How to Compare Business Credit Cards or Charge Cards

These days there is a wide variety of business Credit and Charge Cards, all offering different benefits, terms, and conditions. Those differences exist for a reason: The characteristics of your company may be better-suited to one business Credit Card’s set of benefits and terms, while the business across the street could be better off with an entirely different approach.

Whether you’re a sole trader or a firm employing 50 people, there probably is a business Credit or Charge Card that will benefit your company. To help business owners make an informed choice, this article offers an overview of what business Credit Cards and Charge Cards are, how to compare them, and how to choose the best one for your company’s needs.

What is a Business Credit Card?

A business Credit Card – or Charge Card, depending on the type – is a payment method that works similarly to personal Credit Cards but is specifically tailored to meet the unique needs of business owners. Once an eligible business is approved for a business Credit Card or Charge Card, they can use the Card to pay for business expenses and then pay them off over the established interest-free period. These Cards also tend to feature benefits that aim to help businesses grow.

Advantages of Business Credit Cards and Charge Cards

Business Credit Cards and Charge Cards offer a variety of benefits for businesses. Here are a few:

• Greater purchasing power: Both business Credit Cards and Charge Cards give business owners greater control over how much Credit they can borrow and lend. Balances can be paid off over an interest-free period, which can offer breathing room during months when cash flow is low.
• Increased transaction visibility: Business Cards make it easy to separate business and personal expenses, view detailed statements and transaction details, and track and manage employee spending.
• Software integration: Business Cards may be equipped to integrate with popular accounting software and solutions, making it easier to consolidate and analyse key financial information in one place.
• Rewards: Many business Credit Cards and Charge Cards offer ways to earn rewards on business purchases. Rewards can usually be redeemed for statement Credits, which can help the company’s bottom line, or for gift Cards, which can be used to reward employees, for example. 

How to Compare Business Credit Cards or Charge Cards

When considering which business Credit Card is best to choose, it’s a good idea to first compare business Credit Cards and Charge Cards in terms of several key Card characteristics and features.

Credit Cards vs. Charge Cards. Business Cards come in two main types: Credit Cards and Charge Cards. A Credit Card has an established Credit limit and allows users to defer a portion of the monthly payment beyond the payment due date, but interest is Charged for doing so. Charge Cards do not have a fixed Credit limit¹, allowing businesses greater cash flow flexibility. However, each statement balance must be paid off in full on or before the due date unless you have the ability to activate a flexible repayment option available on some Charge Cards – see more details below.

• Interest rates. All business Credit Cards incur interest on unpaid balances. Interest is expressed as a percentage per annum (p.a.). It’s a key factor to consider, particularly for companies that expect to carry a Credit Card balance from time to time.
• Interest-free days. Not all Cards offer the same interest free periods. The more interest-free days in a billing cycle, the more time your company has to access to no-cost Credit. Some Cards, such as the American Express® Platinum Business Card, may offer up to 55 days to pay for purchases.²
• Rewards programs. Ensuring the Card’s rewards scheme suits the way your business and employees spend money can help you save on business expenses. For example, some Cards offer bonus points for specific travel-related purchases, other Cards offer points on general spending.
• Benefits. Beyond rewards, many business Credit Cards and Charge Cards offer additional benefits such as travel insurance or airport lounge access, which can help your business save on travel costs while providing a more comfortable experience for employees – or owners – on business trips.
• Expense tracking capabilities. Business management and support features can help streamline financial reporting. Not only can this make it easier to track employee expenses, but some Card issuers offer ways to connect directly to financial management solutions like Quicken.
• Welcome offers. Look for introductory welcome offers for new customers. Though not always available, these offers can help businesses earn extra rewards points as long as the company meets a certain spending threshold within the first few months of Card approval and any other T&Cs as applicable. Similarly, some business Credit Cards might offer interest-free or low-interest introductory periods.
• Annual fees. Business Credit Cards and Charge Cards tend to have an annual fee. So, it’s a good idea to be sure your company will make use of the features and benefits associated with any Card you’re considering.

