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Updated August 6, 2019

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

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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 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 apply 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, 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 $595 annual fee (See Rates & Fees). 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, 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) (See Rates & Fees) 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 apply. 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.

Figuring out your finances is just the beginning of managing a business. Wondering how to tackle marketing? Check out this article from Wentworth Financial Communications for tips on finding your business's writing voice.

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

Ink Business Preferred Credit Card
Apply for Ink Business Preferred Credit Card
At Chase's Secure Site
  • Earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®
  • Earn 3 points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year
  • Earn 1 point per $1 on all other purchases–with no limit to the amount you can earn
  • Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards
  • Redeem points for travel, cash back, gift cards and more – your points don't expire as long as your account is open
  • No foreign transaction fees
  • Employee cards at no additional cost
  • $95 Annual Fee
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
N/AN/A
17.99% - 22.99% Variable
$95

American Express Blue Business Cash Card
Apply for American Express Blue Business Cash Card
At American Express' Secure Site
  • Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1%. Cash back earned is automatically credited to your statement.
  • From workflow to inventory to floor plans, your business is constantly changing. That's why you've got the power to spend beyond your credit limit with Expanded Buying Power§.
  • Just remember, the amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to us and other factors.
  • 0.0% intro APR on purchases and balance transfers for 12 months, then a variable rate, 15.24%, 18.24%, or 21.24%, based on your creditworthiness and other factors as determined at the time of account opening.
  • No Annual Fee
  • Terms Apply
  • See Rates & Fees
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% on purchases for 12 months
0% on balance transfers for 12 months
15.24% - 21.24% Variable
No annual fee

The Blue Business Plus Credit Card from American Express
Apply for The Blue Business Plus Credit Card from American Express
At American Express' Secure Site
  • Get rewarded for business as usual. Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners.
  • 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter.
  • Enjoy the flexibility to put more purchases on the Card and earn rewards when you buy above your credit limit*.
  • You've got the power to use your Card beyond its credit limit* with Expanded Buying Power.
  • More buying power for your business means more opportunities to earn points. That's everyday business with the Blue Business Plus Card.
  • *The amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to us, and other factors.
  • 0.0% intro APR on purchases and balance transfers for 12 months, then a variable rate, 15.24%, 18.24% or 21.24%, based on your creditworthiness and other factors as determined at the time of account opening.
  • Terms Apply
  • See Rates & Fees
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% for 12 months
0% for 12 months
15.24% - 21.24% Variable
No annual fee

American Express Business Gold Card
Apply for American Express Business Gold Card
At American Express' Secure Site
  • Earn up to $500 back in the form of statement credits by purchasing qualifying services with FedEx using your American Express® Business Gold Card within the first 3 months of Card membership.
  • Limited time Offer ends 11/06/2019.*
  • More Rewards: Get 4X Membership Rewards® points on the 2 select categories where your business spent the most each month**
  • **4X points apply to the first $150,000 in combined purchases from these 2 categories each calendar year.*
  • Airline Bonus: Get 25% points back after you use points for all or part of an eligible flight booked with Amex Travel, up to 250,000 points back per calendar year.*
  • Pay Over Time Option: A flexible payment option to help manage cash flow on purchases of $100 or more.*
  • Expense Management Tools: Connect to Quickbooks, access SpendManager(SM), receive a Year-End Summary, and more.*
  • *Terms Apply
  • See Rates & Fees
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
N/AN/A
16.24% - 24.24% Variable
$295

Business Charge Cards

The Business Platinum Card from American Express
Apply for The Business Platinum Card from American Express
At American Express' Secure Site
  • Welcome Offer: Earn up to 100,000 Membership Rewards® points.
  • Earn 50,000 Membership Rewards® points after you spend $10,000 and an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership.
  • Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com.
  • Get 50% more Membership Rewards® points. That's 1.5 points per dollar, on each eligible purchase of $5,000 or more. You can get up to 1 million additional points per year.
  • 35% Airline Bonus: Use Membership Rewards® Pay with Points for all or part of a flight with your selected qualifying airline, and you can get 35% of the points back, up to 500,000 bonus points per calendar year.
  • Enroll to get up to $200 in statement credits annually by getting up to $100 semi-annually for U.S. purchases with Dell. Terms apply.
  • Get one year of Platinum Global Access from WeWork. With this membership, you can access 300+ premium, inspiring workspaces in 75+ cities. To get this exclusive offer, enroll between 2/15/2019 and 12/31/2019.
  • Terms Apply
  • See Rates & Fees
Card TypeAnnual Fee
Business Charge Card
$595

The Plum Card from American Express
Apply for The Plum Card from American Express
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.
  • No Foreign Transaction Fees.
  • Introductory annual fee of $0 for the first year, then $250
  • Terms & Restrictions Apply.
  • See Rates & Fees
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 reviews website. Write to Sarah Johnson at sarah@creditdonkey.com

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.

For rates and fees of the Blue Business Cash card, please click here.
For rates and fees of the Business Gold Card, please click here.
For rates and fees of the American Express Business Platinum card, please click here.
For rates and fees of the Blue Business Plus card, please click here.
For rates and fees of the American Express Plum Card, please click here.

More from CreditDonkey:


How to Apply for a Business Credit Card


AMEX Business Platinum Review


AMEX Business Gold Card Review

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American Express Blue Business Cash Card
Apply for American Express Blue Business Cash Card
At American Express' Secure Site
  • Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1%. Cash back earned is automatically credited to your statement.
  • From workflow to inventory to floor plans, your business is constantly changing. That's why you've got the power to spend beyond your credit limit with Expanded Buying Power§.
  • Just remember, the amount you can spend above your credit limit is not unlimited. It adjusts with your use of the Card, your payment history, credit record, financial resources known to us and other factors.
  • 0.0% intro APR on purchases and balance transfers for 12 months, then a variable rate, 15.24%, 18.24%, or 21.24%, based on your creditworthiness and other factors as determined at the time of account opening.
  • No Annual Fee
  • Terms Apply
  • See Rates & Fees
  • Go to issuer's official application, terms, and details
Cash Back Rewards$0 Fraud Liability
Intro APR for PurchasesIntro APR for Balance TransferRegular APRAnnual Fee
0% on purchases for 12 months
0% on balance transfers for 12 months
15.24% - 21.24% Variable
No annual fee

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About CreditDonkey®
CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy 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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CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.