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Small business card signup offers have gone crazy, and you are probably eligible to take advantage of them.
Key links:
- Ink Business Preferred℠ Credit Card: Spend $5000 on your new card within 3 months and you’ll get 80,000 points.
- Enhanced Business Platinum Card®: limited-time offer earn 100,000 points: 50,000 points after $5,000 spend within 3 months and an additional 50,000 points after you spend an additional $10,000 within those first 3 months. (offer expired)
- CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®: limited time offer earn 50,000 American Airlines AAdvantage® bonus miles after $3,000 in purchases within the first 3 months of account opening. (Offer expired)
- Business Gold Rewards Card from American Express OPEN: earn 50,000 Membership Rewards points after $5,000 spend on purchases with the card within your first 3 months of cardmembership. (Offer expired)
Plenty more people have personal cards than the small business cards. But some of the best offers right now are for business cards.
Why Small Business Credit Cards are Great for Spending
Business cards generally don’t show up on your personal credit report. Banks do pull your personal credit when they are deciding whether or not to approve you for the card, but after that the card doesn’t get listed.
That’s useful because one of the major components of your credit score is your credit utilization . That’s not about whether you pay off your cards each month, that’s about how much of your available credit you are using at a given time.
Your cards report your balances each month — not your unpaid balances, not overdue balances, but how much you’re carrying on the card on a given day (and paying off the card before the end of the billing cycle may not help, since they may report mid-cycle).
About 30% of your score stems from how much of your credit you use. If you’re using $2000 out of $4000 available credit, you’re using 50%. You may pay off your bill each month but you still look risky, you’re not being afforded lots of credit that you’re responsible with in the eyes of your credit score. If you’re using $2000 out of $20,000 available credit, that’s only 10% and looks much better — even though you are spending the same amount on your cards each month. Which is why applying for more cards can actually improve your score, despite that conventional wisdom that it’s bad for your credit.
In addition to boosting available credit (increasing the denominator), you can improve your score by reducing the amount of that credit you are using at any point in time (reducing the numerator). By putting your spending on a small business card, the balance of which doesn’t get reported, you reduce the amount of credit that it appears you’re using. Which is good for your score.
How You Can Get a Small Business Credit Card
I find it very useful to have a business credit card, and have for a long time – I got my first one about a decade ago, giving my social security number as a business tax ID (for sole proprietorships American Express lets you leave the business tax ID box blank).
Before I had my registered award booking business I would use my social security number. Most of the time back then (much more so than now) I would be approved instantly, or at least automatically.
Even having $0 in business income was often fine, it’s good to separate out business and personal expenses from the very beginning when starting to look out for business opportunities. In fact, if you want to show the IRS you have a real business this is crucial — even before transacting business a separate credit card for business finance is advisable.
Whether or not a bank will approve you for a business card depends on a variety of factors, but $0 in business income in my experience wasn’t disqualifying.
I’ve been a huge proponent of diversifying income — sure, I have a job, but I also blog and book awards and my writing has earned income from several travel sites. In the past I’ve also done fundraising consulting. And I own a rental property, as well.
It’s much easier to deduct the expenses for a business when the financial transactions for that business are kept separate from personal finances. So just as it’s useful to have a business bank account, it’s useful to have a business credit card. And that’s true even — and especially — before you have any revenue for the business.
Answer questions on the application truthfully. If you don’t have any business income, then list zero. That may be fine, depending on the issuer’s opinion of you otherwise (e.g. income, credit, outstanding credit). You can get approved on the basis of your personal (non-business) income. And if you’re not approved automatically, you can still explain that you haven’t earned income from the business yet, you’re just now setting it up.
Different Perks and More Spending Bonuses
While I love the Chase Sapphire Preferred Card — most of my expenses fall into the travel and dining categories which that card bonuses (double points) — I want to earn the greatest rewards for my spending.
Earning 3 points per dollar on travel though with the Ink Business Preferred℠ Credit Card is even better. Plus you earn triple points on shipping and advertising on social media and search engines.
With the Business Gold Rewards Card from American Express OPEN you get to choose your triple points category from: (Offer expired)
- Airfare purchased directly from airlines
- US purchases for advertising
- Shipping
- US gas stations
- Purchases made directly from select computer hardware, software, and cloud computing providers
An Opportunity to Get More and Different Cards
I have a wallet full of cards. The banks expect that. One credit card executive told me that they give you more than one of his bank’s cards because they know you want more than one card and would rather that you have multiples of theirs than one of theirs and other banks’ cards as well.
The cards you’re able to get are dependent on both your overall credit and your income, some banks have limits on the number of cards they will issue to you. But business cards aren’t usually part of a cap on personal cards.
They have different signup bonuses, and different spending bonuses, and so business cards can be an effective part of your points-earning strategy.
Ink Business Preferred℠ Credit Card
Good to list these opportunities, Gary. Very bad to not inform readers of the issuing companies’ restrictions on who can get these cards (such as the 24 months rule blocking folks who have had any other American Airlines Citi card from getting the one you’re describing).
If you don’t want to hassle with doing so for every post, it would be good to just advise them that such restrictions exist, and provide a link to a post (whether yours or another blogger’s) that summarizes such restrictions.
@ Steve:
As far as I know, the Citi AA personal and business cards are separate “families” and you can get the bonus on the business.
yep:
“Bonus miles are not available if you have had any CitiBusiness® / AAdvantage® card opened or closed in the past 24 months.”
Chase counting my wife’s Ink as her 5th card in 2 years as basis to deny the CSR this week. That was very surprising and disappointing. Could be an outlier but does go against the conventional wisdom that biz cards don’t count
@Kyle:
Thanks very much for this clarification! Much appreciated.
My original point still stands re Gary making clear the bonus eligibility restrictions. As I reflect on it a bit, I can see how this would be a hassle, so more strongly suggest he just have a detailed, all-purpose link (occasionally updated) that he advise folks check to see if the applicable rules for various credit card issuers bar them from bonuses.
Gary,
Is it a business as defined by the IRS or as defined by the individual (e.g. Someone who sells stuff frequently on eBay)? What is the minimum standard definition? Is there one?
@VG – someone who sells stuff frequently on eBay is going to generate business income as defined by the IRS. I think one of the first things you do getting started with any business, before you have revenue/sales at all, is work to separate the finances of the business. A great way to keep expenses separate is with a business credit card.