Do Rewards Credit Cards Have Restrictions for Use by Small Business
If you need a credit card to pay for your business expenses, you should get a small business credit card instead of using a personal rewards card. There may be some restrictions on a personal rewards card if you are planning to use it to cover your business cost, and these will certainly vary from credit card issuers. One restriction is that you won’t be able to earn rewards in business categories when you use a personal rewards cards.
Small business credit cards will offer generous cash back rewards in business categories like office supply, internet, TV and phone services, and advertising. On the other hand, personal rewards cards usually offer rewards in everyday categories like groceries, wholesale clubs, and gas stations. The business credit card can also allows you to earn the same rewards rate as the personal credit card when shopping for everyday purchases.
Most small business credit card typically would come with a higher credit limit. Their bonus rotating programs also offer a higher spending limit than the personal rewards cards For example, a small business card typically allows you to spend up to $25,000 in their rotating bonus category program. In a personal card, you can only continue earning the cash back in the rotating bonus category program for up to $1,500 – $6,000 per quarter.
You earn a higher level of cash back when you use a business credit card to cover your business expenses. The total cash back that you earn can exceed more than $100,000 depending on how much you spend on your business cost. On some rewards cards, you might only earn a maximum of a few thousand dollars in cash back rewards, depending how much you are able to utilize the credit card.
Many small business cards offer quarterly and year-end summary to help you with planning the budget and tax accounting for your business. It allows you to separate your business expenses from your personal expenses. This will make it easy for you when you are doing accounting for your business expenses.
Many small business credit cards don’t charge foreign transaction fees when you are traveling on an overseas business trip. It offers car insurance to protect you from collision damage when you have to rent a car. You can also add additional employee cards for free. The free employee cards makes it convenient for you to let your employee shop for the business items on your behalf.
The downside is that business credit cards tend to have more expensive interest rates than personal credit cards. This is why it is important to repay your balance in full every month otherwise the interest can quickly adds up. However, through responsible use, you can build your payment history and develop a positive credit profile. Having a good credit score allows you to qualify for a low interest loan for your business in the near future.