June 13, 2023

What is a business credit card? A complete guide

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Juggling cash flow can be a difficult process. In some cases, you may need to access outside working capital to keep your business above water.

One popular option to help cover day-to-day business expenses is the business credit card. In this article, we’ll explore the finer details about business credit cards, how they work, what they’re designed to help you accomplish, and the perks of being a cardholder.

What is a business credit card?

A business credit card is designed specifically for business owners rather than for individual use. Business operators typically lean on credit cards to pay their fixed expenses, especially when their monthly income fluctuates.

Some of the top business credit cards come with unique features, including:

  • Employee cards with spending controls that let you get rid of the reimbursement process
  • Integrations with your favorite accounting software
  • Real-time expense management tools
  • Tools that help you analyze and optimize your spending

Aside from the features above, the best business credit cards also offer rewards like cashback and travel perks. However, these are usually matched with high interest rates and fees, so it’s best to avoid carrying a balance and look for options with minimal fees.  Business credit cards often come with unique benefits that are tailored for business owners.

How business credit cards work

Business credit cards work just like your personal credit card. You use your business credit card to charge purchases and receive a statement at the end of the month that includes your balance and minimum payment amount.

When you pay the balance off in full, you won’t pay any interest. However, if you opt to carry a balance, you’ll accrue interest on the amount owed. Your interest rate will vary based on your business’ credit history.

Exploring the different types of business credit cards

There are different types of cards to choose from, each with its own benefits and drawbacks:

Corporate cards

Corporate credit cards are tied to corporate accounts. These accounts are typically available only to businesses that generate at least $4 million in annual revenue.

One of the biggest differences between corporate credit cards and business credit cards is the responsible party. Most business credit cards require a personal guarantee, making the business owner or employees responsible for the bill if the business can’t pay. In the case of corporate cards, the corporation is the responsible party.

These cards are a strong option for large companies that process a large number of transactions and have multiple employees authorized to spend on the company’s behalf.

Legacy corporate cards were simply spending accounts with better terms than business credit cards. Modern corporate cards, like Ramp, bring technology into the equation to help you better manage your funds, create expense reports, close your books faster, and even enjoy negotiated discounts on crucial business software.

Charge cards

Business charge cards are similar to business credit cards, but you’re required to pay the balance in full each month. These cards are best used to track spending because cash purchases are far more difficult to track.

Physical cards

Physical cards are pieces of plastic that have your account data encoded on a magnetic strip and in a chip. These are the cards you swipe, insert, or tap at the point of sale.

Physical cards come with additional risk, and bouncing between physical and virtual accounts can become an accounting nightmare. With Ramp, you can attach physical and virtual cards through the platform’s software for better security and seamless accounting.

Moreover, physical cards can only be issued to one user at a time and cannot be transferred.

Virtual cards

Virtual credit cards are digital versions of physical cards. With the right platform, you’re able to create virtual cards for specific online purchases and cancel them when the purchases are completed. These are also great for subscriptions you’re not sure you want to keep or empowering employees to purchase supplies online.

Virtual cards can be issued immediately upon request. In many cases, you’ll have access to unlimited virtual cards. These cards are also typically easy to transfer and can be terminated at any time.

Five strategies for managing business expenses with credit cards

Monitor and categorize business expenses

Monitoring business expenses is the first step to meaningful expense management. After all, you can’t manage your expenses if you’re not sure what they are. Follow these steps:

  1. Monitor spend at a macro and micro level: It’s important to be able to see how your company is spending overall, but also to zoom into each spending account to monitor activity.
  2. Use instant reconciliation and receipt matching: Use modern technologies, like those offered at Ramp, to simplify this process with instant account reconciliation and receipt matching.
  3. Integrate spend management and accounting software: Integrate your spending accounts with other financial management tools to better monitor your business expenses.
  4. Automatically categorize expenses: Keep an eye on expense categories to determine where you’re spending the most and where optimization opportunities arise. Modern options like Ramp automatically categorize your expenses for you.

