Pay for your business expenses with a business charge card and you’ll get the convenience and safety that comes from this type of payment card. What you won’t get is the option to stretch payments over months or years; a side benefit that often appeals to debt-averse entrepreneurs.
Here’s how to find the best small business cards for your business spending.
What is a charge card in simple terms?
Both charge cards and credit cards can be used to make purchases with any company that accepts that brand of card (such as American Express, Mastercard or Visa). And with both types of cards, you receive a bill for the purchases you’ve made, minus any payments or credits.
Unlike a credit card, though, with a charge card you don’t have the option to pay off balances over months or years. Instead all purchases will be due and payable in a short period of time, whether that’s daily, weekly, monthly, or within two billing cycles.
Payment terms of a charge card vs credit card
Payment terms are the biggest difference between charge cards and credit cards. Most credit cards allow you to carry a balance and pay it off over months or years. In most cases, you’ll pay interest on purchases you pay off over time. (Some credit card issuers offer installment plans for certain purchases, but there is typically a cost associated with this feature.)
With a charge card, payments are due in full; daily, weekly or monthly repayment is typical depending on the terms of the card. Since the cardholder doesn’t carry a balance, interest is not charged.
Best Charge Cards for Small Businesses
Here are three great charge cards to consider for your small business.
BILL Divvy Corporate Card
All charges made on this charge card are due and payable when you receive your periodic statement. The annual fee is $0
BILL Divvy Corporate Card
Eligibility based more on revenue, requires full repayments monthly.
Pros
- Free and flexible expense management platform
- No annual fee.
Cons
- No early spend bonus and lower rewards than other cards
- Must pay off all balances in full each month.
Intro APR
Purchase APR
Annual Fee
Welcome Offer
Charge cards pros and cons
Pros
- Avoid interest charges
- Safer way to pay for purchases due to limited liability for fraudulent charges
- May help build business credit
Cons
- Cannot be used to finance purchases over longer periods of time
- Balance must be paid in full which may affect cash flow
- Balance transfers not offered
How to choose a small business charge card
The main questions you want to ask yourself when considering a small business credit card or charge card are:
What benefits do you want from your business charge card?
Is your main goal to establish business credit or to build or maintain strong business credit scores? Manage spending while avoiding debt? To earn rewards points? Understanding how you plan to use your card will help you narrow down your choices.
What are the costs of the charge card?
Since interest rates are not likely to be involved (you can’t carry a balance), fees will be your main cost. Is there an annual fee, late fee, and/or foreign transaction fees? How do these compare with other options you’re considering?
What business cards do you qualify for?
Creditworthiness is often an important qualifier. We’ll talk more about that shortly, but there’s no point applying for a card you’re not going to be able to get.
What qualifications do I have to meet to get a business charge card?
Even with a charge card it is possible to run up a balance you can’t (or don’t) pay back when due, so many issuers check personal credit scores and/or credit reports. Card applications typically require you to provide your Social Security number. Many credit cards and charge cards for small business owners require good to excellent credit scores. However, a few—like the Nav Prime Card1— do not check personal credit.
Some corporate cards will not accept applications from sole proprietors; instead your business must be a limited liability company (LLC), corporation or partnership. If you have an employer identification number (EIN) you’ll want to include that on your application, even if it’s not required. It may be helpful in reporting your business credit history to business credit bureaus.
If you have a new business, you’ll be relieved to know that there are plenty of charge cards and business credit cards available to startups. Many issuers check personal credit and will accept income from a variety of sources, not just the business.
Many small business charge cards require a personal guarantee. If the business does not pay back the debt, the card issuer may try to get payment from the business owner.
You may need to link a bank account for automatic payments of the balance due. If you do that, make sure you link a business bank account to keep your business and personal finances separate.
Frequently asked questions
Nav can help you find the best business credit cards and charge cards based on your data. Get started now.
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Gerri Detweiler
Education Consultant, Nav
Gerri Detweiler has spent more than 30 years helping people make sense of credit and financing, with a special focus on helping small business owners. As an Education Consultant for Nav, she guides entrepreneurs in building strong business credit and understanding how it can open doors for growth.
Gerri has answered thousands of credit questions online, written or coauthored six books — including Finance Your Own Business: Get on the Financing Fast Track — and has been interviewed in thousands of media stories as a trusted credit expert. Through her widely syndicated articles, webinars for organizations like SCORE and Small Business Development Centers, as well as educational videos, she makes complex financial topics clear and practical, empowering business owners to take control of their credit and grow healthier companies.