Business credit cards in Canada are built to keep your company’s spending separate from your personal life. If you run a small business, freelance, or earn side income, one of these cards can make bookkeeping easier and earn rewards on costs you already pay. But they work a little differently from personal cards, so it helps to know what you are signing up for.
This guide explains how business credit cards work, who can apply, and how to decide if one makes sense for you.
What makes business credit cards different
A business card is meant for business expenses only. Think supplies, software, advertising, fuel for a work vehicle, and travel to see clients. Keeping those costs on one card gives you a clean record of what the business spent. That makes tax time and expense tracking much simpler.
You don’t always need a large company to qualify. Many issuers accept sole proprietors, freelancers, and small partnerships. In most cases, you still apply as an individual, and the issuer looks at your personal credit history. That also means you are usually personally responsible for the balance, even though the card is in the business’s name.
Credit cards vs. charge cards
Some business cards are true credit cards. You get a credit limit and can carry a balance from month to month, with interest. Others are charge cards, which expect you to pay the full balance every month.
The American Express Business Gold Rewards Card is an example of a charge card. At the time of writing, its listing on Great Canadian Rebates says it has no pre-set spending limit on purchases. Your purchasing power adjusts with how you use the card and pay it. The listing says regular balances must be paid in full each month, and it lists a 30% interest rate on any late “Due in Full” charge. It also offers a Flexible Payment Option for some purchases at a listed rate of 21.99%.
The lesson applies to any business card. Read how repayment works before you apply.
How business credit cards earn rewards
Business cards earn points or cash back much like personal cards. Some pay a flat rate on everything. Others pay more in categories that matter to businesses, such as gas, office supplies, or advertising.
The Amex Business Gold Rewards Card lists 1 Membership Rewards point per dollar on purchases. Points can be used for travel, gift cards, and more, or transferred to programs like Aeroplan. The Great Canadian Rebates listing currently shows a welcome bonus of up to 70,000 points in your first year. That comes in two parts: 50,000 points after you spend $7,500 in the first three months, and 20,000 more after $30,000 in your first 12 months. The annual fee is listed at $199, with $50 for each extra card. Offers change, so confirm the details on American Express Canada’s small business cards page before you apply.
Business spending targets can be high. Only aim for a welcome bonus with expenses your business would have anyway.
Employee cards and expense control
A big draw of business credit cards is the ability to add cards for employees or partners. Each person can pay for work costs without using their own money and waiting for reimbursement. Many issuers also offer online tools to see who spent what, and some let you set limits on extra cards.
Extra cards can carry a fee, so add them only for people who really need one.
Insurance and other perks
Many business cards include insurance similar to personal cards. The Amex Business Gold card, for example, lists travel accident insurance, flight and baggage delay coverage, car rental theft and damage insurance, purchase protection, extended warranty, and mobile device insurance. These benefits usually apply only when you charge the full cost to the card, and each one has its own terms. Read the certificate before you count on it.
Who business credit cards suit best
A business card tends to work well if you:
- Have regular business expenses you want to track separately.
- Pay your balance in full every month.
- Want cards for employees or a business partner.
- Spend enough that the rewards and perks outweigh the annual fee.
It may not be worth it if your business spending is small or irregular. In that case, using one dedicated personal card only for business costs can do a similar job with less cost. The Financial Consumer Agency of Canada has a clear guide to choosing a credit card that covers fees, interest, and rewards.
Questions to ask before you apply
Before you pick a card, check a few things. Is it a credit card or a charge card? What is the annual fee, and how much do extra cards cost? How do the rewards line up with where your business actually spends? Are there foreign transaction fees if you buy from U.S. suppliers? And will the issuer report the card to your personal credit file?
The bottom line
Business credit cards can save you time and earn real value when your business has steady costs and you pay in full. Pick a card whose rewards match your spending, keep personal purchases off it, and watch the fee.
If a business card fits your plans, compare the American Express Business Gold Rewards Card on Great Canadian Rebates, where you can earn a $40 GCR cash back rebate on top of the card’s own welcome offer when you apply through our link. Browse more credit card and banking rebates at Great Canadian Rebates.