Self-Employed? You May Qualify For A Business Credit Card

Being self-employed brings great freedom and flexibility when it comes to scheduling, determining workflow, and setting pay rates. But there’s one more benefit that you might not immediately think about: getting a business credit card. Even though you may not run your work as a “business,” you still could be eligible for a business credit card. There are plenty of benefits to having a business credit card, so perhaps it makes perfect sense for you to apply for one.

Is a business credit card right for you? Read on through to find out!

Do I Need An “Established Business” To Get A Business Credit Card?

Not necessarily. You might qualify as a business owner as long as you sell goods or services outside of a traditional employment situation, enabling you to get a business credit card.

You may qualify if you sell items via online storefronts, such as Amazon or eBay, or offer lessons for activities, such as music or art. You may even qualify if you provide freelance services, such as writing, photographing, or writing code. Do a maintenance side gig for friends and neighbors? That could qualify you, too.

Essentially, if you make a profit doing something outside your day job or personal life, you could qualify as a business owner.

What Are The Perks Of A Business Credit Card For The Self-Employed?

There are numerous benefits to maintaining a business credit card while self-employed.

The primary reason you might want to apply for a business card is so that you can separate your professional expenses from your personal ones. This means you can keep track of business-related spending more easily — something that’s important for both budgeting and filing taxes.

Reward programs are also structured for business expenses. For instance, some business-specific cards offer rewards geared towards travel, which might be beneficial if you spend time flying for work. Some cards also bundle in perks, such as access to airport lounges or free Wi-Fi.

Additional business credit card benefits can include excellent sign-up bonuses, higher potential credit limits, and free employee cards.

Are There Any Drawbacks To Watch Out For?

As with any credit card, it’s always important to pay off your balance on time. Doing so limits interest accrual while potentially improving your credit score.

You’ll also want to avoid applying for too many cards in a short space of time. That’s because applying for a credit card results in a hard pull on your credit score. Too many hard pulls in quick succession could drop your credit score.

How Do I Apply For A Business Card?

You’ll first want to do proper research to find the best card for you. Not all cards are equally suitable for everyone. Some cards look snazzy upfront, but they may not mesh with your professional pursuits. With that in mind, you’ll want to look for a card with rewards that align with your business expenses while also allowing you to make the most of the card’s other benefits.

Because you’re self-employed, you might not have a history of business income or a business tax identification number. In most cases, card issuers will do a pull on your personal credit and your personal income to guarantee your credit history. Additionally, your social security number can often be used in place of a tax ID number. During the application process, you can also usually list yourself as a sole proprietor when filling out what kind of business you own.

And most importantly, never lie on a credit card application. Lying about your business or making up business income will only bring about a world of hurt in the future — even if you somehow manage to get approved.

How Can I Improve My Chances Of Being Approved For A Business Credit Card?

As with any credit card, it always helps to have a good credit score. Ultimately, though, issuers have their own criteria when deciding who gets approved and who doesn’t. As such, you’ll want to double-check that you meet the requirements of a card before applying.

Top Business Credit Card Picks For The Self-Employed

Best For Cash Back

With 1.5% cash back and no annual fee, the Spark® Cash Select from Capital One® is easy to recommend. Once holding this card in hand, you’ll get 1.5% cash back across all purchases — plus there’s no cap on the amount you can earn.

New cardmembers can additionally collect $200 once they pass the $3,000 spending threshold within their first three months.

Beyond rewards, Capital One packs in several standard credit card benefits, including fraud protection and no foreign transaction fee. All told, this is a great, simple card that can work well in the wallet of almost anyone who is self-employed.

If you can stomach a $95 annual fee, Capital One offers another cash back card in the form of Spark Cash. This card features a higher rate (2% back) to help offset the annual fee.

Best For Travel Rewards

The best option for many small businesses, Chase Ink Business Preferred℠ is a great choice for those who are self-employed, too. This card from Chase is simply a solid, well-rounded offering.

It packs in three points per dollar on the first $150,000 spent in combined purchases on travel, shipping, internet/cable/phone services, and advertising on social media and search engines each account anniversary year. For all other purchases, you’ll get one point per dollar spent.

On top of that, you’ll get a bonus of 80,000 points after you spend at least $5,000 in the first three months of opening your account. Because a single point usually equals $0.01, those 80,000 points are the equivalent of $800 cash back. Chase also bundles in purchase protection and employee cards at no extra cost.

You can also reap plenty of travel benefits, too. To start, points are worth 25% extra when redeemed through Chase Ultimate Rewards. You can further transfer points on a 1:1 basis with other travel programs, including United MileagePlus and Marriott Bonvoy. Finally, there is no fee on foreign transactions, a plus if you travel overseas frequently.

Best For Building Credit

If you don’t have great credit or have no credit at all, have no fear — there are options out there for you. Probably one of the better bits of plastic for the low-credit user is this option from Capital One.

The Spark Classic® features a basic 1% cash back rate, but it lacks an annual fee as well as a foreign transaction fee. This 1% cash back rate is pretty pedestrian; however, considering that it’s aimed at those with a middling credit history, the low rate is to be expected.

While Capital One might skimp a bit on the rewards rate, it doesn’t skimp on other benefits. You’ll get the issuer’s standard fraud protection, plus purchase security, extended warranty, and an auto rental damage waiver.

By using the Spark Classic responsibly, you’ll eventually be able to graduate to cards with beefier reward schemes. That makes the Spark Classic a solid choice for self-employed users who lack a credit history or have one that is less-than-stellar.

Final Thoughts

Want more business card options? Check out our comprehensive breakdown of the best business cards.