Lots of business credit cards nickel-and-dime their holders and come with hidden fees. These can add up over the long run and eat into your company’s bottom line. How can founders find a no-fee business credit card and apply for them? What do they need to score these better credit options?
There are a variety of business credit cards available. Since every business has a unique credit situation, it’s important to consider the specific financial needs of your company.
Are you a brand-new startup with little to no business credit? Are you an established business with existing lines of credit? Does your business generate significant travel expenses? Once you’ve identified what you want out of a business credit card, you can narrow down the search and find the best one for your company.
For example, if your business is a new startup, you might need to settle for a lower credit limit or a card with fewer perks than you might prefer; it’s part of the process of building business credit.
If you travel a lot for business, you might want to get a card that has specialized rewards for travel-related purchases, such as extra frequent flier miles on your favorite airline or additional cash back percentages for hotels, airfares and restaurant meals.
Avoid Annual Fees…Unless the Fees Are Worth It
While every credit card offers different perks and rewards, it’s often best to find a card that avoids annual fees. Even if a card offers attractive features like high cash back percentages, extra frequent flier miles or new customer welcome bonuses, an exorbitant annual fee can easily counteract the gains you make from the credit card’s rewards program.
A no-fee business credit card allows you to earn incentives while using it, but doesn’t make you pay anything to be a cardholder. These are terrific credit cards for small businesses and new companies that are trying to keep costs down and don’t need a lot of extra frills with their credit card incentives.
However, in some situations, it might make sense to use a business credit card that has an annual fee — but only if the rewards are worth it and you’re saving more money or "earning" more money with the card than you’re paying in annual fees.
Different business owners will have a different “break even” point for an annual fee credit card, so read the fine print and crunch the numbers to see what makes sense for you.
Do Some Online Research
There are dozens of no-fee business credit cards available, but which one should you choose? Here is where a little online research can go a long way.
There are numerous websites dedicated to this topic that allow you to search and compare the pros and cons of different business credit cards:
NerdWallet is a great site for evaluating business credit cards; check out their review of the best credit cards for small businesses.
The Simple Dollar is another great financial advice blog; they have a roundup of their recommended best business credit cards.
The Points Guy is a popular site for people who love to earn “points” that they can use for discounted travel; check out this list of their favorite business credit cards with a variety of rewards, bonuses and fees.
Read the Fine Print
It's important to know the details of any card you're considering.
To start, make sure you have a general idea of how much you’ll be spending on your business credit card. For example, some credit card rewards only apply to the first $15,000-$20,000 worth of charges. Any money spent beyond that amount wouldn’t be eligible for the same rewards.
If you have a larger budget and spend more than the rewards limit provides for, you could be missing out on a lot of money. Also, if you want a no-fee business credit card, ensure the card is truly “no annual fee,” not just “no annual fee during the first year.”
Some no-fee business credit cards offer unlimited rewards at a flat rate, and some cards incentivize special purchasing categories. For instance, some of these cards might give you a better cash back percentage on purchases of office supplies, while others might offer bonus points when you purchase airfare or lodging for business travel.
As generous as some no-fee business cards can be with their rewards structure, the interest rates that come along with it can be quite steep. As with a personal credit card, it’s best to pay off the full balance of your business card every month to avoid paying interest.
If you’re looking to earn some solid credit card rewards from your business purchases, there’s no reason to pay an annual fee if you don’t have to. There are lots of good options that allow you to avoid this added expense, such as Ink Business Cash Credit Card and Ink Business Unlimited Credit Card that come with no annual fee and offer attractive $500 sign-up bonuses. Assess what your business needs are, shop around and find the right business card to help you meet them.
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Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.