How to use a business credit card to manage expenses and save
How to use a business credit card to manage expenses and save
Running a business means juggling expenses, receipts, and cash flow on top of everything else. A business credit card can make that easier. It helps you cover everyday costs, separate business from personal spending, and even build your company’s credit history.
Ramp explains how to use a business credit card the right way to boost your buying power, simplify bookkeeping, and unlock valuable rewards while helping you avoid common pitfalls.
What is a business credit card and how does it work?
A business credit card works like a personal credit card, but it's designed for company spending — things like vendor payments, software subscriptions, equipment, and travel. You charge purchases, receive a monthly statement, and pay the balance by the due date.
The key differences from personal cards: Business cards typically offer higher credit limits and rewards in categories such as advertising, travel, and shipping. The best business credit cards also include built-in spend controls and expense management tools that give you visibility into team spending. You'll find options tailored to different structures, including business credit cards for LLCs, partnerships, startups, and corporations. Issuers report your activity to business credit bureaus, so responsible use builds your company's credit profile over time.
It's worth noting that business credit cards carry fewer federal consumer protections than personal cards. The CARD Act's restrictions on rate increases and fee disclosures, for example, don't fully apply. That makes reading the fine print even more important.
Most cards let you add employee cards and track spending across your team. Small business owners, finance managers, and growing teams use them to cleanly separate personal and company expenses.
How to qualify for a business credit card
Issuers typically check your personal credit score first. Requirements vary by card, but a score of 670 or above generally qualifies you for a standard card, while 740 or higher opens the door to the best rates and terms. If your score falls below that range, a secured business card — which requires a cash deposit — may be your starting point.
Lenders also weigh business revenue, years in operation, and your bank balances. Building credit through vendor accounts or responsible borrowing improves your odds.
Expect to provide documents like tax returns, bank statements, licenses, and financial projections when you apply.
How card payments and interest work
When you carry a balance on your business credit card, you must make at least a minimum payment every month. To avoid interest, pay the full statement balance whenever possible. Business card rates often run higher than personal credit card interest rates.
Most issuers give you a 21-day grace period on new purchases. If you miss a payment, you’ll face late fees and higher costs. Setting up automatic payments helps ensure you don’t miss a due date.
Tax implications of a business credit card
Tax rules around business credit cards can be nuanced, so it's worth confirming your approach with a tax professional and reviewing IRS guidelines on deductible expenses. That said, in most cases, many business expenses you charge to your card are deductible, including business credit card interest and annual fees.
Accurate record-keeping is essential: save receipts, invoices, and statements for every purchase. To streamline bookkeeping and tax prep, pay your card from a dedicated business bank account. Mixing personal and business charges can create problems during tax season and draw IRS scrutiny.
What can I use my business credit card for?
Business credit cards give you flexibility to cover essential costs while keeping expenses separate from your personal spending. Here are the most common uses:
Common business expenses
You can use a business credit card for everyday operations, including:
- Office supplies and subscriptions
- Travel costs like flights, hotels, and rental cars
- Equipment such as computers, furniture, and software
- Inventory purchases for resale
- Employee expenses like client meals or reimbursements
Building business credit
Using your card responsibly helps you strengthen your company’s financial profile:
- Establish credit history by making regular, on-time payments
- Qualify for loans with a stronger credit score and positive payment history
Rewards and benefits
Most cards offer perks that put money back into your business:
- Cashback or points you can redeem for travel, statement credits, or gift cards
- Travel perks such as insurance or airport lounge access
- Purchase protection to cover damage or theft on eligible items
Step-by-step: How to use a business credit card responsibly
Using a business credit card wisely comes down to a few simple but powerful habits. Follow these steps to stay organized, protect your finances, and maximize your benefits:
1. Determine who gets a card
Decide whether only owners and executives receive cards, or if managers and employees also need them. The fewer cardholders you have, the easier it is to track spending and limit the risk of misuse.
2. Set employee card spending limits
Most issuers let you assign individual limits or block certain categories. Set limits to keep employees within budget, prevent overspending, and reduce the chance of business credit card fraud.
Go a step further with policy and oversight: publish a short expense policy (what’s allowed, receipt rules, approval thresholds), enable real-time alerts for large or out-of-policy spends, and review a monthly report to spot patterns or misuse. Lock, lower, or revoke cards when needed to enforce the policy.
3. Track all expenses diligently
Require receipts for every transaction. Use your card’s built-in expense management features or connect it with accounting software. These tools simplify reconciliation, prepare you for tax season, and give you a clear view of where your money goes.
4. Pay on time and in full
Missing payments or carrying high balances damages both business and personal credit. Automate payments if you can, and aim to pay the statement balance in full each month. Doing so avoids interest charges and strengthens your credit history.
5. Spend responsibly
High credit utilization — using too much of your available credit — can lower your score. Aim to keep balances below 30% of your limit. Regularly maxing out your card signals risk to lenders and may lead to lower limits or denied applications.
6. Monitor credit card statements and rewards
Check your statements monthly to catch errors, unauthorized charges, or fraud. If you spot an unfamiliar transaction, contact your issuer immediately — most cards offer zero-liability protection on unauthorized purchases, but you typically need to report the charge within 60 days. Set up transaction alerts so unusual activity gets flagged in real time rather than at the month's end.
Track your rewards alongside your statements and redeem them before they expire to offset business costs.
Pros and cons of business credit cards
Business credit cards are a great way to separate your business finances, earn rewards on your purchases, and build business credit. Despite this, there are both advantages and disadvantages you should consider.
Key advantages
- Reward programs: Earn cashback, statement credits, or travel points on eligible purchases
- Build business credit: Strengthen your company’s credit score, making it easier to qualify for loans and increase your credit limit
- Improve cash flow: Spread out large purchases without straining immediate cash reserves
- Simplify expense tracking: Card statements provide a clear overview for bookkeeping and taxes
- Fraud protection: Most cards include safeguards against unauthorized transactions
Common drawbacks
Some disadvantages of using a business credit card include:
- Annual fees: Some cards charge yearly fees that may outweigh the benefits
- High interest rates: Carrying a balance or paying late quickly increases costs
- Temptation to overspend: Easy access to credit can lead to poor budgeting
- Personal credit risk: Many cards are tied to personal credit, so mismanagement can damage both personal and business scores
Tips to maximize your business credit card
Follow these practices to get the most value from your business credit card while keeping finances under control.
Don’t mix personal and business expenses
Using your card for both business and personal expenses creates accounting headaches and potential tax issues. It can also violate your card agreement. Keep purchases separate to maintain clean records and limit liability.
Read the fine print on introductory offers
Issuers often promote 0% APRs or sign-up bonuses. These perks can help, but they come with conditions. For example, if you finance a large purchase with a 0% APR offer and don’t pay it off in time, the interest rate may spike. Used carefully, no-interest business credit cards can provide short-term flexibility without adding borrowing costs.
Optimize your benefits and rewards
Many cards offer higher rewards in specific categories like travel or dining. Others provide flat-rate cashback on every purchase. Choose a card that matches your spending patterns so you earn without overspending.
Make use of virtual cards
A virtual credit card generates a unique number linked to your main account. You can issue unlimited cards, assign them to specific vendors or employees, and lock or delete them instantly without affecting your primary account.
For example, you might create a dedicated virtual card for each SaaS subscription your team uses. If you cancel a service, you can shut off that card number immediately — no risk of lingering charges. If a vendor's payment system is compromised, only that one card number is exposed. This level of control makes virtual cards one of the more practical fraud-prevention tools available.
This story was produced by Ramp and reviewed and distributed by Stacker.