How to Choose the Best Business Credit Card for Your Needs

To find a business Credit Card or Charge Card that’s best for your company’s needs, it’s important to first consider your unique business situation, from repayment habits to spending requirements. Considering the following questions can help you get a better sense of what type of business Card is best.

How many employees need a Card? Some business Cards offer limits for how many employee Cards can be opened, while others Charge a fee for employee Cards after a certain number of Cards are issued. It’s a good idea to assess how many employees, if any, would need a Card, and what that may cost.

• Are you planning to run a balance on the Card, or pay it off regularly? Choosing a business Credit Card with a lower interest rate can help companies keep interest costs down when cash flow is too low to pay off a statement in full. For businesses that intend to pay off their statement in full, a Charge Card might be a better choice, especially when considering the financial flexibility of no pre-set spending limit.¹
• Do you have any expensive purchases coming up? Some business Credit Cards offer a low introductory interest rate, making it less costly to pay off major expenses over time.. The American Express® Business Explorer Credit Card, for example, currently has an introductory rate of 3.99% p.a.³ on new purchases for the first six months of Card Membership, 19.99% p.a.⁴ thereafter – a great way to take advantage of growth opportunities without breaking the bank.
• What annual fee can you comfortably afford? Annual fees can vary depending on the Card type. If the Card has a high annual fee, don’t automatically discredit it. Consider your business’ annual spend and compare it to the benefits and rewards earning rate of the Cards you’re comparing. As long as you’re going to make use of its benefits and rewards capabilities, the Card may end up helping the business’ bottom line.
• What type of purchases does your business typically make? If your business does a lot of travel, for example, it might be wise to opt for a Card that offers rewards points on travel expenditures. The American Express® Qantas Business Rewards Card allows businesses to earn 2 Qantas Points per $1 spent on Qantas products and services and 1.25 Qantas Points per $1 spent on everyday business spend.⁵ Other Cards offer travel privileges like airport lounge access and exclusive savings at eligible hotels. If your business purchases many supplies, you may prefer a Card with a higher rewards earning rate for general purchases.
• Do you make overseas transactions? If so, consider a Card that offers no foreign transaction fees or a way to make seamless overseas payments. With American Express AccessLine™⁶, for example, eligible business Card customers can make fast, secure payments overseas (and within Australia), even to merchants who don’t accept Card payments – while earning Membership Rewards points in the process.⁷

How Credit Cards and Charge Cards Can Extend Your Cash Flow

Both Credit Cards and Charge Cards enable a business to extend its cash flow with interest free days on the purchases made. This means if you plan to make a large purchase or have unexpected costs, you can enjoy more time to pay. Here’s how:

• Credit Cards: A Credit Card such as The American Express Business Explorer Credit Card can give you up to 55 interest-free days on to pay for purchases. The exact number of days depends upon a range of factors such as when you made a purchase, when your statement is issued, whether you have a balance transfer, or are carrying forward a balance from your previous statement period.
• Charge Cards: Similarly, a Charge Card such as The American Express® Gold Business Card can extend your cashflow with up to 51 days to pay for purchases. Again, the exact number of days depends on your method of payment, when you make a purchase, when your statement is issued, and whether or not you are carrying forward a balance from your previous statement period.

Some Charge Cards also give you the option to further optimise your cashflow by choosing to pay off a portion of your balance using a flexible repayment feature. For example, with the American Express Flexible Payment Option⁸, you can choose to pay off a portion of your monthly balance, up to your Flexible Payment Option limit, over time with interest Charges applied. This added feature allows you to take advantage of opportunities to invest upfront or overcome fluctuations in cash flow.

The Takeaway

There are many types of business Credit Cards and Charge Cards available today, offering a variety features and benefits that can help businesses save money, or even grow. So, it’s well worth taking the time to evaluate the various types to find the best business Card to match your company’s needs.

The Author

Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.

This content was written by a freelance author and commissioned and paid for by American Express.

