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Updated July 7, 2016

Business Credit Cards vs Charge Cards: Which is Right for Your Business?

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Editorial Note: This content is not provided by the card issuer. Opinions expressed here are author's alone, not those of the issuer, and have not been reviewed, approved or otherwise endorsed by the issuer.
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Is your business better off with a charge card or a credit card? Does it matter? Yes. Read this article to learn the important differences.

At the end of this article, we'll highlight some of the latest credit card and charge card promotions for small business owners.

Why Even Use a Separate Business Credit Card or Charge Card

Using a business credit card or charge card makes smart business sense. These cards help businesses leverage credit and/or get rewards for the things they buy.

Even sole proprietors, like freelancers and independent contractors, can benefit from using a separate business credit card or charge card.

  • Business cards typically have spending rewards categories that are more in line with common business expenses, like office supplies and phone charges. Business owners who use them will therefore see their rewards multiply more quickly than if they stick to a personal credit card with a rewards program that’s more focused on groceries and department-store purchases.

  • Plus, it just makes sense to keep your personal and business finances separate, both for record-keeping purposes and for taxes.

But there’s one matter you should figure out before you start comparing cards — should you go with a business credit card or a charge card?

Not sure if your business needs a credit or charge card? Even the smallest of businesses, like side Etsy projects, can benefit from having accessible credit. See how to choose a small business credit card.

People often group these two card types together, but there are key differences you should know before you apply.

The benefits may surprise you. Read on.

Charge Card vs Credit Card

Both cards have a similar premise: You get a short reprieve between when you buy something and when you have to fork over the cash for it. However, charge cards have a slight distinction that can be beneficial, depending on how disciplined you are about paying your bills and how much you need to keep your business spending in check.

How They’re Similar

With either a charge card or a credit card, the bank pays for your purchase and you’re expected to pay it back.

Like credit cards, you can find charge cards that offer sign-up bonus rewards and ongoing rewards. Also like some credit cards, charge cards may also charge an annual fee.

How They’re Different

The distinction comes down to how long you have to pay off the debt you accrue.

Balances and How You Pay:

  • Credit cards let you carry a balance (with interest):
    With a credit card, you’ll always want to pay off the balance every month, but you have the flexibility of taking your time when necessary (and pay interest charges for the privilege).

  • Charge cards are due in full:
    Charge cards are less forgiving; they want you to pay right away, by the due date, or you’ll have to pay an expensive late payment fee and you may have to give up ownership of the card if you keep missing payments.

    So why would you even consider a charge card? Keep reading to find out.

Credit Limits and How You Spend:
Another big difference is in the credit limit.

When you first sign up with a credit card, you may be surprised how little the credit card issuer trusts you by limiting how much you can put on the card.

However, with a charge card, there is no predetermined credit limit. For some people, that wide berth can be great, giving them leeway if they ever need to make a large purchase in the future. Keep in mind, no predetermined credit limit does not mean unlimited spending. Your purchasing power usually adjust based on your card usage, payment history, credit history, and other factors.

Reasons to Get a Charge Card

  • You can’t stand interest charges. With a charge card, you’re using a payment method that won’t cost interest as long as you pay when you’re supposed to. Unlike credit cards, you don’t have the threat of interest charges hanging over your head.

  • You know you can control your spending. Do you pride yourself on never spending beyond your means, and are you determined to use that philosophy for your business? Having a charge card can prompt business owners to stay disciplined, as they know they’ll have to pay off every purchase they make within a few weeks.

  • Unique benefits. While you lose the ability to carry a balance, many business charge cards come with unique benefits.

    For example, the Business Platinum® Card from American Express OPEN, a CreditDonkey advertiser, includes Global Lounge Collection, Airline Fee Credit, and Platinum Concierge Service. These travel-friendly benefits come at a price though. There is a $450 annual fee. If you are a frequent business traveler, read the 10 reasons why the Business Platinum Card is worth it.

    Another business charge card, the Plum Card from American Express OPEN, a CreditDonkey advertiser, offers a 1.5% discount when you pay early. While there is no cap on how much you can earn back by paying early, there is a $250 annual fee ($0 introductory annual fee for the first year) to keep in mind. If your business spends more than $1,389/month, read this Plum Card review to see if this charge card is right for your business.

Reasons to Get a Credit Card Instead

  • You need flexibility in your cash flow. While you usually strive to pay off your balance in full each month, sometimes your business needs the flexibility to repay the balance over time. That's when a credit card comes in handy since there's no hard deadline to pay off the entire balance as long as you make at least the minimum payment each month.

    This feature comes in handy when your business needs to make a large purchase.

  • You want a promotional interest rate. Many business credit cards have a promotional interest rate to entice new customers to sign up. You’re not going to find that with a charge card.

  • It’s what you’re already used to. If you have used only personal credit cards for your personal spending, you may want to stick with what you already know — a business credit card. A charge card is similar enough where it shouldn’t be confusing — but as a business owner, you have things to deal with.

