Business Credit Card Benefits – Credit vs. Cash Back

June 11, 2007

Which is a better move, earning cash back or building credit history? I have a personal credit card I use only for business purposes that earns me cash back and a business credit card that could help me build credit history if I used it.

Why a Business Credit Card?
When I setup a business account at my local bank I applied for a business credit card for several reasons. This article on Effective Small Business Credit Card Management does a good job covering the benefits of using a separate card for business. Here are three key points from the article; I currently accomplish the first two with my personal card.

Avoid Co-mingling Funds
Keeping my personal and business charges separate avoids any confusion about which account to pay the bills from. In addition, this separation shows the IRS I am operating like a business, not a hobby.

Easy Itemization
I pay my reoccurring fees such as internet access, domain hosting, phone bills, and eBay fees on a credit card. I also use a card to buy all the inventory I purchase for re-sale. It’s great putting all of these expenses on my card because I get an itemized list at the end of the month.

Build Business Credit
Just like personal loans, a business needs to have some form of credit history in order for lenders to consider them for a loan. Using a credit card in the business name and paying it off on time can help build business credit.

No Card Rewards
Another benefit of a business credit card the article lists are “Special Rewards”. Unfortunately, my bank does not offer any type of rewards for business cards and this is why I’ve been using a separate personal credit card instead. As you can see from my business spending below, I spent $4376 in the first 5 months of this year.

January – $688
February – $106
March – $450
April – $973
May – $2159

My cash back personal credit card has paid out $50 so far this year and I’m a little over half-way to another $50. It’s hard to turn this money down by instead charging on my business card but I am missing out on the opportunity to build credit for the business by not using it.

Short Term vs. Long Term Benefits
Using the personal card instead of the business card has been a short-sighted approach. It does help a little with cash flow, which is important to all small businesses, but doesn’t help with the long-term goal of building credit history.

Since the business card only has a $1,000 limit, I plan on maxing it out, then putting the remainder of what I spend each month on the personal card designated just for business. Hopefully after 6 months or a year the company will have a credit history and I’ll be able to apply for a business credit card that does offer cash back rewards.

Can you recommend any business cards that offer cash back? I’m partial to American Express Blue Cash for our personal cash back card but have to use a Visa card for business expenses because my main supplier doesn’t accept American Express. I’m open to any card for business, American Express, Visa, Mastercard; whichever provides the most cash back.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to Business Credit Card Benefits – Credit vs. Cash Back

  • Justin Dupre

    The Plum Business Card from AmEx. Your best friend with no installed spending limits. Pure Yummy. 2% cash back on any months over 5,000 is spent and paid back in full by the next billing statement, or an extra month to pay it off.

    Justin Dupre

  • Ben

    Thanks Yan & MoneyNing for the suggestions. I agree, cash back are my favorite cards. I’ll have to look into Chase Freedom.

  • MoneyNing

    I really love my Citibank PremierPass Elite Level card. It has an annual fee but I’m racking up crazy points with this because of the miles I’m flying with it. Citi has a business version of this card which I believe does not have an annual fee.

  • Yan

    After we bought house on a 30 year fixed loan, I don’t worry about credit history.
    My favorite cards are those offering cash back and my favorite cash back card is Chase Freedom.


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