Business credit vs. charge cards – Which is right for you?
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There are a number of different American Express credit cards that offer fantastic rewards and great perks, especially for small-business owners. We often talk about how more people qualify for a business credit card than you might think — so keep reading even if you don’t own your own business.
Let’s take a look at the differences between business credit cards and business charge cards, and the specific advantages of each.
What is a charge card?
The next time you consider one of the best business credit cards, keep in mind that some of them may, in fact, be charge cards as opposed to credit cards.
Major differences between charge cards and credit cards
Credit cards allow you to pay off your balance over a number of months with a required minimum payment, whereas charge cards require that you pay your balance off in full every month — you can’t carry a balance and you are required to pay the full amount that you spent on the card after each statement closes.
If you don’t make the required payment (full amount on charge cards, required minimum payment on credit cards), you will be subject to a late fee with both card types and interest will accrue on your credit balances. For this reason, we always recommend that you pay your entire balance off every month, regardless of which card type you have. Otherwise, any fees or interest will negate the value of the rewards you earn.
All credit cards have an APR (Annual Percentage Rate), which is more commonly referred to as the card’s interest rate. This is the rate at which any balance you carry from one month to the next will be charged interest.
In comparison, there’s no APR on a charge card. You can’t pay a portion of your bill and carry the remaining balance (with interest) over to the next month’s bill. If you don’t pay your full balance off every month, the issuer will charge a late fee and you may not be permitted to make any additional purchases until your past-due amount is paid off.
Credit score requirements
Charge cards are unique in that they’re typically reserved for people with excellent credit. Since charge cards allow for large purchases without a credit limit, issuers want to make sure that charge card holders are creditworthy and have the financial resources to pay off their bills each month.
In contrast, issuers offer credit cards to those with varying levels of credit. There are credit cards for those with little to no credit history and those who’re working to improve their score, and also credit cards (like the top travel rewards cards) for those with years of solid credit history.
While there are a number of no-annual-fee credit cards, a charge card will almost always come with an annual fee. Charge cards are meant to be paid in full each month, so charge card issuers don’t earn revenue from interest on those cards — an area where credit card companies make most of their money. For this reason, charge cards implement annual fees to help turn a profit.
If the idea of paying an annual fee is a turnoff, don’t disregard charge cards just yet. Remember the benefits you can receive from a card (especially the top travel rewards cards) often can outweigh the cost of the annual fee.
Credit cards offer a set spending limit, while charge cards do not have a pre-set limit. Upon approval for a business credit card, the bank or issuing company will typically inform you of the prescribed limit, such as a $5,000.
Business charge cards, on the other hand, have no predetermined limit. This means that purchases will be approved up to a variable limit, and this limit can change over time. This can be a great benefit to business owners who are trying to grow their business and need flexibility in the amount they can charge each month.
American Express is the main financial institution currently offering business charge cards. The other big issuers, like Chase, Citi and Bank of America only offer business credit cards.
Best business charge cards
If you’re sold on business charge cards, here’s a look at a few of our favorites. I’ve included links to our full reviews, but this high-level synopsis should give you a taste of the best business charge cards on the market.
The Business Platinum Card® from American Express is the creme de la creme of business charge cards, being by far the most rewarding. We talk about it often around here, but I love this card (despite it’s $595 annual fee; see rates and fees) for its increased earning on large purchases and a 35% points rebate when redeeming membership rewards for travel (up to 500,000 additional points per calendar year). Here’s our review of the Amex Business Platinum card.
Business Green Rewards Card from American Express
Being the entry-level product in the company’s line of charge cards, the Amex Business Green card doesn’t offer any premium perks or benefits, but it can still be plenty useful. That’s because it flexible Membership Rewards points which can be redeemed for travel through the Amex travel portal or transferred to any Amex travel partner. And with it, you can earn a welcome bonus of 15,000 Membership Rewards points after you spend $3,000 on eligible purchases in the first three months of account opening. You’ll find our review of the Amex Business Green card here.
The information for the Amex Business Green has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.
Best business credit cards
If you’re not sold on business charge cards, here are a few of our favorite business credit cards that are currently available.
My favorite overall business credit card is the Chase Ink Business Preferred card due it’s massive sign up bonus (currently at up to 100,000 Chase Ultimate Rewards points after spending $15,000 on purchases in the first three months of account opening), powerful ongoing earning in certain categories and valuable rewards program. View our full review of the Chase Ink Business Preferred.
If you prefer to collect airline miles, the CitiBusiness AAdvantage Platinum Select card is a great option with a large sign-up bonus — enough to take you almost anywhere in the whole world. You can earn 65,000 American Airlines miles after spending $4,000 on purchases within the first four months after account opening. This card also has a relatively low $99 annual fee that is waived for your first year. Here’s our review of the CitiBusiness AAdvantage Platinum card.
The information for the CitiBusiness AAdvantage Platinum card has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.
The Capital One Spark cash card offers another large signup bonus where you can earn $500 cash back after spending $4,500 within the first three months of account opening. That’s in addition to the card’s ongoing earning rate of 2% back on all purchases. Read our full review of the Spark Cash for Business.
Which card is best for your business?
Depending on your business needs and spending habits, you can determine whether a business credit card or business charge card is the best fit for you. I would consider things like how much you plan to spend, what level of available credit you want, and whether certain types of rewards or cash back are most valuable for you.
For business spending, significant amounts and who value purchase protection, earning rewards, and added benefits, the Amex Business Platinum card represents a fantastic option. If you have fewer expenses but want to maximize your rewards, I recommend the Chase Ink Business Preferred credit card.
Let us know in the comments if you have specific questions and we’ll try to chime in.
Many folks may not even know that business charge cards exist because they only slightly differ from the business credit cards most of us are used to. With that in mind, there are some unique differences that make business charge cards a great option for businesses wanting extra spending power — but which don’t mind paying the bill in full each month.
Keep in mind that charge card applications may be more carefully reviewed. Here are our tips on how to get a business credit (or charge) card.
What business cards do you keep in your wallet?
For rates and fees of the Amex Business Platinum card, click here.
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