The best business credit cards offer a variety of benefits and attractive income rates that many types of businesses can take advantage of. However, some business owners need more than one card. They may want access to higher spending limits or want to spread their purchases across different cards based on the bonus spending categories.
In any case, having more than one business card can give your business the purchasing power it needs while allowing you to leverage the unique benefits of each card to maximize savings and rewards.
In this article, we explore when it makes sense to have more than one business credit card and what benefits multiple cards can bring to your small business.
Should a company have multiple credit cards?
When it comes to determining how many credit cards you should have, business owners can take the same approach as personal cardholders by using more than one credit card to make purchases. This helps increase purchasing power, build credit and increase rewards.
The main reason for a business to have more than one card is to increase its purchasing power with a higher total credit limit. Having only one credit card can limit a business’s access to credit.
For example, a business owner with a $15,000 limit on an Ink Business Preferred credit card could find themselves in trouble if they have to spend $10,000 on business travel in one month. In this situation, it would be beneficial for the company to have more than one card so that their purchasing power is not limited to the remaining $5,000 and their business can function smoothly.
Related: Business Credit Cards: What They Are and How They Work
Benefits of multiple business credit cards
There are many benefits to carrying more than one business credit card. For starters, it allows your company to participate in multiple rewards programs, offsetting costs. Just like with personal credit cards, business credit card holders can earn cash back, airline miles or rewards points.
For example, the Ink Business Unlimited Credit Card offers 1.5% cash back on all purchases, and businesses that spend money on travel can earn 5 points per dollar on airline tickets and prepaid hotels booked on AmexTravel.com with The Business Platinum Card® from American Express. You can also receive valuable statements when you purchase from certain merchants, such as Dell, Adobe, and Indeed (enrollment required).
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These credits can help businesses cover some annual costs, providing business owners with tangible value.
Another benefit of having multiple business credit cards is that it increases your total available credit and helps your business maintain a lower credit utilization ratio, which is good for building business credit in the long term. Business credit scores work differently than personal credit scores, and a higher business credit score can result in access to better rates on business loans or business lines of credit from banks.
Related: Amex Business Platinum card review: Big bonus and luxury benefits
Things to consider before applying for multiple business credit cards
Before you apply for additional business credit cards, there are a few things to consider.
Annual contribution
Depending on which business credit cards you apply for, there may or may not be an annual fee. Having multiple business credit cards can become expensive if you pay an annual fee for more than one card. The above mentioned for example Business Platinum Card® from American Express has an annual fee of $695 (see rates and fees). If a company adds other credit cards to the mix, it can quickly increase costs.
Use of benefits
Business credit cards have their respective benefits and perks, whether it’s bonus cashback categories, statement credits, or travel perks like lounge access and a TSA PreCheck/Global Entry statement credit. If your business isn’t using most of the benefits of a card, it may not be worth paying the annual fee.
On-time payments
Most business credit cards have flexible repayment terms that allow you to carry over a balance from month to month, but they require you to make minimum monthly payments. If you, as a business owner, have two, three, or more business credit cards, you’ll need to decide if you’re able to make minimum payments on multiple cards each billing cycle.
If minimum payments are not made on time, you may be charged late fees and negatively affect your credit report. Keep in mind that any card you carry a balance on will continue to accrue interest, which not only increases your business expenses but can also eat into your rewards income.
Related: The Best Way to Pay Your Credit Card Bills
How many business credit cards should you apply for?
While there is no limit on the number of business cards you can request, it is important to note that each request submitted will result in a heavy inquiry on your credit report. This can not only lower your personal credit score, but also your business credit score.
Before applying for additional cards, consider which ones best suit your spending habits, what benefits will help your business, what the APR rates are, and whether your business has the capacity to manage multiple credit cards.
Related: What is a purchase APR on a credit card?
In short
The number of business credit cards you should carry depends on the needs of your business and how you will take advantage of the various benefits that business credit cards offer. While having just one card sounds simple, multiple cards can increase a company’s purchasing power and open up the possibility of more flexible rewards.
For Business Platinum Amex rates and fees, click here.