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Are you a big spender who wants to make the most of your business purchases? You might want to choose a business charge card. It’s one of the best ways to maximize rewards and perks for benefit seekers.
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? So there are downsides to going big. If you’ve been wanting to know why you might choose a business charge card for your spending, we’ll help. Especially if you’re looking to get the most out of the dollars you put into your business, this should be everything you need for figuring 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 are very similar to business credit cards. Both let you make purchases without debiting the money directly from your bank account, and both can offer great rewards and travel perks.
The main difference between charge and credit cards: When your balance comes due at the end of the month, you can pay off your credit card balance over time (though you’ll accrue interest on the unpaid balance), while you’re expected to pay a charge card balance in full every month.
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.
Charge cards, on the other hand, impose stiff penalties if you don’t pay your balance in full every month. The American Express Business Platinum, for example, charges a $38 late fee no matter how much of your balance remains unpaid. On a $500 balance, that late fee is equivalent to an APR of 140%.
Much less friendly.
Although there are a few programs to help lessen this APR (Amex’s Pay Over Time, for instance, which we’ll get to 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!
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If after all of the that, you still think you’re a good candidate for business charge cards, great. Let’s keep going. There are three distinct advantages to choosing a business charge card:
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.
Because charge cards have no preset spending limit, it’s often harder to qualify for one than a standard business credit card. If your business is just starting out, or if you or your business doesn’t have great credit, you might want to go with a credit card—or have to out of necessity.
The Business Platinum Charge Card from American Express is one of the best-known luxury cards.
First, this charge card offers a signup bonus of up to 100,000 Membership Rewards points— 50,000 when you spend $10,000 and an extra 50,000 points when you spend an additional $15,000 in the first three months.
As for ongoing rewards, you’ll get 5 points per $1 spent on flights and prepaid hotels booked through Amex’s travel portal; 1.5 points per $1 on purchases of $5,000 or more; and 1 point per $1 spent elsewhere. Plus, you’ll get 35% of your points back (up to 500,000 bonus points per calendar year) when you redeem for any flight on your chosen airline, or for a first- or business-class flight on any other airline.
The card also offers an extensive suite of perks, including an annual $200 airline fee credit, access to Amex’s network of over 2,000 airport lounges, a credit for Global Entry or TSA Precheck, no foreign transaction fee, and automatic Starwood Preferred Guest Gold Elite status.
The card’s annual fee is quite steep at $595 a year, but the $200 airline fee credit, lounge access, and bonus points go a long way toward offsetting the charge. Frequent business travelers and big spenders can’t go wrong with the Amex Business Platinum.
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 certainly 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. Which is substantial if you spend a lot for your business.
And you know 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 these two American Express options, 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.
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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.
Now, go forth and choose!