The Ultimate Guide to Business Charge Cards

Are you a big spender who wants to make the most of your small business purchases? Then you should consider looking into business charge cards. They’re one of the best ways to maximize rewards and perks for benefit seekers like small business owners.

Unlike business credit cards, business charge cards have no preset spending limit and can offer some of the best signup bonuses out there.

But, what goes up must come down, right? There are downsides to going big. If you’ve been wanting to understand the pros and cons of using a business charge card for small business spending, we’ll help. If you’re looking to get the most out of the dollars you put into your business, this article should have everything you need to figure out if you should get a business charge card for your small business, and which is the best business charge card for you.

Business charge cards let you make purchases without debiting the money directly from your business bank account. They also come with great perks, like travel rewards or cash back, and fraud protection. However, you must pay off your charge card in full at the end of your repayment period. Note that some business charge cards offer 60-day repayment periods. So this makes charge cards a less-than-ideal solution for long term cash flow. However, they are still a good option for short term cash flow. Business charge cards are also often used to manage employee spending.

Charge cards impose stiff penalties if you don’t pay your balance in full every month.

Although there are a few programs to help lessen this APR (Amex’s Pay Over Time, for instance, which we’ll get into more), the important thing to know is that if you think you’ll carry a balance on your card, you should stick with traditional business credit cards. You can see which ones you qualify for now if you’d like.

Because charge cards have no preset spending limit, it’s often harder to qualify for one than a standard business credit card. Typically, you’ll need a credit score of at least 670 to qualify for business charge cards. If your business is just starting out, or if you or your business doesn’t have great credit, it may be necessary to go with a credit card.

Besides APR and late fees, you should also be aware that business charge cards typically come with an annual fee. This fee differs depending on the card and can be hard for some business owners to stomach.

So, what’s the difference between a charge card and credit card? Though these two terms are sometimes used interchangeably, you can probably already tell that charge cards and credit cards are not the same. In fact, there are multiple differences between charge cards vs. credit cards that can change your cardholder experience significantly. Here are five ways that charge cards differ from credit cards:

As previously mentioned, credit card users who don’t pay their balance off in full at the end of the month know they’ll get hit with paying interest on the balance, but making a minimum monthly payment on time is all that’s required to keep a typical credit card account in good standing. A major difference between a charge card vs. a credit card is that, with a charge card, you’re required to pay the balance off in full each month.

This is an important distinction for small business owners a charge card vs. credit card. With a credit card, if cash flow is tight one month, you do have the option to make just the minimum payment. There’s no option like that with a charge card, though—if you don’t pay off your balance in full, you’ll risk damaging your credit score and face heavy late payment fees.

Late fees on charge card balances can feel pretty painful. But don’t forget that, unlike with a credit card, you’re not supposed to carry a balance at all on a charge card. Instead, you’re meant to pay it off in full at the end of each billing cycle.

American Express, which has the lion’s share of charge cards in the United States, charges $25 the first time you’ve got a late payment on your charge card. This rises to $35 for the next late payment within the following six billing cycles, and then to $35 or 2.99% of the outstanding amount if you’re late with two or more payments in a row.

Compared to American Express’s regular credit cards that come with a late payment fee of the lesser of $25 or your minimum payment amount, charge card late fees are significantly more expensive.

These first two differences highlight just how far apart charge cards and credit cards can be, especially when it comes to when and how you pay off your balances.

Another difference between a charge card vs. a credit card that small business owners should be aware of is that charge cards don’t charge interest.

Yup, you heard that right.

Charge card borrowers have to borrow money interest-free—as long as you pay off the noted balance before your next statement date. This goes hand-in-hand with the charge card rule of not carrying a balance: after all, why set an interest rate for balances you’re not supposed to carry. This feeds from the fundamental difference between charge cards vs. credit cards: Charge cards assume that you will pay you spending off in full every month, and will base most of the card experience off of this assumption.

With credit cards, you can find flexible financing to benefit your payment schedule best. There are 0% APR business credit cards, which let you make a purchase and take several months to pay off your debts interest-free. And there are other low-interest business credit cards that still only charge 10% APR or less. That’s good if you carry a balance. But know that, unlike business charge cards, you will still be charged interest on unpaid credit card balances with a business credit card.

Maybe the most appealing benefit of a charge card over a credit card is that a charge card doesn’t have a spending limit—while a credit card does.

This doesn’t mean you can—or should—swipe that charge card in a spending frenzy. Your lender could always impose some boundaries on your spending. But not having a preset spending limit does let small business owners seize time-limited opportunities that require immediate access to cash.

Instead of waiting for a loan approval, business owners with charge cards can immediately purchase the inventory or supplies they need to complete a large rush job. They then pay off the balance in full at the end of their billing cycle.

With a credit card, you can only spend up to your preset credit card limit, usually determined by your income and credit score. To increase your credit card limit, you’ll need to contact your lender for a limit increase. This could mean re-qualifying by providing up-to-date income verification, plus authorizing a new credit check.

