Should You Get a Business Credit Card? | When is it Worth it?

Are you one of the millions of small business owners in America?

Whether it’s a side hustle or a booming success story, you may be wondering whether a business credit card is worth adding to your wallet.

Money expert Clark Howard generally advises against applying for them, even though he actually has one!

In this article, we’ll look at who qualifies for a business credit card and talk to Clark about who should consider applying for one and who should probably stay away from them.

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Table of Contents

• Who Qualifies for a Business Credit Card?
• Why Clark Generally Suggests You Avoid a Business Credit Card
• Who Should Consider a Business Credit Card
• Final Thoughts

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Who Qualifies for a Business Credit Card?

A business credit card can help you separate business spending from personal spending. And it’s not overly difficult to acquire one.

You might be surprised to find out that almost anyone who runs a business can meet the requirements to apply for a business credit card.

Whether you’re running a sole proprietorship as a form of additional income or have a corporation with a large staff, you are likely a candidate for a business credit card.

The requirements to qualify may vary by card issuer, but generally these types of businesses should be eligible:

• Sole proprietorship
• Partnership
• Limited liability company (LLC)
• Corporation

So, for most, the primary question isn’t whether your business type qualifies for a business credit card. Instead, the question is whether a business credit card creates any value in your unique situation.

The answer may not be “yes,” as business cards are sometimes inferior to personal credit cards on things like rewards programs and interest rate practices.

I sought the help of money expert Clark Howard to help determine when a business credit card could be right for you.

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Why Clark Generally Suggests You Avoid a Business Credit Card

Before we tell you who might benefit from a business card we’re going to be a bit of a wet blanket with this news: Clark generally advises against applying for business credit cards.

There are a couple of big reasons for this.

• Consumer protections don’t typically apply. The CARD Act of 2009 gives consumer credit cards protection on things like late fees, over-limit fees and double billing cycles. This protection was not extended to business credit cards. Many issuers will honor the provisions out of good faith, but they’re not required to do so.
• Interest rate increases are more likely. Clark says that business credit cards see APR numbers increase at a faster pace than consumer cards. This could mean that you’ll end up paying a higher interest rate on balances with a business card.

It’s worth noting that you’re likely going to be judged by your personal credit when you apply for either type of card, so that’s not a benefit that some people may assume comes with a business card either.

One popular scenario in which business owners sometimes consider adding a business credit card is when they have to start trusting employees to do spending outside of their personal oversight.

But the business card actually doesn’t offer you any additional protection from fraudulent charges they could make behind your back.

“You are not protected against improper charges that an employee makes,” Clark says. “Whether you give somebody a consumer card or a business card, you’re not absolved from the dirty dealings of an employee with a card.”

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Who Should Consider a Business Credit Card

Now that you know why Clark is generally hesitant to recommend this type of credit card to business owners, let’s talk about the instance in which it may be worth it.

Clark says he takes calls from listeners and has conversations with entrepreneurs who approach him about a strong rewards program they have found in a business credit card offer.

He says there’s a risk-benefit analysis that needs to happen based on some of the factors we mentioned in the last section, but ultimately there may be an offer or a rewards program that is too good to pass up.

“In my mind, you would only use a business version of a credit card when the reward you’re getting is valuable enough to make it worth doing,” Clark says. “As long as you know you don’t have the same consumer protections and you’re comfortable with that, you can do it.”

Clark himself has a real-life example of this scenario.

Though he primarily uses consumer credit cards for business purposes, he does have one business credit card because of a benefit analysis. He uses the card_name for select business purchases.

He initially signed up because it had a great temporary welcome offer, but he keeps it and has no regrets in doing so because the rewards multipliers help him earn the Companion Pass that allows his wife to fly free when they travel.

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Final Thoughts

Business credit cards may be enticing, but if you ask Clark there’s a good chance he’d tell you to consider taking the protections provided by a consumer credit card instead.

But if you’ve decided you’re ready to apply for one, Team Clark has compiled a list of the best small business credit cards.

Do you have a business credit card in your wallet? If so, how do you use it? Do you like it? We’d love to hear your thoughts in the Clark.com community.