Which One Is Right for You?

Do you want the flexibility of a credit card to pay over time?

Or do you prefer the unique benefits that many charge cards offer? Will you always be able to pay off your balance each month and if there is a time when you can’t, will you be able to withstand the hefty late payment fee you’ll get stuck with? That’s a key question to ponder as you weigh the pros and cons of credit cards vs. charge cards.

Terms and limitations apply. For more information, click on the "Apply Now" button to visit the issuer's website.

Business Credit Cards

SimplyCash Plus Business Credit Card from American Express
Apply for SimplyCash Plus Business Credit Card from American Express
At American Express' Secure Site
  • Special Offer: Earn up to $400 cash back
  • Earn a $200 statement credit after you spend $5,000 in qualifying purchases on your Card within the first 6 months of Card Membership.
  • Plus, earn an additional $200 statement credit after you spend an additional $10,000 or more in qualifying purchases on your Card within the first year of Card Membership.
  • No Annual Fee. Plus, more buying power and more cash back.
  • 5% cash back on wireless telephone services purchased directly from U.S. service providers and U.S. office supply stores.
  • 3% on the category of your choice from a list of eight and 1% cash back on other purchases.
  • 5% and 3% apply to the first $50,000 in purchases per calendar year, then 1% thereafter. Cash back received is automatically credited to your statement.
  • Terms and limitations apply
  • See Rates & Fees
Introductory Bonus Cash BackCash Back RewardsOffice RewardsDiscountCar Rental InsuranceExtended WarrantyPurchase ProtectionBaggage Insurance$0 Fraud Liability
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% on Purchases for 9 months
N/A
12.99% - 19.99% Variable
No annual fee

The Blue for Business Credit Card from American Express
Apply for The Blue for Business Credit Card from American Express
At American Express' Secure Site
  • Special Offer: Earn Up To 25,000 Membership Rewards® points
  • Earn 10,000 points after making your first purchase on the Card within your first 3 months of Card Membership.
  • Earn an additional 15,000 points after you spend $5,000 in purchases on the Card, in the first 6 months of Card Membership.
  • Earn a 30% annual points bonus based on the past year's purchases on your Blue for Business Card.
  • 0.0% introductory APR on purchases for 15 months, then a variable rate, currently 11.99%, 15.99% or 19.99%, based on your creditworthiness as determined at the time of account opening.
  • No Annual Fee
  • Terms Apply
  • See Rates & Fees
Introductory Bonus Reward PointsBonus Reward PointsPoint RewardsDiscount$0 Fraud Liability
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% on Purchases for 15 months
N/A
11.99% - 19.99% Variable
No annual fee

U.S. Bank Business Edge Platinum
Apply for U.S. Bank Business Edge Platinum
At U.S. Bank's Secure Site
  • 0% Intro APR* on purchases and balance transfers for the first 12 billing cycles
  • No annual fee*
  • Free employee cards
  • Zero fraud liability* protects you against unauthorized transactions
$0 Fraud Liability
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0%* for 12 billing cycles*
0%* for 12 billing cycles*
10.74% - 18.74%* (Variable)
$0*

Gold Delta SkyMiles Business Credit Card from American Express
Apply for Gold Delta SkyMiles Business Credit Card from American Express
At American Express' Secure Site
  • Make business travel more rewarding. Earn 30,000 bonus miles after you make $1,000 in purchases on your new Card within your first 3 months.
  • Additionally, earn a $50 statement credit after you make a Delta purchase with your new Card within your first 3 months.
  • Earn 2 Miles per dollar spent on purchases made directly with Delta. Earn 1 mile on every eligible dollar spent on purchases.
  • Settle into your seat sooner with Priority Boarding and enjoy 20% savings on eligible in-flight purchases in the form of a statement credit.
  • Pay no foreign transaction fees when you spend overseas.
  • $0 introductory annual fee for the first year, then $95.
  • Terms and limitations apply
  • See Rates & Fees
Introductory Bonus Airline RewardsAirline RewardsNo Limits on RewardsDiscountCar Rental InsuranceExtended WarrantyPurchase ProtectionBaggage InsuranceTravel Accident Insurance $0 Fraud LiabilityEmergency Card ReplacementIdentity Theft Assistance
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
N/AN/A
15.99% - 19.99% Variable
$0 introductory annual fee for the first year, then $95

