Business Credit Card Trends For 2023 And Beyond

Credit card trends tend to be closely tied to economic trends more generally. For business owners considering applying for a business credit card to finance business activity, being aware of trends in the credit card industry — and being aware of what macroeconomic conditions may mean for your search for a business credit card — is vitally important.

Let’s explore some of the latest credit card trends poised to affect the industry (and your business) in 2023 and beyond.

1. Interest Rates Should Remain High, So Consider A Balance Transfer Card

Since March of 2022, the prime interest rate has gone from 3.25% to 8%, and continuing inflation concerns mean that the Fed is unlikely to substantially lower interest rates any time soon — if anything, interest rates may continue to rise. Meanwhile, the Federal Reserve Bank of St. Louis reports that the average interest rate for all US credit cards has risen even more precipitously as of late — as of the first quarter of 2023, the average US credit card APR is 20.09%, up from 19.07% in Q4 2022 and just 16.27% in Q3 of 2022.

At the same time, according to the Federal Reserve Bank of New York, the total credit card balance of all Americans reached $986 billion in the fourth quarter of 2022. LendingTree notes that not only is this the highest recorded debt amount since the Fed began tracking it in 1999 — it’s also the biggest quarterly increase in the report’s history.

So, what does this all mean? It means that just as Americans’ credit card debt has reached unprecedented levels and is poised to hit $1 trillion for the first time, that debt has become significantly more expensive to service. It all adds up to an enormous debt burden borne by the average American credit card holder. In such circumstances, it is imperative for business owners to reduce credit card debt costs, and one way to do this is with a balance transfer business credit card.

The best business balance transfer credit cards will come with a 0% introductory APR for balance transfers (and perhaps purchases as well) that lasts anywhere from nine to 21 months. Most balance transfer credit cards charge a balance transfer fee of 3-5%, though a few such credit cards waive the balance transfer fee for balance transfers made within 1-2 months of getting the card.

2. With The Continued Risk Of Recession, Request A Credit Limit Increase Sooner Than Later

Bankrate’s quarterly survey of economists reveals that, according to the experts’ average forecast as of the end of Q1 in 2023, there is a 64% chance of the financial system contracting by the end of 2023. Naturally, lending institutions get bearish during recessions, as they grow weary of borrowers defaulting on their debts and/or declaring bankruptcy.

With the chances of an impending recession remaining high, if you’re looking to expand your available credit, the best time to request a credit limit increase for your current accounts is now. If you wait until macroeconomic conditions worsen, your credit card issuer may not be inclined to take on the risk of granting your request.

3. You May Need To Improve Your Credit Health To Stay Credit-Worthy

Uncertain economic conditions are also likely to lead credit card issuers to tighten their credit score requirements for new card applicants. The same concerns about the financial stability of borrowers that leads card issuers to be reticent in extending more credit to borrowers also lead them to be more selective in issuing credit cards in the first place — particularly cards meant for sub-prime borrowers. If your credit health isn’t the strongest, now is the time to do what is necessary to strengthen it.

Thankfully, you don’t need to pay in order to check your business credit score (or your personal credit score, for that matter). The best free credit score sites will keep track of your credit score (using data provided by the major credit bureaus), which you can check whenever you desire. Some such services also offer free credit monitoring and transaction alerts so you are notified whenever something negatively impacts your credit health.

You might think that since you’re aware of when you’ve made a large purchase or when you’ve missed a credit card payment, you don’t need to be alerted when something impacts your credit score. However, the reality is that credit bureaus can make mistakes that hurt the credit scores of unsuspecting consumers. If this happens to you — again, this happens more often than you might think — you want to know about it ASAP so you can dispute the error on your credit report.

Of course, it’s a good idea to be conscious of your credit health regardless of the state of the economy. Our guide to improving your business credit score contains a wealth of helpful information, but if you’d like a quick summary, here are a few quick tips.

4. With Interest Rates Rising Fastest For Business Credit Cards, Consider Using A Personal Credit Card For Business

According to a recent WalletHub report, interest rates for business credit cards have been rising at a faster rate than interest rates for credit cards as a whole. If you’re seeking to use a credit card for business expenses and you intend to carry a monthly balance, you may be able to save on interest payments by getting a personal credit card instead.

There’s nothing wrong with using a personal credit card for business expenses — in fact, personal credit cards are more heavily regulated than business credit cards. The 2009 CARD Act prevents issuers of personal credit cards from jacking up your APR overnight and charging excessive fees for minor infractions, and it requires any introductory rate to be offered for at least six months. Such provisions may be voluntarily offered by business credit card issuers as a courtesy, but they are not legally required to do so.

An important note: If you use a personal credit card to pay for business expenses, don’t use the same card on personal expenses as well. This way, at tax time, you won’t have to go through your card’s purchase history line-by-line to determine which purchases were related to your business and which weren’t.

Keeping Up With Credit Card Industry Trends

While following industry news to keep up with credit card trends can help you make informed credit card decisions, following best practices regarding credit card use will always be to your benefit.

• If you’re leaning towards applying for a business credit card, check out our step-by-step guide to getting a business credit card, then read through our rundown of the best business credit cards.
• Alternately, corporate credit cards can be a great fit for corporations and startups with strong financials and high growth potential, but who may lack much of a credit history. If this sounds good, read up on how to get a corporate credit card, then check out the best corporate credit cards currently available.
• If you’re also considering other types of business funding, check out your best small business loan options.

FAQs: Business Credit Card Trends