Who Can Get a Business Travel Credit Card?
Business travel credit cards are extended exclusively to businesses. That means general consumers shouldn’t expect to be approved. However, what credit card issuers consider a business can be broad, and it includes freelancers, self-employed individuals and sole proprietors.
You don’t necessarily need several years in business or even revenue, as approval hinges primarily on your personal credit and business credit, if it’s established. Although you can use your business tax ID number to apply, sole proprietors only need a Social Security number.
What Are the Benefits of Business Travel Credit Cards?
With a business travel credit card, you can snag rewards for travel, but that’s just the start. Some other pluses:
- Access to revolving credit. Whether your business is new or well-established, you need capital, and a business credit card may be faster and more convenient than a loan. Applications are much simpler for business credit cards than for business loans. That could make business travel cards easier to obtain for working capital purposes, startup costs or other expenses. And a business travel card allows flexibility, so you can tap as much of your credit line as you need during each statement period, pay off your balance, then use the card again.
- Impressive travel rewards. Business travel cards can provide excellent rewards value. You will typically receive rewards for every purchase and can redeem them for travel expenses. Although business travel cards usually earn the most rewards on travel, these cards offer bonus rewards on business purchases such as gas, telecommunications, shipping, advertising and dining.
- Organize your business’s finances. One practical benefit of business travel cards is that you can use them to better organize your finances. A business card facilitates separating business and personal expenses. “Every small-business owner benefits from separating their business and personal purchases, and using a business credit card is an effective way to do that,” says Gerri Detweiler, education director for Nav, which helps business owners build and monitor business credit for free and matches them to financing. A Nav survey in 2015 found that 24% of small-business owners use personal credit cards for their business, which can impact their personal credit.
- Other cardholder benefits. Top-level benefits such as travel credits, priority boarding, airport lounge access and hotel status come with many business travel cards. These cards typically offer travel insurance as well. “Many business travel cards act as a VIP pass that you can simply flash to get into airport lounge networks,” says Maddie Shepherd, senior staff writer at Fundera, which offers financial advice for small businesses. “This is obviously pretty exciting for business owners and employees who have to travel frequently for work, but it’s not necessarily the most practical benefit of carrying a business travel card.”
What Are the Drawbacks of Business Travel Credit Cards?
Business travel cards have a lot to offer, all of which can come at a cost. Before you apply for a business travel credit card, consider these factors:
- Good to excellent credit required. Most business travel cards demand good personal credit. That means you’ll need a personal FICO score of at least 670 to qualify for most cards.
- High fees. According to U.S. News research, business travel credit cards have above-average fees compared with other types of business cards. Some business travel cards do waive their annual fee the first year.
- Above-average minimum APR. Compared with other types of business credit cards, business travel cards have an above-average minimum annual percentage rate of about 17%.
- Limited redemption options. If you have a co-branded business travel card, you may only be able to redeem your rewards with the brand and its partners. “Many of these cards allow you to redeem points for gift cards or merchandise, but that’s generally not the best use of miles,” Detweiler says. “If you don’t spend enough to earn a reward you’ll use, or if you don’t plan to travel, then a card that offers cash back rewards may be a better choice. Business owners can always use cash.” Other cards have flexible redemption options, including cash back, but they impose a lower value on these choices compared with travel.
Should You Get a Business Travel Card?
You need to carry a balance or you don’t spend enough to earn the rewards you would need to offset any annual fee. You could be better off with a business cash back card, ideally one with a low annual fee or no fee.
Evaluate cards on a case-by-case basis because you could find worth from a business travel card in other ways. “An exception would be if you can justify the annual fee based on the benefits you’re earning,” Detweiler says.
You plan to travel, need flexible capital, and can avoid fees and high interest rates, a business travel card is probably worthwhile.
“The value that businesses can access through a business travel card is pretty remarkable,” Shepherd says. “But that’s if they’re constantly redeeming points for travel and taking advantage of travel perks, which isn’t necessarily a given for most businesses.”
You could use a business travel card to supplement a business cash back card. Remember that splitting your spending between two or more cards will mean fewer charges on each account, which makes accruing enough rewards to justify each card’s annual fee more difficult.
What to Consider When Choosing a Business Travel Card
No two business travel cards are alike, so you’ll want to choose one tailored to your business needs. Some factors to weigh include:
Loyalty vs. flexibility. Airline or hotel co-branded business cards may be a good choice if you frequently fly or stay with a particular brand. You’ll earn the highest rate of bonus rewards with the brand and get valuable cardholder perks. However, co-branded business travel cards generally have limited redemption options. The best redemption values are typically with the brand and its partners.
A general business travel card might provide fewer benefits, but you can redeem your travel rewards for any qualifying travel purchase. For example, The Business Platinum Card from American Express offers up to a $200 airline fee credit. You’ll get access to more than 1,200 airport lounges worldwide as well as Marriott Bonvoy Gold Elite status and Hilton Honors Gold status. These credits and other perks, if you take full advantage of them, help offset the card’s hefty $595 annual fee.
Costs vs. benefits. Shepherd recommends doing a cost-benefit analysis to choose a business travel card. Look at typical spending for your business, and add up how much you expect to net from each card’s rewards. Factor in how often you anticipate using the cardholder benefits, and compare the card’s overall value with the annual fee.
“You may have to do a little math to figure it out for your situation, but getting free checked bags – a $25 to $35 charge one way on most domestic flights – is often enough to make it worthwhile, even if you don’t travel more than a handful of times each year,” Detweiler says.
Fees vs. perks. Various costs are involved in using a business travel card besides the annual fee. With few business travel cards offering 0% APR introductory periods on purchases or balance transfers, any balance you carry is likely subject to interest charges.
Business travel cards also have a higher minimum APR than other types of business credit cards. If you plan to carry a balance, a business travel card is probably not the right choice for you.
Justifying the cost of premium business travel cards with annual fees well into the triple digits could be difficult. These cards usually come with big benefits to match their big costs, so maximizing their value may hinge on taking advantage of those benefits.
Shepherd recommends considering which cardholder perks you’d invest in even if you didn’t have a business travel card. Be honest with yourself, she says. Would you truly have spent that much to access airport lounges?
Are There Card Limitations or Special Considerations for International Travel?
There aren’t any limitations for business travel cards when traveling overseas. The main consideration is to confirm your card doesn’t charge foreign transaction fees. Otherwise, you’ll pay a fee (typically 3% of the transaction) for each purchase.
You’ll also want to see if your card offers travel insurance or trip cancellation insurance. If you’re going to be renting a car, check that your card provides rental car insurance coverage.
Finally, the best international credit cards include 24/7 worldwide assistance. If your card is lost or stolen, you’ll be able to reach customer service immediately to get help and get a replacement card sent to you right away.