Set up approval workflows

Managing business expenses isn’t just about tracking spending. It also has to do with creating an efficient process for approving employee purchases. To do so effectively, it’s critical to set up approval workflows.

Define the amount of each type of purchase that will require your approval. Then, empower your employees to make small purchases of specific types without your approval and define how to request approval when needed.

This is another area where Ramp can help. You can give employees their own spending cards that automatically apply your parameters. If an employee tries to make a purchase that goes against these boundaries, it will be declined until you provide approval.

Implement spending limits and other controls

You can’t spend your time looking over their shoulder every time an employee makes a purchase. That’s where spending limits and other controls come in.

With cards like Ramp, you can give each of your employees a spending card. You’ll be able to set unique limits for each card, allowing and denying specific types of purchases and setting spending limits.

For example, an office employee may need access to $100 in office supplies here and there but doesn’t need to cover travel expenses. A sales employee may need to book hotels and car rentals or take a client out to a nice meal. With the right card, you can customize each employee’s spending abilities based on the needs associated with their job.

Monitoring employee spending

As a business owner, you shouldn’t have to wait for a monthly account statement to see how your employees are spending company money. Look for credit cards that give you the ability to monitor employee spending in real time.

For example, Ramp makes it impossible to miss employees going outside your company's spend policies. If they spend beyond their limit, Ramp alerts managers via email. From there, the manager can discuss the issue with the employee and take action if needed.

If an employee uses your Ramp card for a purchase that violates your policy, Ramp flags the transaction for manager review. In conducting the review, the manager can approve the transaction, dispute the transaction, lock the employee's card, request a repayment, or a mix of these.

Leverage rewards and cashback

Most business credit cards come with rewards programs. In exchange for each purchase with the card, you receive a perk such as cashback, airline miles, or credit toward a gift card.

You may also be able to take advantage of a sign-up promotion to earn bonus points if you spend a specific amount of money shortly after your account opening.

Choose your rewards program wisely. Many travel rewards programs are difficult to use, so cashback is often the best bet.  

Discover how Ramp transforms business card solutions

Ramp is nothing like a traditional business credit card account. The Ramp charge card doesn’t come with fees, and there’s no credit card interest. When you sign up for Ramp, you also get access to intuitive software that provides a host of useful tools.

Here are just a few of the most unique features of the Ramp corporate card:

  • Set individual spending limits and restrictions for each employee card you create.
  • Access a higher credit limit with Ramp’s sales-based underwriting.
  • Take advantage of automatic receipt tracking and purchase categorization.
  • Integrate your Ramp account with your favorite accounting platform to save a significant amount of time closing your books.

Learn more about our business charge card solutions and find out how Ramp can help today.

Content Marketing Manager, Ramp

Richard Moy is an experienced freelance Content Marketing Manager supporting Ramp. Prior to joining Ramp, he served as a content marketer and editor at BetterCloud and Stack Overflow.

Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.


What is the difference between a business credit card and a personal credit card?

Business credit cards and personal cards are similar. They both represent revolving lines of credit and give you the ability to make point-of-sale purchases anywhere they’re accepted. They also both deduct the money you spend from your available credit and add it to your balance when you use them. The core difference between the two is the audience they’re designed for.  

Business credit cards are designed for businesses that need an easily accessible revolving line of credit to cover day-to-day business expenses. Personal credit cards help consumers with day-to-day purchases.

What are the requirements to apply for a business credit card?

In most cases, you’ll need a business that’s been around for at least three years and that has a positive credit history. Aside from credit and business age requirements, you’ll need statements that show your revenues and earnings and that your company can afford to take on debt.

If your business doesn’t have any revenue, you may be required to make a personal guarantee that’s tied to your Social Security number.

Can freelancers and sole proprietors benefit from business credit cards?

Freelancers, sole proprietors, and new businesses may all qualify for a small business credit card.

How can businesses choose the best credit card for their needs?

Consider what primary feature would benefit your business the most:

Also consider the features that will help you manage your expenses and grow your business. Ramp offers unlimited employee cards, automatic receipt tracking, automatic expense categorization, and other features to help your business thrive.

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