The post Best Credit Cards for Startups by Chika Uchendu appeared first on Benzinga. Visit Benzinga to get more great content like this.
A Quick Look at the Best Credit Cards for Startups:
- Best Overall: American Express Blue Business Cash™ Card
- Best for Unlimited and Flat-Rate Cash Back: Capital One Spark Cash Plus
- Best for Bonus Cashback Categories: Ink Business Cash® Card
- Best Corporate Card for Startups: Brex Card
- Best for Building Fast Credit Score: Capital One Spark Classic for Business
Starting a business can involve several challenges and experiences, from fierce competition to customer acquisitions. However, funding is the most difficult challenge you’ll have to deal with, regardless of how innovative and feasible your startup idea is. The reason is partly due to your inability to access loans, favorable interest rates and other core benefits since you have a limited or nonexistent business track record. Consequently, you’re left to fund growth with a limited budget unless investors step in.
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14.74% – 22.74% Variable | See Rates & Fees
The American Express Blue Business Cash™ Card offers no annual fee and 2% cash back on all eligible purchases up to $50,000 and 1% after that. With a 0% intro APR and affordable rates thereafter, this card helps your business get its footing and manage spending.
- Annual Fee: $0
- Regular APR:
14.74% – 22.74% Variable | See Rates & Fees
- Intro APR: 0% on purchases for 12 months
- Rewards: 2% cash back on all eligible purchases up to $50,000 and 1% on all other purchases
- No annual fee
- 0% intro APR
- Need good – excellent credit
- Caps on bonus
16.24% – 21.24% | See Rates & Fees
The Ink Business Preferred® Credit Card is an excellent choice for frequent travelers who want to collect points as they hop around the country or around the globe. With an affordable annual fee and reasonable rates, you can earn 3X the points on your combined purchase limit and an addition 100,000 points if you spend $15,000 in the first 3 months you own the card.
- Annual Fee: $95
- Regular APR:
16.24% – 21.24% | See Rates & Fees
- Rewards: 3X points on combined purchase limit ($150,000 on travel and select business categories annually)
- Welcome Bonus: Purchase $15,000 in the first three months and earn 100,000 points
- Low annual fee
- Low minimum credit lines
- Solid anniversary gift
- High welcome bonus threshold
13.99%-21.99% | See Rates & Fees
The Brex card is designed to help businesses build credit. You can level up your limits with regular payments, establish credit for your company and enjoy several types of rewards, including 8x on rideshare, 5x on Brex Travel, 4x on restaurants, 3x on recurring software and 1x on the rest.
- Regular APR:
13.99%-21.99% | See Rates & Fees
- Rewards: 8x on rideshare; 5x on Brex Travel; 4x on restaurants; 3x on recurring software; 1x on the rest
- Welcome Bonus: 10,000 points when you spend $1000 and another 10,000 when you spend $3000 in the first 3 months
- Level up for higher limits
- No deposit
- Helps build business credit
- Rewards may not benefit your business
16.99%
The Capital One Spark Business Classic card is a good place to go when you want to earn unlimited rewards. The card collects 1% rewards on all purchases, and it even offers you 5% on U.S. hotels and travel when booked through Capital One Travel.
- Annual Fee: $0
- Regular APR:
16.99%
- Rewards: 1% unlimited rewards; 5% cash back on U.S. hotels and rental cars booked through Capital One Travel
- Unlimited 1% rewards on shopping
- 5% on travel
- No annual fee
- Must book travel through Capital One Travel to earn rewards
One approach that can help you streamline cash flow, at least during that initial phase while perhaps awaiting the influx of big-money investors, is leveraging startup credit cards. A sound startup credit card can help your business save money (through cash backs, reward points and perks), build a strong business credit history and turbocharge your startup purchasing power, enabling it to expand and thrive.
The right mix of startup business credit cards helps you separate your business and personal finances, which is vital in financial management. It is the ultimate tool entrepreneurs need to enhance financial flexibility in everyday business operations while boosting their bottom line.
