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?
A charge card looks and works like a credit card; you can use it to make purchases with any company that accepts that brand of card (such as American Express, Mastercard or Visa). Like a credit card, 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 five great charge cards to consider for your small business.
With the **, get the flexibility to either pay in full each month or carry your balance for up to 60 days with no interest.
Although this card carries a relatively high annual fee of, many card members find the benefits worth it.
The annual fee is
The ‡offers the Pay Over Time option, which lets you carry a balance with interest on eligible purchases.
- Eligible purchases can be paid over time, up to the amount of your Pay Over Time Limit on your account.
- You can choose to pay for these purchases over time with interest, or you can pay your full balance each month, whichever is best for your business.
- Card Members must pay in full all charges not included in a Pay Over Time balance.
4. Nav Prime Card
The Nav Prime Card* is a charge card, with no credit check or security deposit required. With your Nav Prime Card transactions are reported as a monthly tradeline, turning your everyday transactions into opportunities that can build business credit with regular use. Daily autopay from your linked checking account helps you avoid carrying high debt.
Exclusive to Nav Prime users, the Nav Prime Card reports as your second tradeline to help improve your business’s financial health profile to unlock better financing options.
The Nav Prime Card is not available in CA, NV, ND, SD.
5. Capital One Spark Cash Plus***
Capital One offers this business rewards charge card. It allows cardholders to earn unlimited 2% cash back on every purchase with no limits or category restrictions. Plus, earn unlimited 5% cash back on hotels and rental cars booked through Capital One Travel.
It also currently offers a welcome bonus: Earn a one-time cash bonus of $1,200 once you spend $30,000 on eligible purchases in the first 3 months.
There is no preset spending limit. The $150 annual fee can be refunded each year when you spend at least $150,000 in the calendar year.
***All information about the Capital One Spark Cash Plus card has been collected independently by Nav. This card is not currently available through Nav. To see available business credit cards, please visit Nav.
Charge Cards Pros and Cons
- Avoid interest charges
- Safer way to pay for purchases due to limited liability for fraudulent charges
- May help build business credit
- 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 Card— 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 About Small Business Charge Cards
What Types of Businesses Do Well With a Charge Card?
Small business owners who want the convenience and security of a business credit card, but who also want to avoid getting into debt, often find a charge card to be an excellent choice.
Business charge cards are covered by the Fair Credit Billing Act which limits liability for unauthorized charges to no more than $50.
However, since balances must be paid in full, it’s less likely your business will run up debt it can’t afford to pay. (It’s still possible, of course, so stay on top of your spending and stick to your budget for your business.)
As long as your business is making purchases you’ll pay for with a payment card—whether that’s fuel, office supplies, software, etc.– a charge card can be a good option.
If you have employees, you may also want to get a card that offers free employee cards. These cards will often offer rewards and can be helpful for managing employee spending.
If, on the other hand, your business needs to finance purchases over time, and you can’t (or don’t want to) apply for a small business loan, you may be better off with a business credit card. Some credit card offers feature 0% introductory APRs that let you pay for purchases over several months without interest charges.
How Do I Account for Charge Cards in My Business Budget?
A charge card is simply a method of paying for purchases. You’ll set up your budget by including the types of purchases you need to make, then pay for them using a charge card. If you use business budgeting software and/or accounting software, it should be simple and straightforward to enter the purchases your business makes and simply assign them to the payment method used.
It’s a good idea to have a business checking account you’ll use to pay for the purchases you make with your charge card, rather than using a personal bank account. This is the recommended method for separating your business and personal finances, and when tax time comes around you’ll be glad you didn’t mix the two.
If your business operates a separate legal entity, such as a limited liability company (LLC) or corporation, having a business bank account and a business credit or charge card is essential. Commingling your finances by using a personal credit card for business purchases, for example, can jeopardize the asset protection benefits of the business entity.
Do Business Charge Cards Offer Rewards?
Yes, just as business credit cards may offer rewards programs including cash back or travel points, business charge cards may offer rewards including cash back or travel rewards, as well as perks like extended warranties, purchase protection, or car rental coverage.
If you want a card with rewards, consider first which type of rewards you want. If you mainly want to earn rewards for personal or business travel, consider whether you’re loyal to a particular airline or hotel brand. If so, you may want a co-branded card affiliated with the airline or hotel chain you prefer. If you’re more flexible, consider a card that earns points you can use with multiple providers, such as Chase Ultimate Rewards or American Express Membership Rewards.
If you prefer cash back, understand the base cash back rate (usually 1-2 cash back on all purchases), as well as higher cash back rates for bonus categories in certain spending categories such as office supply stores or gas stations.
Nav can help you find the best business credit cards and charge cards based on your data. Get started now.
*DISCLAIMER: Nav Technologies, Inc. is a financial technology company and not a bank. Banking services provided by Blue Ridge Bank, N.A., and Thread Bank, Members FDIC. The Nav Visa® Business Debit Card is issued by Blue Ridge Bank, N.A., and the Nav Prime Charge Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa cards are accepted. Your funds are FDIC-insured up to $250,000 through Blue Ridge Bank, N.A., Member FDIC.