12 Business Credit Card Statistics

Written on August 17, 2021

Overview: Business Credit Card Statistics

  1. 67% of business owners have a business credit card.
  2. 7% of small business owners use a business credit card as a means of startup capital.
  3. 37% of millennial startup founders use business credit cards for startup capital.
  4. 30% of small business owners seek credit cards as a means of investment capital.
  5. 45% of small business owners do not know they have a business credit score.
  6. Small business owners who know their business credit scores are 41% more likely to be approved for a bank loan.
  7. One-third of business owners who use credit cards for business financing don’t know how much their debt will really cost.
  8. 20% of business credit card issuers unfairly allocate payments.
  9. Only 40% of issuers wait until a cardholder is more than 60 days delinquent to raise rates on existing balances.
  10. 20% of business card issuers do not give 45 days’ notice to cardholders before changing key account terms.
  11. 67% of card issuers report business card activity to customers’ personal credit reports.
  12. Business card APR rates are about 2% less on average than general-purpose cards.

Getting the financing you need to start a business is hard. Securing additional investment when you’re ready to grow is even harder. Many business owners turn to business loans, but some don’t have the resume to entice a bank. As such, business credit cards are a promising capital solution for small business owners.

Whether you’re looking to grow your business quickly, score some rewards, earn travel points, or just have a resource for emergencies, business credit cards can be a big asset for your business. But getting a business credit card is not entirely without risk, whether you’re a brand new business or you’ve been around for a while.

Here, we’ll explore some of the most important statistics that define the business credit card industry today to help you better understand how it works and whether a business credit card may be right for you.

General Business Credit Card Statistics

1. 67% of business owners have a business credit card.

Although two-thirds of business owners have a business credit card, only 24% of them use it as a primary method of business spending. That helps explain why there is just $50 billion in outstanding debt on business credit cards. That’s less than 8% of all outstanding debt on general-purpose cards. [1][2]

How Business Owners Use Business Credit Cards

2. 7% of small business owners use a business credit card as a means of startup capital.

When it comes to startup capital, 7% of small business owners use business credit cards, 13% use personal credit cards, 11% use personal assets, and 12% seek business loans. [3]

3. 37% of millennial startup founders use business credit cards for startup capital.

While just 7% of all business owners use business credit cards for startup capital, millennial founders are far more likely to do so. This suggests that the business credit card market will only grow as millennials make up a larger percentage of small business owners. [4]

4. 30% of small business owners seek credit cards as a means of investment capital.

More small business owners are likely to use business credit cards as a growth driver rather than startup capital. 89 percent of small business owners seek loans or lines of credit to grow, but business credit cards are the second choice. [5]

Problems with Business Credit Cards

5. 45% of small business owners do not know they have a business credit score.

Nearly half of all business owners don’t realize that they have both a business credit score and a personal credit score. According to the report from Nav, 72% of business owners don’t know where to find their business credit score and 82% don’t understand how to interpret their score. [6]

6. Small business owners who know their business credit scores are 41% more likely to be approved for a bank loan.

Everyone should know their credit score. But it’s especially important for business owners to know their business credit scores because, if they don’t know it or don’t understand how it is calculated, they are much more likely not to be approved for a loan. [6]

7. One-third of business owners who use credit cards for business financing don’t know how much their debt will really cost.

Unfortunately, small business owners are still subject to arbitrary increases in the cost of debt. With a consumer card, credit card companies must wait until payment is at least 60 days delinquent to raise the interest rate on an existing balance. Business credit cards don’t have the same protection, so business owners often experience practically random interest rate hikes, making it exceedingly difficult to know exactly what they’ll pay in interest on the debt. [7]

8. 20% of business credit card issuers unfairly allocate payments.

According to a WalletHub study, 20% of business credit card issuers do not apply payments above the minimum required to account balances with the highest interest rate. This results in business owners paying higher amounts on high-interest accounts for longer, rather than paying down the principal on the highest interest-rate accounts whenever they make a payment above the minimum. [8]

9. Only 40% of issuers wait until a cardholder is more than 60 days delinquent to raise rates on existing balances.

Echoing the earlier point that many small business owners don’t know what they’ll ultimately pay for credit, 40% of business credit card issuers practice these almost arbitrary rate hikes. [8]

10. 20% of business card issuers do not give 45 days’ notice to cardholders before changing key account terms.

Even further emphasizing the issues with business credit cards, a fifth of issuers change key account terms without proper notice. All of this is to say: Do your research before getting a card. [8]

11. 67% of card issuers report business card activity to customers’ personal credit reports.

Finally, most business card issuers will report to customers’ personal credit reports. This makes it absolutely crucial that you pay business credit card statement balances on time; otherwise, it may damage your personal credit. Only Bank of America, Barclays, U.S. Bank, Citi, and PNC Bank do not report business credit card activity to personal credit reports. [8]

Business Card Benefits

12. Business card APR rates are about 2% less on average than general-purpose cards.

There is some good news for business credit cardholders! As of October 2020, the national APR average for business cards was about 14%, 2% lower than the average for general-purpose cards. [9]