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For most startups, physical cash is scarcely used. Instead, many use credit cards to make payments both in-store and online, earn benefits and build credit. As a result, small business credit cards account for $430 billion in spending or about 1/6 of all credit card spending.
Using a business credit card can also offer even better perks than the ability to make large purchases — doing so will also enable you to separate your personal and business finances and establish your business' financial reputation.
But when you're choosing which credit card to go with, the options can be overwhelming. That's why we asked four experts to share the top credit card picks, as well as their best tips for budgeting and financial management.
The 4 Best Credit Cards for Startups
We consulted four experts from a variety of companies, and these are the credit cards they recommended.
1. American Express Blue Business Cash Card
Two of the entrepreneurs we talked to recommended the Blue Business Cash Card from American Express.
Mike Abelson, Editorial Director at Lendza, explained that with this card, "You can earn 2 percent cash back on all eligible purchases on up to $50,000 per calendar year, then 1 percent cash back" after that.
This benefit can be especially helpful for small or new businesses. Ann Martin, Director of Operations at CreditDonkey, says that "cash back is a great perk for startups because they're often pressed on being able to afford everyday items."
The Blue Business Cash Card has more benefits than its cash-back program, though. Martin also appreciates that "there's no annual fee and 0 percent APR for the first 12 months, which makes it an inexpensive card to get on board with compared to many others."
In terms of downsides, Martin pointed out that this card "isn't as good as some others when it comes to travel." However, she doesn't "consider that to be a strong drawback for startups" since "they're usually not racking up thousands and thousands of dollars in flights."
If your startup is the exception, Abelson recommends looking into the American Express Business Gold Card instead, which offers a 25 percent airline bonus when you purchase tickets using membership points.
2. Chase Ink Business Unlimited Credit Card
Another popular choice among the experts we consulted was the Ink Business Unlimited Credit Card from Chase.
Abelson likes this card because of its main selling point: unlimited 1.5 percent cash back on all purchases ($750 bonus cash back when you spend $7,500 within the first three months of opening your account doesn't hurt, either).
John Li, Co-Founder and CTO at Fig Loans, recommends the card for new businesses, saying that the "Ink Business Unlimited Credit Card is a great starter card, provided the business owner has a good credit score."
That's because "The card is fee-free and has 0 percent APR for the first year, which can be incredibly helpful if you find yourself leaning heavily on the card during your business’s startup phase."
And although other cards may have higher cash-back rates, Li says that if you're "a business owner that regularly puts thousands of dollars on a credit card, you [may] want to pick one that doesn’t have an annual limit on the cash back you earn."
Just as with the American Express cards, Chase also has an option that's ideal for businesses that travel frequently: the Ink Business Preferred Credit Card. As Abelson explains, you get "three points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year" and "one point per $1 on all other purchases, with no limit to the amount you can earn." So, "it fits for small business owners just starting out with rewards."
3. Capital One Spark Cash Plus
The Spark Cash Plus card from Capital One is recommended as a foolproof choice for business owners with excellent credit.
According to Nathan Grant, Senior Credit Industry Analyst at Credit Card Insider, the Spark Cash Plus card "is a great business credit card that earns unlimited 2 percent cash back on every purchase made, everywhere, with no limits or category restrictions."
Plus, "it has no annual fee for the first year and you can earn a one-time $500 cash bonus after spending $5,000 on purchases within three months of opening the account." And if you spend $50,000 within the first six months, you'll get another $500 one-time bonus.
If you're looking to avoid a high APR, you'll also appreciate that the Spark Cash Plus has no APR. That's because your balance is due in full each month (if you're late on a payment, you'll owe a 2.99 percent monthly late fee).
4. Brex Card
Finally, Grant suggests you consider the Brex credit card if you'd prefer to avoid a personal guarantee.
Brex is able to provide such an offer because its credit card is technically not a credit card at all — instead, it's a charge card. This means that you'll need to pay it off in full either every day or every month, depending on the option you choose.
The card will be paid via a Brex Cash account that you've already deposited funds into. Grant explains that "by requiring a Brex Cash account, your card balance will automatically be paid from the funds in the account, so you never have to worry about interest rates or late fees."
In terms of rewards, "You pick from one of three comprehensive rewards programs depending on your business needs including Tech Rewards, Life Science Rewards or Remote Workforce Rewards."
You can also earn up to 5X points on Brex Travel, take advantage of discounts from Brex's corporate partners and even redeem points for cryptocurrency.
Top Tips for Using Your Startup's Credit Card
Choosing the right credit card for your business is only half the battle — ultimately, your financial success depends on how you actually use it.
Abelson shared several tips you can use to manage your company's finances like a pro:
- Choose the right credit card based on your current financial condition, and be sure to know the card's fees.
- List your essential startup costs, including both assets and expenses.
- Determine your fixed costs, such as rent and payroll.
- Estimate your monthly revenue using market research.
- If you can choose the date of your credit card billing cycle, select one that aligns with your pay period to simplify your billing schedule.
- Keep internal records of every cost, and don't just rely on your credit card statement.
Grant also had some valuable pieces of advice, noting that "all of the same fundamentals of using personal credit responsibly apply to business credit cards:"
- Only spend what you can afford.
- Always pay your bills on time.
- Keep your debt low in relation to your credit limits.
- Don't apply for lots of new credit in a short period of time.
- Understand your card's terms inside and out.
Last but not least, Martin stressed that "startup owners should take care to keep business accounts separate from personal costs. Otherwise, finances (and taxes) can quickly get very messy."
While there may not be a one-size-fits-all business credit card, the four listed here can work for a wide array of startups. As long as you do your research, understand each card's terms and take careful stock of your business's finances, you're sure to make a smart choice.
And once you do have a credit card that suits your startup's needs, those crucial early months of your startup's life can become that much easier.
Carrie Buchholz-Powers is a Colorado-based writer who’s been creating content since 2013. From digital marketing to ecommerce to land conservation, she has experience in a wide range of fields and loves learning about them all. Carrie is fond of history, animals and beauty in equal measure. In her free time, she enjoys knitting, playing video games and exploring Colorado's prairies and mountains with her husband.
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