However, with so many great options available, choosing the right credit cards that align with your startup’s core financial needs and objectives can be challenging. The good news is that there’s always a credit card category that meets your goals. Whether it’s earning travel rewards and cash back or building your startup credit history, you needn’t worry.
Benzinga compiled some of the best startup credit cards in different categories to help you make a more informed choice. This page will also give you insight into the key features to consider before applying for a startup credit card, how to improve your credit score and get your credit card application approved.
Best Overall: American Express Blue Business Cash™ Card
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14.74% – 22.74% Variable | See Rates & Fees
The American Express Blue Business Cash™ Card offers no annual fee and 2% cash back on all eligible purchases up to $50,000 and 1% after that. With a 0% intro APR and affordable rates thereafter, this card helps your business get its footing and manage spending.
- Annual Fee: $0
- Regular APR:
14.74% – 22.74% Variable | See Rates & Fees
- Intro APR: 0% on purchases for 12 months
- Rewards: 2% cash back on all eligible purchases up to $50,000 and 1% on all other purchases
- No annual fee
- 0% intro APR
- Need good – excellent credit
- Caps on bonus
With its virtually limitless credit limit, great introductory APR discount and other business-conscious perks, the American Express Blue Business Cash™ is undoubtedly the best overall credit card for your startup. To bring you on board, you’re awarded a $250 statement credit for the first $3,000 spent within the first three months starting from the day your card gets approved. You’re also eligible for a 12-month zero-fee introductory APR offer in the first year of usage.
However, its best offer is probably the cashback rate, a robust 2% cash back on every business purchase capped at $50,000 per annum. Once you reach the cap, you earn 1% cash back on all purchases. Furthermore, the American Express Blue Business Cash™ allows you to spend reasonably above your credit limit without over-the-limit fees. However, the extra spending allowance is not unlimited. Instead, it is determined by factors like your card usage, credit record and payment history.
Understandably, expanded buying power can help turbocharge your startup supplies. Nevertheless, it would be best to be mindful of how you use it to avoid racking up interest charges. Employee cards are offered at no additional costs, and you can set the spending limit. Extra perks include purchase protection, car rental insurance and extended warranty coverage, which is great if you travel a lot. The major drawback, though, is the 2.7% foreign expense fee. The American Express Blue Business Cash™ integrates with Quickbook and Bill.com to help you streamline expense management and payment.
Best for Unlimited and Flat-Rate Cash Back: Capital One Spark Cash Plus
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2.99% monthly late fee when you default on your balance
The Capital One Spark Cash Plus card allows businesses to collect an unlimited 2% cashback on all purchases, up to $1000 cash back as a welcome bonus and all for a low annual fee of $150. With no APR and low fees, you can help your business get some money back as you manage expenses while also enjoying the customer support Capital One provides. Keep in mind, however, you must pay off your balance each month to avoid interest.
- Annual Fee: $150
- Regular APR:
2.99% monthly late fee when you default on your balance
- Rewards: Cashback bonus: Unlimited 25% cash back for every purchase, anywhere, no restrictions; $200 flat annual cashback each year your business spends at least $200,000
- Welcome Bonus: Up to $1,000 cashback
- Unlimited cash back accrual without any restrictions
- 0% foreign transaction fee
- No APR or credit limit
- Rewards don’t expire
- Relatively high annual fee
- Annual cash back may be unrealizable for small businesses
- Charge card may not be the best option for startups trying to strengthen credit score
- No reward in select categories
- Mandatory monthly balance repayment
The Capital One Spark Cash Plus is an excellent fit for startups with high- to moderate annual expenditures that don’t fall into bonus categories from other business cards. If your startup averages at least $59,500 in expenses, then the Capital One Spark Cash Plus is the way to go. It offers an unlimited 2% cash back reward for every purchase without a spending cap or any other restrictions. The card has no preset credit limit. Instead, it self-adjusts your spending allowance by adapting your credit needs based on your payment history, spending behavior and credit profile.