Further Reading: These articles on the Kochie’s Business Builders website offer deeper insight into how Australian small businesses are benefitting from their use of American Express® charge cards:

From chocolate bouquets to a global gift empire: How this Adelaide sister act built Edible Blooms

“We had a culture issue”: How Sparro put people first and doubled its team to 90 this year

Sustainability proves a winner for love.fish

1. No fixed Credit limit/ no pre-set spending limit does not mean unlimited spending. Your purchases are approved based on a variety of factors, including current spending patterns, your payment history, Credit records, and financial resources known to us.

2. Extend your cash flow by up to 55 days: Depending on when you make a purchase, when your statement is issued and whether or not you are carrying forward a balance on your account from your previous statement period. If you pay by direct debit, your payment will be processed 10 days after your statement is issued.

3. Once your new Card Account is activated, new purchases made for the next 6 months will have a promotional interest rate of 3.99% p.a, after which these purchases will revert to the standard interest rate of 19.99% p.a. This offer does not apply to cash advances, fees or commissions.

4. Interest rate is correct as at 28 July 2022 and is subject to change. This interest rate does not apply for Cash Advances and associated fees.

 5. A business must be a Qantas Business Rewards Member to earn Qantas Points for business. Membership and the earning of Qantas Points as a business are subject to the Qantas Business Rewards Terms and Conditions. Points are earned in accordance with and subject to the American Express Qantas Business Rewards Card Points Terms and Conditions. Your business will earn 1.25 Qantas Points per $1 of everyday spend, which does not include annual fees, late payment fee and fees and Charges for foreign currencies. Your business will earn 0.5 Qantas Points per $1 spent at participating merchants classified as "utilities" including gas, water and electricity providers; "government" including the Australian Taxation Office, the Australian Postal Corporation, federal/state and local government bodies; and "insurance" excluding insurances offered by American Express. Industry specific earn rate may apply when you use a payment account, payment aggregator, services of a third party or online retailers that sell goods for another merchant. For example a payment made to Local Government bodies processed through a payment aggregator may earn rates at the government earn rate. Your business will earn 2 Qantas Points per $1 spent on the following Qantas Products and Services purchased on the Qantas merchant account (i.e. directly from Qantas): Qantas passenger flights (with a QF flight number), Qantas Holidays, Qantas Branded non-airfare products, and Qantas Frequent Flyer and Qantas Club membership joining and annual fees. Excludes Jetstar. For the full list of exclusions, please refer to the American Express Qantas Business Rewards Card Points Terms and Conditions.

 6. The information has been prepared without taking into account your objectives, financial situation or needs. You should read the PDS and consider the appropriateness of International Payments in relation to your individual requirements. Terms, conditions, fees and Charges apply. For further information, please refer to the relevant PDS: Telegraphic Transfers. AccessLine™ is not available to individual consumers. To enrol in this service, your business will be required to complete an application, which is subject to review and approval by American Express. For a copy of the application, including terms and conditions, call 1300 855  749. Users need to have an American Express Corporate Card or American Express Business Card, an FX International Payments account and be registered to use AccessLine™. International Payments are arranged through American Express International Inc. (ABN 15 000 618 208 AFSL no. 237996). Incorporated with Limited Liability in Delaware, USA.

7.  Subject to the Terms and Conditions of the Membership Rewards program available here. Merchants classified as "government" include the Australian Taxation Office, the Australian Postal Corporation (Australia Post), Federal/State and Local Government bodies. Industry specific earn rate may apply when you use a payment account, payment aggregator, services of a third party or online retailers that sell goods for another merchant. For example a payment made to Local Government bodies processed through a payment aggregator may earn rates at the government earn rate. There may be tax implications associated with participation in the Membership Rewards program. You are advised to check with your accountant or tax adviser for further information.

8. With Flexible Payment Option, you will be Charged interest if you do not pay your Closing Balance in full by the due date each month. Please refer to your monthly statements for the current Interest Rate and PDS for number of interest-free days. Eligibility criteria applies.

 

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