Are Business Credit Cards Right For Freelancers?

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Are Business Credit Cards Right For Freelancers?

Jul 21, 2015

Business credit cards are a popular and valuable resource which, when used responsibly, can help you make purchases and organize your spending, all while getting some perks on the side.

Most issuers offer credit cards for small businesses and freelancers in addition to their regular cards, and there are 3 important things you need to know about them.

Rewards and Benefits for Business Purchases

There are several advantages that business credit cards provide to their cardholders, and the right card for you will be one that fits into your habitual spending.

If you’re setting up a home office, for example, the Chase Ink Plus card provides 5 points for every dollar you spend at office supply stores, as well as on cell phone, landline, Internet, and cable TV services.  You’ll also get 2 points per dollar for hotel accommodations and gas, so you can use this card on the road too.

Then there are also cards without categories like the Capital One Spark Cash for Business, which provides an easy 2% cash back on every purchase you make.

Overall, business credit cards generally have higher credit limits than regular consumer cards, allowing for large business expenses.

Business cards also come with a host of other benefits and services designed to give you peace of mind, like travel accident insurance, purchase protections, extended warranties, receipt and purchase tracking, and dispute resolution services.

Who Is Liable For Business Credit Card Purchases?

The short answer is: you are liable, not your business. When you apply for most business cards, you’ll need to sign what is called a Personal Guarantee.

This means that you are personally responsible for the debt, even though your business and employees may be involved in the usage of the card. If your account goes delinquent, you can be targeted by collection companies just like with a regular consumer credit card.

How Business Credit Cards Affect Your Credit

There is an important difference between business and regular consumer credit cards when it comes to your credit reports.

In most cases, business credit cards will not be listed on your credit report, and they will not affect your credit score. This is because credit card issuers don’t usually report the usage to the credit bureaus.

However, there is an exception: if you commit some negative actions with the card, such as making late payments or going over the credit limit, that activity will be listed on your credit report, bringing your credit score down.

The quick rule is: as long as everything is fine, you won’t see the good effects on your credit report; but if something goes wrong, you will suffer the negative consequences.

So, business credit cards come with a number of benefits for the average freelancer, but there are also some important factors to be aware of. You can reap the full rewards of business cards when you understand how they work and commit to using them responsibly.

For more information on using business credit cards and other cards, visit Credit Card Insider.

The opinions expressed in our published works are those of the author(s) and do not necessarily reflect the opinions of the National Association for the Self-Employed or its members.

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