The Best Charge Cards For Small Businesses
You may have heard the terms used interchangeably in casual conversation, but charge cards and credit cards aren’t the same thing. While small businesses can make great use of both types of cards, charge cards come with a unique set of risks and rewards.
A credit card is a revolving line of credit. A bank extends you a credit line, and you can spend up to your limit, paying interest on any balance you carry beyond the first month. When you pay off your debt, the full line of credit becomes available to you once more.
A charge card, on the other hand, doesn’t come with a credit limit. Instead, it may have a limit that can vary month to month based on a variety of factors ranging from your payment history to prevailing economic conditions. The catch? You need to pay off your entire balance every month. If you don’t, you’ll be hit with fees and interest rates that usually far exceed anything you’d see with a credit card. You will likely forfeit your reward points as well. In some cases, you may be able to spread out your payment on certain purchases through programs like American Express’s Extended Payment Option. Because they’re less likely to earn money on carried balances, charge card companies tend to have higher annual fees.
Note that charge cards aren’t quite as widely accepted as credit cards, so it’s best to have another payment method as a backup.
Think a charge card is right for your business? Here are some of our favorite options.
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American Express Platinum
Charge cards are American Express’s wheelhouse, and its Platinum Card is one of the most well-known and prestigious charge cards around. With extremely generous reward tiers and a laundry list of benefits, it’s quite a powerful little piece of plastic for travelers. Be prepared for some sticker shock when you look at the annual fee, however.
|American Express Platinum|
|Signup Bonus||60,000 points|
|Rewards||5 pts./$1 on flights and hotels through Amex Travel; 2 pts./$1 on other travel|
|1 pt./$1 on all other purchases|
A glance at Amex Platinum will tell you that it’s a card heavily weighted toward people on the go. The 5x reward tier offers an insane return on travel expenses, as long as you can make them through Amex’s first party system. The 2x return on expenses that you don’t book through Amex isn’t too shabby either. Points can be transferred to participating reward programs at variable rates. They can also be used as statement credit as long as you have at least 1,000 points.
The $550 annual fee is pretty brutal, but if you make strategic use of the card’s other perks, it’s not quite as bad as it looks. You’ll get:
- $15 worth of Uber rides/mo, plus $20 in December
- $200 airline fee credit
- Hotel and resort benefits/upgrades
- $100 TSA fee credit for global entry
If you aren’t a heavy traveler, however, this card is probably not a great investment. Businesses that are less focused on travel and more focused on large purchases may want to consider the business version of the platinum card. It replaces the 2 point tier with a 1.5 point tier for qualifying purchases. You’ll lose the Uber credits and some of the other perks, however. On the bright side, the Platinum Business Card is $100 cheaper per year.
American Express OPEN Business Gold Rewards
If the Platinum Card sounds too expensive and travel focused, Amex also offers more general-purpose charge cards. Amex OPEN Business Gold may not come with the incredible 5x reward tier of Platinum, but it’s cheaper and extends a 3x reward tier to a broader variety of purchases.
|American Express OPEN Business Gold Rewards|
|Annual Fee||$175 ($0 first year)|
|Signup Bonus||50,000 points|
|Rewards||3 pts./$1 for the first $100,000 spent on a category of your choice–airfare, advertising, shipping, gas stations, or computer hardware and software; 2 pts./$1 for the first $100,000 spent on the other four categories.|
|1 pt./$1 on all other purchase|
The American Express OPEN Business Gold Rewards card is one of the more interesting pieces of business plastic on the market. Rather than coming out of the box with a set reward tier structure, it lets you choose one of five different categories to be your 3x reward tier. You don’t even have to worry too much about buyer’s remorse, because the other four categories will still be rewarded at 2x. It gives the card a modular, customizable feel that can be fitted to most types of business.
The $175 annual price tag is still on the steep side, though Amex waives the fee for the first year. Note that you’ll have to spend at least $5,000 during the first month to qualify for the 50,000 point signup bonus, so plan your purchases accordingly if you decide to go with this card.
Overall, Amex OPEN Business Gold provides a pretty good value–and more versatility–at a lower annual price than some of their elite cards. The trade-off is that you won’t be getting the 5x reward tiers, statement credits, and some of the perks that come with a card like Amex Platinum.
American Express Premier Rewards Gold Card
If the Platinum Card looks like overkill and the OPEN Business Rewards Gold Card too unfocused, you may want to consider the Premier Rewards Gold. Like Platinum, it’s oriented around travel, but it comes in at a more affordable annual fee.
|American Express Premier Rewards Gold Card|
|Annual Fee||$195 ($0 first year)|
|Signup Bonus||25,000 point|
|Rewards||3 pts./$1 on directly booked flights; 2 pts/$1 at supermarkets, gas stations, and restaurants in the U.S.|
|1 pt./$1 for all other purchases|
If the Platinum card caters to the well-heeled, international jet-setter, Gold Premier is for the business owner whose work takes them around the US. You’ll still get some nice airline-related perks, so long as you book those flights directly; no Kayak or Priceline bookings. You’ll also get a smaller version of the Platinum card’s airline credit, giving you $100/yr. in statement credits for things like baggage fees, which can offset more than half of the significant annual fee.
Rather than rewarding you for fancy resort spending, the Premier card’s 2x tier is focused on more pragmatic expenses you’re likely to encounter during your domestic travels.
As is usually the case, you’ll need to spend a minimum amount of money in the first three months to get the signup bonus ($2,000 in this case).
As is the case for all Amex charge cards, remember that they’re not as widely accepted as Visa or Mastercard credit/debit, so be sure to have a plan B in your wallet.
American Express Plum Card
If the reward programs outlined above sound like more trouble than they’re worth, or if your spending habits and cash flow would make those cards hard to use, there’s another option. Enter American Express’s Plum Card, a charge card that sacrifices lavish words for flexibility.
|American Express Plum Card|
|Annual Fee||$250 ($0 the first year)|
|Rewards||1.5% early payment discount|
If a charge card could be “controversial,” the American Express Plum card would be a top contender for that title. Why is that?
While the Plum Card is a technically a charge card, it functions almost more like a cash back credit card. For starters, you’re given 60 days to pay off your balance without incurring a late fee. Pretty neat, right?
Well, there’s a catch. If you pay off your card early, within 10 days of your statement closing date, you’ll get a 1.5% discount on your bill. This is comparable to the 1.5% return you’ll see with most business credit cards that offer cash back, but with a little less leeway for earning your rewards. If you want that type of reward system in a charge card, however, the Plum Card can accommodate you.
Charge cards fill an increasingly small but still popular niche, offering some distinct advantages and drawbacks to the businesses that use them. Though business credit cards have been rapidly closing the gap, charge cards still offer some of the highest rewards tiers, albeit with high annual fees.