Another difference between a charge card and a credit card: Qualifying for a charge card requires a stronger credit score than you’ll usually need for a credit card, so it might work best for creditworthy borrowers. With no preset limit, the lender wants to minimize their risk of borrowers defaulting—so they’re going to pay particular attention to your credit score.

Once you have a charge card, make sure to stay on top of payments, or else you might find your credit score taking a beating.

Now that you know what business charge cards are (and what they aren’t), let’s provide you with some of the best charge cards for small businesses. All of these charge cards are great for well-qualified business owners who can pay off their balance in full each month:

If you’re certain that you’re not only going to carry a balance, but you’ll likely be able to pay it back early, you might want to think about American Express’s Plum Charge Card. That’s because if you can pay 10 days ahead of schedule, there are big cash-back rewards to be had—1.5% on all of your purchases. That is substantial if you spend a lot for your business.

And remember how we talked about big penalties for charge cards? The Plum is a nice exception to the rule. If you can’t pay your balance in full each month (either ahead of schedule or on time), Amex’s Plum Card will let you take another 60 days to pay off your full balance without interest, late fees, or penalties as long as you hit your minimum due.

It’s unusual, and a nice perk that small business owners might like to consider—great flexibility, especially if you have cash flow that can be slightly unpredictable.

On the other hand, if you’d prefer a business charge card that’s different than the  American Express option, you might consider the Brex Corporate Card. The Brex card does not require a credit check or personal guarantee, however, you must have a U.S. EIN and at least $100,000 in funds in your corporate bank account to qualify.

The Brex corporate card is designed for startups and carries some unique rewards. With this card, you can have unlimited cards (although it will cost $5 per user per month after the first five cards), use your cards in over 200 countries with no foreign transaction fees, and receive access to bookkeeping tools to track your expenses. Moreover, if you’re a Brex Exclusive member—meaning Brex is the exclusive corporate card for your business—you’ll have access to their rewards program which gives you 7x points back on rideshares, 4x points back on travel, 3x points back on restaurants, 2x points back on recurring software, and 1x points back on all other purchases.

Designed to accommodate tech entrepreneurs by providing points for the purchases they make most often, this is one of the most unique reward structures out there. With these reward points, you can redeem them for a statement credit—plus, there’s no limit on the rewards you can earn.

For a limited time, you can even get 30,000 in Brex Rewards points upon signup and waived card fees for life—which has a $300+ value in the first year. You’ll also have access to $50,000+ in rewards from some of the best products and tools for your business (AWS, Google Ads, WeWork, Salesforce, Zoom and many more)⁠—which could prove very useful to your startup.

The one point to keep in mind with this charge card, however, is that you must pay your account balance in full every month. If you fail to pay your balance at the end of each payment period, Brex will cancel your card.

American Express recently introduced Pay Over Time, a program that lets Amex charge cards function more like credit cards. Qualified cardholders can move charges upward of $100 or on eligible travel-related purchases to a separate POT balance, which can be paid off over time. (Hence the name.)

POT balances do accrue interest but cost much less than carrying a balance on a traditional charge card. Keep in mind that not all Amex cardholders can qualify for Pay Over Time, and not all purchases are eligible. But it’s worth the heads up when you’re thinking about all of this business charge card info. And, of course, if you’re looking for an American Express charge card alternative, you can always consider the Brex corporate card.

If, after all of the that, you still think you’re a good candidate for business charge cards, then great. Let’s keep going. There are three distinct advantages to choosing a business charge card, some of which you may have already deduced:

The upside to card issuers not expecting cardholders to carry a balance is that charge cards don’t have a preset spending limit. Credit cards have a maximum balance you can carry at a given time, and some charge over-the-limit fees if you exceed that balance.

Charge cards don’t offer unlimited spending—the card issuer might impose limits based on your credit history, usage, business financials, etc.—but there’s no explicit ceiling.

Large credit card purchases can put a strain on your debt-to-credit ratio, which in turn can damage your credit score. But new scoring models exclude charge card balances from debt-to-credit ratios—and that’s because of that no-preset-spending-limit thing. The models can’t calculate what percentage of your limit you’re using.

If you need to make a big purchase but don’t want to impact your credit score, a business charge card can help.

If you’re making a purchase big enough to impact your credit score, you probably want rewards to go with it. (Or, you should.)

Business charge cards don’t come cheap—annual fees often top $100—but they offer best-in-class perks for business travelers. They do change from card to card, but they’ll quite literally open doors for you, with their access to airport lounges. There’s also fee reimbursement, high-earning rates on points, and more. With all that in mind, premium business charge cards can make big purchases pay off.

Charge cards are a responsible way to manage business finances—if you can afford it. The qualification standards make this form of business financing inaccessible to some. But if you can qualify, you’ll get access to great rewards and never have to worry about credit limits. The only thing left for you to decide is which is the best business charge card for you.