As a welcome bonus, you are eligible for up to $1,000 cashback — $500 for the first $5,000 spent within the first three months and another $500 for the first $50,000 spent within the first six months. However, that’s not all. You’re also eligible for flat annual cashback bonus of $200 each year your business spends at least $200,000. Furthermore, the card offers unlimited 5% cash back on every rental car and hotel you book through Capital One Travel.
Employee cards can also be added for free, allowing you to earn unlimited 2% cashback on their transactions. The Capital One Spark Cash Plus has no APR because cardholders are expected to pay off their total balance monthly. Other perks include zero liability if your card is lost or stolen; and integration with Quicken®, QuickBooks® and Excel®, allowing you to download your purchase record into multiple formats. The major drawback is its high annual fee. However, its juicy offers more than compensate for that.
Best for Bonus Cashback Categories: Ink Business Cash® Card
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16.24% – 21.24% | See Rates & Fees
The Ink Business Preferred® Credit Card is an excellent choice for frequent travelers who want to collect points as they hop around the country or around the globe. With an affordable annual fee and reasonable rates, you can earn 3X the points on your combined purchase limit and an addition 100,000 points if you spend $15,000 in the first 3 months you own the card.
- Annual Fee: $95
- Regular APR:
16.24% – 21.24% | See Rates & Fees
- Rewards: 3X points on combined purchase limit ($150,000 on travel and select business categories annually)
- Welcome Bonus: Purchase $15,000 in the first three months and earn 100,000 points
- Low annual fee
- Low minimum credit lines
- Solid anniversary gift
- High welcome bonus threshold
The Ink Business Cash® Credit Card and the Capital One Spark Cash Plus are different sides of the same coin. While the latter offers generous rewards for broad purchases, Ink Business cash offers cashback bonuses for specific categories of expenditures. The implication is that startups with business-oriented expenses in the particular categories enjoy more regular cash back than others. Nevertheless, the credit card offers an attractive signup bonus and impressive cashback rates, making it a natural choice for startups looking to maximize earnings. You’ll also favor this card’s 0% intro APR if you need extended time to pay off business expenses without chalking up interest.
As a new cardholder, you’re eligible for $750 cash back for the first $7,500 spent within the first three months. A great offer considering you don’t pay annual fees. However, that’s just the welcome bonus. The cashback rates across expense categories are also excellent. These rewards include 5% cash back on the first $25,000 you spent on office supply stores, phone services, cables and internet another 2% cash back on the first $25,000 spent on gas stations and restaurants each account anniversary year. Subsequently, you earn 1% on all other purchases.
Additional perks include auto insurance coverage, purchase protection and fraud protection. You’re not liable for unauthorized usage or access to your account. Ink Business Cash® Credit Card also offers employees cards at no additional cost and allows you to set spending limits accordingly.
Best Corporate Card for Startups: Brex Card
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13.99%-21.99% | See Rates & Fees
The Brex card is designed to help businesses build credit. You can level up your limits with regular payments, establish credit for your company and enjoy several types of rewards, including 8x on rideshare, 5x on Brex Travel, 4x on restaurants, 3x on recurring software and 1x on the rest.
- Regular APR:
13.99%-21.99% | See Rates & Fees
- Rewards: 8x on rideshare; 5x on Brex Travel; 4x on restaurants; 3x on recurring software; 1x on the rest
- Welcome Bonus: 10,000 points when you spend $1000 and another 10,000 when you spend $3000 in the first 3 months
- Level up for higher limits
- No deposit
- Helps build business credit
- Rewards may not benefit your business
The Brex Card is the best credit card for corporate use. Unlike other credit cards, Brex doesn’t require a personal guarantee of debt repayment. Instead, It evaluates a company’s cash balance, investors and expenditure patterns to determine creditworthiness. Therefore, Brex separates the individual entity (or business owners) from the corporate entity, the business itself.
New cardholders can earn 10,000 points on the first $1,000 spent and another 10,000 points on the first $3,000 within the first three months. Linking your business payroll to your Brex account within the first three months also makes you eligible for a 20,000-point bonus. To qualify for Brex, startups need a minimum bank balance of $50,000 from professional investors and $100,000 if self-funded.