Starwood Preferred Guest Business Credit Card from American Express
Apply for Starwood Preferred Guest Business Credit Card from American Express
At American Express' Secure Site
  • Limited Time Offer: Earn up to 35,000 bonus Starpoints® – Offer ends 04/05/2017.
  • Earn 25,000 bonus Starpoints® after you use your new Card to make $5,000 in purchases within the first 3 months.
  • Earn an extra 10,000 bonus Starpoints® after you make an additional $3,000 in purchases within the first 6 months.
  • Earn 2 Starpoints® for each dollar of eligible purchases at participating SPG® Marriott Rewards® hotels. Earn 1 Starpoint® for all other purchases.
  • Redeem Starpoints® for free nights at over 1,300 hotels & resorts in over 100 countries and for free flights on over 150 airlines with SPG Flights. Some hotels and resorts have mandatory service charges.
  • Free, unlimited Boingo Wi-Fi at more than 1,000,000 Boingo hotspots worldwide. Enrollment required.
  • No Foreign Transaction Fees on international purchases and $0 introductory annual fee for the first year, then $95.
  • Terms Apply
  • See Rates & Fees
Introductory Bonus Hotel RewardsTravel RewardsAirline RewardsBonus Airline RewardsBonus Hotel RewardsHotel RewardsNo Limits on RewardsDiscountExtended Warranty Purchase ProtectionReturn ProtectionTravel Accident Insurance$0 Fraud LiabilityEmergency Card Replacement
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
N/AN/A
15.99% - 19.99% Variable
$0 introductory annual fee for the first year, then $95

Business Charge Cards

The Business Platinum Card from American Express OPEN
Apply for The Business Platinum Card from American Express OPEN
At American Express' Secure Site
  • Welcome Offer: Earn up to 75,000 Membership Rewards® points.
  • Earn 50,000 Membership Rewards points after you spend $10,000 and an extra 25,000 points after you spend an additional $10,000 all on qualifying purchases within your first 3 months of Card Membership.
  • Get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each qualifying purchase of $5,000 or more. You can get up to 1 million additional points per year.
  • Plus, continue to get one point per dollar for qualifying purchases under $5,000.
  • 50% Airline Bonus: Use Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 50% of the points back.
  • You can also receive 50% points back on all First and Business class flights, with all airlines available through American Express Travel.
  • You can enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
  • Terms & Restrictions Apply
  • See Rates & Fees
Introductory Bonus Reward PointsTravel RewardsAirline RewardsPoint RewardsNo Limits on RewardsNo Pre-Set Spending LimitConciergeDiscountCar Rental Insurance Extended WarrantyPurchase ProtectionReturn ProtectionBaggage InsuranceTravel Accident Insurance$0 Fraud LiabilityEmergency Card ReplacementIdentity Theft AssistanceRoadside Assistance
Card TypeAnnual Fee
Business Charge Card
$450

The Business Gold Rewards Card from American Express OPEN
Apply for The Business Gold Rewards Card from American Express OPEN
At American Express' Secure Site
  • Special Offer: Earn 50,000 Membership Rewards® points after you spend $5,000 in purchases on the Card within your first 3 months of Card Membership
  • Get 3x points - Choose 1 out of 5 categories
  • Plus, 2X points on the 4 remaining categories and 1X points on other purchases
  • 3X and 2X apply to the first $100,000 in purchases in each of the 5 categories per year, 1X point per dollar thereafter
  • Track, organize, and stay on top of your business expenses with powerful expense-tracking tools
  • No foreign transaction fees
  • $0 introductory annual fee for the first year, then $175
  • Terms and limitations apply
  • See Rates & Fees
Introductory Bonus Reward PointsPoint RewardsNo Expiration on RewardsNo Pre-Set Spending LimitDiscountEventsCar Rental InsuranceExtended WarrantyPurchase Protection Return ProtectionBaggage Insurance$0 Fraud LiabilityEmergency AssistanceEmergency Card ReplacementIdentity Theft AssistanceRoadside Assistance
Card TypeAnnual Fee
Business Charge Card
$0 introductory annual fee for the first year, then $175

The Plum Card from American Express OPEN
Apply for The Plum Card from American Express OPEN
At American Express' Secure Site
  • Paying early pays off: Get a 1.5% discount when you pay early, with no cap on what you can earn back.
  • Take up to 60 days to pay with no interest, if you pay your minimum due.
  • Use the power of the Plum Card to buy big for your business.
  • Unlock new opportunities with a spending limit that can grow with your business.
  • Additional Employee Cards at no annual fee - and an early pay discount on employee spending.
  • No Foreign Transaction Fees.
  • Introductory annual fee of $0 for the first year, then $250
  • Terms & Restrictions Apply. See Rates & Fees
No Pre-Set Spending LimitDiscountCar Rental InsuranceExtended WarrantyPurchase ProtectionReturn ProtectionBaggage Insurance$0 Fraud LiabilityIdentity Theft Assistance Roadside Assistance
Card TypeAnnual Fee
Business Charge Card
$0 introductory annual fee for the first year, then $250

Sarah Johnson is the senior editor of CreditDonkey, a credit card comparison and financial education website. Write to Sarah Johnson at sarah@creditdonkey.com. Our data-driven analysis has been recognized by major news outlets across the country and has helped small business owners make savvy financial and lifestyle decisions. (read more)

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.

More from CreditDonkey:


How to Apply for a Business Credit Card


AMEX Business Platinum Review


AMEX Business Gold Rewards Review

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CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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