips, that hotel’s co-branded business credit card may provide value.
A new business credit card should also make sense within the context of your overall business financials. For instance, opening too much new credit in a short amount of time may have a negative impact on your credit score. Also, if you have struggled to pay down existing credit card balances, adding more available credit may raise your debt level.
You can also review a card’s welcome offers. Some cards offer signup bonuses for meeting a spending requirement within the first few months, and these can be worth up to a few hundred dollars. Other cards may have an introductory 0% APR period. If you’re a startup owner or an entrepreneur with limited capital, this zero-interest period can provide extra time to pay off a large purchase.
Will the business benefit from the rewards programs?
Maximizing business rewards programs can help your bottom line. It could mean earning cash back on business expenses you’d have to pay anyway. Or you may benefit from a travel rewards card that could help you earn free flights, free hotel stays, or other perks and benefits like airport lounge access or free checked bags.
When looking at potential business credit cards, consider whether the rewards program aligns with the type of spending you do most for your business. Also, review the redemption options to ensure that you can use your earnings in ways that work for you.
Can you juggle multiple credit card payments?
Credit cards can be helpful financial tools, but they can also become costly because of revolving large balances or missing monthly payments. Cardholders who are on top of their finances will find managing multiple business cards less challenging. Consider using account tools that let you set up automatic payments, monitor accounts regularly, and set spending limits to avoid going over budget.
How many business cards can you apply for?
While there’s no official limit to the number of business credit cards you can apply for, opening too many accounts in a short timeframe could signal that your business is experiencing cash flow problems. To avoid this, Experian recommends waiting six months between credit card applications.
By following Experian’s advice, you may decide to gradually open new accounts to find cards with unique benefits. You may also want to add employee cards to the primary accounts to streamline and monitor team business expenses. For example, client-facing teams may be able to earn rewards with cards featuring dining or travel as a bonus category, while an office manager may get more value from a card that rewards office supply spending.
Summary
The number of business credit cards a business owner chooses to have really depends on their spending style. It also depends on the type of benefits they’re seeking, such as the different rewards programs or the various benefits of a travel credit card.
