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What Type of Business Credit Card is Right for You?

By: Michael Esparza

Business credit cards are cards that are designed for business owners or entrepreneurs who want to separate their personal and business expenses, earn rewards or cash back on their purchases, and access other benefits and features that can help them manage their cash flow and grow their business. There are different types of business credit cards, each with its own advantages and disadvantages. Here are some of the most common types of business credit cards:

Cash back business credit cards: These cards let you earn a percentage of cash back on your purchases, which can be redeemed as a statement credit, a direct deposit, or a gift card. Cash-back business credit cards can have a flat rate of cash back for all purchases, or a tiered or rotating system that offers higher cash back on certain categories, such as office supplies, gas, or travel. Some cash-back business credit cards may offer a sign-up bonus or an introductory 0% APR period.

Rewards business credit cards: These cards let you earn points or miles on your purchases, which can be redeemed for various rewards, such as travel, merchandise, gift cards, or statement credits. Rewards business credit cards can have a general rewards program that offers flexible redemption options, or a co-branded rewards program that partners with a specific airline, hotel, or retailer. Some rewards business credit cards may also offer perks such as travel credits, airport lounge
access, free checked bags, or discounts on partner purchases.

Secured business credit cards: These cards require a security deposit that acts as your credit limit. Secured business credit cards can help you build or improve your business credit score by reporting your payment history to the credit bureaus. Secured business credit cards may have lower interest rates and fees than unsecured business credit cards but may not offer any rewards or benefits. Some secured business credit cards may also offer the opportunity to graduate to an unsecured card after a period of responsible use.

0% APR business credit cards: These cards offer an introductory 0% APR period on purchases and/or balance transfers for a certain number of months. 0% APR business credit cards can help you finance large purchases or pay off existing debt without paying any interest charges. However, you should be aware of the regular APR that will apply after the introductory period ends, and the balance transfer fee that may apply if you transfer a balance from another card. You should also avoid carrying a balance beyond the 0% APR period, as it can hurt your credit score and incur interest charges.

You might be surprised to learn that you don’t need a formal business to apply for a business credit card. In fact, many people who work as freelancers, independent contractors, or side hustlers can qualify for a business credit card based on their self-employed income. To apply for a business credit card without a business, you need to follow these steps:

  1. Research and choose the right card: Compare annual fees, interest rates, rewards programs, and other benefits to find the card that best suits your business needs.
  2. Gather necessary documentation: You will need to provide some information about yourself and your business, such as your name, address, phone number, email, Social Security number, estimated annual income, and estimated monthly spending.
  3. Fill out the application form: You can apply online or by phone for most business credit cards. You will need to enter your personal and business information, as well as agree to the terms and conditions of the card.
  4. Wait for approval: Depending on the card issuer and your credit history, you may get approved instantly or within a few days. Some card issuers may ask you to mail in additional documents for verification, such as tax returns or bank statements.

As you can see, applying for a business credit card without a business is not as difficult as you might think. However, you should be aware of some things before you apply:

Your personal credit may be affected: Since your name and Social Security number are on the card application, the credit check and new account may show up on your personal credit report. This can affect your credit score and your ability to qualify for other loans or credit cards.

You are personally liable for the debt: Unlike some corporate cards that are backed by the
company’s assets, most business credit cards hold you personally responsible for paying off the
balance. This means that if you default on your payments, the card issuer can sue you or garnish
your wages.

You should use the card responsibly: To avoid getting into debt or damaging your credit score, you should always pay your bills on time and in full every month, keep your balance low, and avoid
unnecessary fees or interest charges. You should also track your spending and keep receipts for tax purposes.

Before you apply for any type of business credit card, you should compare the features and benefits of different options and choose the one that matches your spending habits and financial goals. You should also check your business credit score and report to see if you qualify for the card you want and to avoid any errors or fraud. Finally, you should always use your business credit card
responsibly by paying your bills on time and in full every month, keeping your balance low, and avoiding unnecessary fees or interest charges.