There are many advantages to using a business credit card. But how do you know if the business credit card you’re interested in is the best choice for you? By exploring its pros and cons. Discover insights, tips, and more on the subject in this article.
Whether you’re self-employed or the owner of a sole proprietorship such as an SME, there are many advantages to taking out and using a business credit card. If you use it responsibly, you’ll reap significant benefits, including:
Here’s more information on each of these benefits.
A business credit card lets you record your business expenses efficiently. Regardless of your financial institution, you can access your spending picture at your fingertips. This lets you monitor things in real-time or create reports based on specific criteria.
For example, detailed quarterly statements allow you to break down your business expenses into specific categories. What’s more, some of the best business credit cards allow you to integrate your credit account with applications and software such as QuickBooks or Sage50.
Good commercial credit offers a number of advantages, whatever the size or status of your business. First and foremost, a favourable trade credit means you’ll benefit from more straightforward, faster borrowing procedures. It also gives you access to higher tranches of business financing.
Your trade credit is also a valuable tool for accessing better repayment options with your suppliers and lenders. The golden rules :
The latter corresponds to the credit rate used on the total available. Ideally, it should remain below 30%.
Having a business credit card gives you the opportunity to obtain credit cards for your employees. In this way, they can proceed with their expenses without giving you a receipt, submit a claim for reimbursement, etc.
The BMO World Elite Business Mastercard, for example, allows you to obtain additional cards for just $50 each.
With detailed statements for all cards issued, you can monitor spending at any time. This way, your team buys on behalf of your company and helps you earn reward points faster.
“Short-term” is important here. Having access to a source of capital at all times allows your company to remain flexible in the event of imponderables, it’s true. However, a business credit card should never be used to cover your long-term cash flow needs. This could damage your business credit in many ways.
Depending on the type of card, you can earn reward points or cash rebates. Even some loyalty programs reward you faster when you spend in bonus categories. These include gasoline, office supplies, restaurant expenses and more. You can then use these reward points on your business travel plane tickets, gift cards to pay for business expenses, etc.
Depending on the credit card you select, you may receive a welcome offer. Often, these welcome offers take the form of rewards points and cash back. Sometimes, however, they take the form of a first year with no annual fee, or promotions on balance transfers or cash advances. However, check the conditions and restrictions that may apply.
Consult the following articles to find the best offers on the market today:
Separating your business expenses from personal your expenses dramatically reduces the work involved in filing your business tax return. No more digging through your personal statements to find out what you’re spending on your organization! Everything is in one place, and every expense is linked to your business.
The BMO AIR MILES® World Elite Business Mastercard particularly rewards AIR MILES collectors who wish to separate their personal and business spending.
You can earn 3,000 AIR MILES Bonus Miles in your first year! In addition, there is no annual fee for the first year.
You earn 4x the Miles when you use your card at participating AIR MILES Partners. And 1 Mile for every $12 you spend everywhere else, including Costco.
With the BMO AIR MILES®† World Elite®* Business Mastercard, you benefit from various travel protections:
And for your purchases:
Business credit card issuers offer a variety of fraud protection options. These include fraud protection in the event of card loss or theft, and protection against online fraud.
As mentioned above, you benefit from using this card in the right way. This is how you reduce the impact of inconveniences, or avoid them altogether. For example:
Here’s more information on each of these disadvantages.
Business credit cards require better creditworthiness than personal credit cards. Moreover, most issuers accept applications only if they have an excellent or good credit record. But don’t be discouraged. Secured business credit cards will help you establish or re-establish your business credit rating.
Getting a business credit card is very tempting, especially when you have many business expenses as an organization. But be careful. Accumulating debt can happen faster than you think. Before you apply, check that your financial health and cash flow are sufficient to pay off your credit card every month.
In general, business credit card issuers look at your personal creditworthiness when deciding. And if they perform a thorough credit analysis, your personal credit rating may be temporarily lowered. However, once your application has been approved, most issuers do not report business credit card activity to the credit bureaus.
Expect to pay particularly high-interest charges if balances are not paid in full. Consider the Business Platinum Card® from American Express, which allows you to maximize your cash flow with up to 55 days of interest-free credit. It’s especially useful for major purchases such as renovations.
Earn up to 150,000 points with this welcome offer for Business Platinum Card® from American Express:
You can use your Membership Rewards points in many ways:
150,000 points have a minimum value of $1,500 for a Statement credit, and much more if you transfer your points to a partner.
For example, with this welcome offer, if you decide to transfer your Membership Rewards points to a partner loyalty program, you would have the choice of earning up to:
With this Card, you earn 1.25 Membership Rewards points per dollar on all purchases. What’s more, you’ll enjoy a host of travel and business benefits:
With this Card you can maximize your cash flow with up to 55 interest free days. It is a card that is particularly appreciated by contractors when making large purchases in home improvement stores, for example.
Finally, the Business Platinum Cardᴹᴰ from American Express stands out for the many insurances it offers: rental car theft and damage, $500,000 travel accident, emergency medical expenses (out of province or country), lost or stolen luggage, flight delay and misdirected luggage, hotel or motel burglary, Purchase Protection, Purchase Security.
Like all American Express Canada Cards, there is no minimum income requirement.
The best choice of credit card for your business depends on a number of factors. In particular, the size of your company and your business spending habits. Here are the business credit cards we often recommend:
Generally speaking, it’s easy enough to get a credit card for your business. But the process does take into account your creditworthiness and the financial health of your business. Some cards require a good to excellent credit score for approval.
That said, once you’ve found the right business credit card on our credit card comparator, click on the “Apply” button. Then follow the steps on the financial institution’s website to complete your online business credit card application.
In short, a business credit card offers significant advantages for your business. These include effective expense management, building business credit and monitoring employee spending. However, it’s crucial to weigh these advantages against the potential drawbacks.
By choosing the right credit card and using it wisely, you can maximize your rewards and maintain sound financial practices for your business.
Ultimately, a business credit card can be a powerful tool for financial management and growth when used responsibly. Remember to consider the specific needs of your business to make an informed decision.
Key benefits include better expense management, building trade credit and monitoring employee spending.
Yes, issuers often consider personal credit, which can temporarily impact your score.
It offers detailed statements and integrates with accounting software for precise expense tracking.
The main risks include debt accumulation and high credit requirements.
Yes, many cards offer reward points, cash back or miles, often with bonuses in certain spending categories.
Evaluate your spending habits, the benefits of the card and compare the different offers to find the one that best suits your business needs with our credit card comparator or our best business credit card offers page.
It’s usually easy to get a credit card for your business. But the process does take into account your creditworthiness and the financial health of your business. Some cards require a good to excellent credit score for approval.
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