Outside the welcome bonus, cardholders can earn multiplier bonus points on their expenses; 4x on Brex Travel, 7x on a rideshare, 2x on software subscriptions, 3x on restaurants and 1x on all other transactions. Again, you’re eligible for 3x Brex bonus points on all eligible Apple purchases initiated through your Brex dashboard link.
Other perks are reduced cost of business and personal travel through redeemable Brex points for miles, which grant you access to major global airline alliances like Star Alliance. You’re also eligible for over $150,000 worth of perks by leveraging Brex partner products. These include $100,000 through AWS activate, 50% off your annual Gusto plan, $150 in Google Ads credit, $10,000 worth of credit on Freshworks product suites and many other discount offers. Brex card integrates with virtually all possible productivity and accounting software (over 1,000 apps). Additionally, it also offers fraud protection with zero liabilities.
Best for Building Fast Credit Score: Capital One Spark Business Classic
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14.74% – 22.74% Variable | See Rates & Fees
The American Express Blue Business Cash™ Card offers no annual fee and 2% cash back on all eligible purchases up to $50,000 and 1% after that. With a 0% intro APR and affordable rates thereafter, this card helps your business get its footing and manage spending.
- Annual Fee: $0
- Regular APR:
14.74% – 22.74% Variable | See Rates & Fees
- Intro APR: 0% on purchases for 12 months
- Rewards: 2% cash back on all eligible purchases up to $50,000 and 1% on all other purchases
- No annual fee
- 0% intro APR
- Need good – excellent credit
- Caps on bonus
16.99%
The Capital One Spark Business Classic card is a good place to go when you want to earn unlimited rewards. The card collects 1% rewards on all purchases, and it even offers you 5% on U.S. hotels and travel when booked through Capital One Travel.
- Annual Fee: $0
- Regular APR:
16.99%
- Rewards: 1% unlimited rewards; 5% cash back on U.S. hotels and rental cars booked through Capital One Travel
- Unlimited 1% rewards on shopping
- 5% on travel
- No annual fee
- Must book travel through Capital One Travel to earn rewards
With Capital One Spark Classic, you won’t get a welcome bonus or added perks. The credit card substitutes the lack of abundant reward offerings with its low credit requirements. It is an excellent option for startups looking to get quality credit services with average credit scores thereby using it to build a credit score. The card is available to business owners with a fair credit score (between 630 and 689) with limited options.
There is no welcome bonus for new cardholders. However, cardholders can earn unlimited 1% cash back for any purchase without any limits or restrictions. Furthermore, you’re eligible for 5% cash back on rental cars and hotels booked via Capital One Travel. You can also add employee cards for free and earn unlimited cash back rewards from their spending. It is one of the few credit cards whose bonus awards don’t expire, provided your account is active. However, the credit card charges a high APR.
Features to Look for in Best Credit Cards for Startups
Choosing a suitable credit card for your startup is one of the essential steps towards its financial sustainability. Here are some features to consider while shopping for your startup credit card.
Annual percentage rate (APR)
The annual percentage rate (APR) is the amount your credit card issuer charges for its credit services. It is the sum you pay to borrow credit on the card. A credit card with many perks but a high APR when you need to carry a balance is counterproductive. The reason is that long term, the amount you pay interest will likely exceed your rewards. You should prioritize credit cards with moderate to low rates if you want to stay afloat. The lower, the better.
Rewards and benefits
The credit industry is a highly saturated and competitive space, with each new credit issuer trying to outdo the other. With different companies comes different benefits, rewards or perks. While some offer cash back, others offer a signup bonus and additional cash back. Others offer a signup bonus, cash back, travel rewards and other additional benefits. Do your due diligence to compare each based on unique features that align with your business interests and then make a choice.
Minimum repayment and balance repayment
The minimum repayment is the minimum amount you are required to pay given you aren’t able to settle your card’s balance for that particular month. Your startup credit card should have a low minimum repayment.
