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Businesses enjoy a couple of options when it comes to credit cards: business credit cards and corporate cards. Business credit cards are geared toward businesses of all sizes, while corporate credit cards typically carry a higher threshold for qualification.
Eligibility factors for a corporate card usually include minimums for annual revenue, annual expenses and number of cardholders. Read along to learn how corporate credit cards work and whether you should get one of these cards for your business.
How Do Corporate Cards Work?
Requirements vary from card issuer to card issuer, but a business will typically have to meet the following preconditions to qualify for a corporate credit card:
- A minimum yearly revenue
- A minimum in annual charges
- A minimum number of employees
- Valid registration as an LLC, S corporation or C corporation
To get a corporate credit card, a business typically must have a good credit score, and must provide its tax ID number, supply tax information and go through a financial audit.
If a business doesn't meet the requirements for a corporate card, it can apply for a business credit card as an alternative. Businesses of all sizes can qualify for one of these cards, including startups and one-person ventures.
A big benefit of a corporate card is that it can help a business keep a lid on costs. That's because a corporate card enables a business to closely control and monitor spending. For instance, the business can restrict how much money is spent per transaction and can prevent a card from being used at certain places. The business can even set different spending limits for, say, top executives and department managers.
The name of the business and the individual cardholder appear on a corporate credit card. Each individual card has its own number, but they're all attached to a single corporate card account.
Can a Corporate Card Affect Your Personal Credit?
A corporate card might affect your personal credit, but the effect often is minimal.
Typically, payment history, balances and other account details are attached to the credit report belonging to the business, not the individual cardholder.
If the card issuer checks your credit report, it may result in a hard inquiry, which can cause your credit scores to dip slightly. This score impact is usually small and temporary. If the card features what's known as individual liability, the cardholder is responsible for paying monthly bills, then getting reimbursed for those expenses.
Also, if debt on a corporate card is overdue, it may show up on the credit report of an individual cardholder. This could happen if the card comes with individual liability or joint liability (which is when both the employer and employee are on the hook for the debt).
Should You Get a Corporate Credit Card for Your Business?
So, should you apply for a corporate credit card for your business? Check out these pros and cons before you do.
Pros
- A corporate card allows businesses to get a better handle on expenses.
- Employees don't need to cover company expenses out of their own pocket. However, they may be required to pay each month's bill, then submit that expense for reimbursement.
- The business owner normally doesn't need to offer a personal guarantee, thereby protecting the owner's personal assets.
- A business can accrue cash back, reward points, frequent flier miles or other perks.
Cons
- An employee might charge personal expenses to their card, rather than sticking solely to business expenses.
- An employee might spend in excess when entertaining clients or traveling for business.
- Lax policies could lead to unauthorized spending.
- Corporate cards aren't required to have the same protections that consumers receive under federal law. However, some card issuers extend them anyway.
Best Corporate Cards for Business Owners
A number of options are available if you want to get a corporate card. They include:
- American Express: This financial giant offers four types of corporate cards: Corporate Green Card, Corporate Gold Card, Corporate Platinum Card® and Business Extra® Corporate Card. Annual fees can be as high as $550. Perks include reward points for the company or an individual cardholder, or cash back through statement credits. Terms apply.
- Brex: Brex's corporate cards require no personal liability guarantees and charge no fees. Benefits include up to 8 points per dollar for spending on rideshare trips, 4 points per dollar spent on restaurant meals and 3 points per dollar spent on software subscriptions.
- Divvy: Divvy's corporate card program charges no fees, enables every employee to carry a card, offers unlimited creation of virtual cards and integrates with Divvy's expense management software.
- Stripe: Stripe's corporate card charges no annual fees, foreign transaction fees or late fees. Every business purchase earns 1.5% cash back that's automatically credited to each monthly bill.
The Bottom Line
Before you apply for a corporate credit card, obtain your Experian business credit report so you know where your business credit score and other credit factors stand.
All information about the American Express Corporate Green Card, American Express Corporate Gold Card, American Express Corporate Platinum Card®, American Express Business Extra® Corporate Card, Brex corporate card, Divvy corporate card, and Stripe corporate card has been collected independently by Experian and has not been reviewed or provided by the issuer of the card.