You might also want to consider the balance repayment rules of the card and factor them in. Some credit issuers will require you to pay all your balance monthly before you can use credit again. Depending on your business operations and finances, you can choose whether or not to patronize such credit companies.
Personal guarantee
Many business credit cards in the market require a personal guarantee, which basically states that you’re personally liable and will cover the unpaid debt in the credit card should your business fail. On the face of it, this requirement looks reasonable enough. However, considering your business isn’t established yet, it is risky. So it’d be best to look out for cards that don’t require a personal guarantee. Thankfully, a few new startup business credit cards in the market don’t need personal guarantees. The qualification criteria for such cards, though, are stricter.
Financial integration
Finance and accounting integration is one of the newest perks in the startup business credit card space. Startup credit cards with this feature offer a robust cash management platform that integrates seamlessly with existing payment or financial software like Quickbook, Bill.com and others. This feature can fast-track automation of certain bookkeeping operations and expense management and enable faster payment processing. Therefore, prioritize cards that offer financial and accounting integration when shopping for a suitable startup business credit card.
How to get approved for a credit card
Applying for a credit card doesn’t mean you’ll automatically get it. Companies have established criteria they use to assess whether an applicant is worthy of a card. Nevertheless, you can boost your chance of success by leveraging the following hacks.
Good spending habits
As inconsequential as it might seem, good spending habits could be the difference between your application approval or rejection. Your spending habits tell a story about yourself. A good spending habit tells your potential credit vendor that you prioritize essential spending and can be trusted to fulfill your credit obligations on time.
Good credit history (credit score)
An essential requirement for a successful application is good credit history. A good credit history tells the issuer that you pay your bills in a timely manner without accumulating debt. Aside from helping your application, it can also help you get a better loan deal at a lower interest rate. So pay attention to your credit history and what your credit score says. Chances are it’ll be the critical determinant of your credit approval or rejection.
Build your credit
Suppose you don’t have a substantial credit history for your credit application or your credit score is below the issuers’ minimum requirements. In that case, you need to build your credit from the ground up.
Numerous tools are available that’ll help you build your credit. A good instance is the secured credit card option that allows you to back your credit limit with your cash. You can also consider taking a credit-builder or secured loan.
How you can Improve Your Credit Score
Your credit score is central to almost all financial leverages available to you. Therefore you need to guard against a poor credit score. But how? Let’s take a quick look at some tactics you can adopt to improve your credit score.
Pay your debts
Your credit score is an aggregated calculation of your financial situation, with your debts and income as key inputs. Imagine your income and debts as two different components being measured on a weighing scale. A decrease in debt will naturally cause a rise in the income part of the scale. A lower debt increases your credit score. The lower your debts, the better. Try as much as possible to timely pay off your debts.
Set up automatic bill payment
Other than your credit card balances, your monthly bills and payables are other factors that could hurt your credit score. Late bill payment or skipping payments is a big no-no for your credit score. A simple yet effective way to avoid this is by setting up automatic bill payments. When you put your bill payment on autopilot, you won’t have to worry about late or skipped payments. The bills are settled directly out of your bank account.
Use a secured credit card
Security or secured credit card is a credit card that uses your deposit as credit. For example, if you deposit $100, then your credit limit is $100. On your credit report, this will translate to early payment of balances and no defaults. It is an excellent way to build your credit and improve your credit score.
Frequently Asked Questions
What is the benchmark credit score needed to get a startup credit card?
There is no benchmark regarding the credit score required for a successful credit card application. However, as a rule of thumb, a FICO score of 670 or higher is acceptable. It will almost certainly qualify you for most credit cards.
Is it possible to get a startup credit card with a bad credit score?
You can get a startup business credit card with a bad credit score. However, you’ll have to choose between a secured business credit card or one of the few unsecured business credit cards offered to people with bad credit.
Is credit card cash back taxable?
No, credit card cash back is not taxable. It’s considered rebates and not income. Hence they are not taxable.
The post Best Credit Cards for Startups by Chika Uchendu appeared first on Benzinga. Visit Benzinga to get more great content like this.
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