When To Change Credit Cards If Your Business Is Growing

The growth and expansion of your company serve as tangible measures of success, indicating that your enterprise is progressing to the next stage. But as your business blossoms, your financing needs and goals can change — including your expectations for business credit cards.

“Your business changes and the market does, too,” says Ted Rossman, senior credit card analyst at Bankrate. “A card that suited you well in the past may no longer be the ideal fit if you are spending differently or if you now carry a balance that you didn’t before. Or maybe what you want to get out of your rewards has changed — perhaps you used to travel a lot but now you are sticking closer to home and find cash back more appealing.”

Knowing when to switch business credit card issuers altogether is also important. Take the time to explore the advantages of switching to or adding a new business credit card, when it’s best to stick with your current card and what you should do with your original credit card if you make a change.

When to change business credit cards

As your business grows, your financing needs evolve, making it a smart time to consider a new business credit card. A card with better perks, lower interest rates or fewer fees can help reduce costs and improve cash flow. Below are key reasons and situations that might prompt a switch.

1. You have higher operating expenses

As your business grows, so will your expenses — making sufficient purchasing power essential to cover costs before client or customer payments come in. Many business owners seek new cards for greater borrowing flexibility.

“For instance, if a startup initially had a $20,000 credit limit and now needs $70,000 to cover incoming orders, it might hit a bottleneck without upgrading,” says Joe Camberato, CEO of commercial lender National Business Capital.

If your current credit card has a limited spending cap, you can consider requesting a higher limit — or it could be time to apply for a new and stronger card.

2. Your card lacks business-friendly rewards or features

If you began with a personal card but are now formalizing your business, it’s worth switching to a small-business credit card. While personal cards allow you to charge business expenses, they lack the comprehensive functionality and specialized rewards offered by business cards.

Unlike personal cards, business credit cards offer specialized rewards and tools, such as bookkeeping, invoicing and accounting, that can ease growing pains and support long-term growth.

If your current card doesn’t have business-friendly features or perks, it might be time to switch. For instance, some cards offer extra points or cash back on shipping, advertising and travel.

— Leslie Tayne
Financial attorney

3. You’re looking to give your business a bonus

If you’re planning a major business expense, consider taking advantage of a card with a lucrative welcome bonus. While your current cards may offer strong rewards, introductory bonuses are typically a one-time offer.

Cards like the Ink Business Preferred® Credit Card and American Express® Business Gold Card can deliver exceptionally high bonuses, which can be particularly advantageous for businesses in the growth stage.

“Credit card promotions with a 0 percent introductory rate are often available to new customers, and sign-up bonuses — typically in the form of cash back or travel rewards — are another perk of signing up for a new card,” Rossman says. “You might consider adding a new card every year or every few years to get these sign-up bonuses.”

4. You want your employees to have their own cards

Whether for a sales team traveling to conferences or a supervisor handling purchases, issuing employee cards can simplify expenses and save time. Authorized users can enjoy perks like purchase protection, travel insurance and extended warranties, while you benefit from higher rewards on their spending. Many issuers, including American Express, Capital One and Bank of America, also allow you to set individual spending limits for authorized users.

5. You or your employees expect to travel

If you are frequently traveling to business-related events, such as conventions or sales conferences, ensure your credit card meets those needs. “If you or your employees will be traveling, a travel-specific card can help you earn airline miles or hotel points. Airline-specific credit cards often waive baggage fees, as well,” Tayne notes. Look for perks like no foreign transaction fees, trip cancellation insurance and rewards on travel expenses.

“Frequent travel-focused rewards programs more than repay annual fees for businesses with extensive travel needs.”

— Andrew Lokenauth
Personal finance expert

6. You want to fund your expansion for less

A new credit card with a 0 percent APR introductory offer can help with necessary expenses for your business’s expansion at a lower cost by allowing you to carry a balance without incurring interest for a set period.

For example, financing a $50,000 oven for your second restaurant location at 18 percent APR over 18 months could cost $7,425 in financing fees, according to Bankrate’s credit card payoff calculator. But by using a 0 percent APR card instead and paying off what you borrow in full within the introductory period, you could avoid financing fees altogether. Just remember that most come with a 3 to 5 percent balance transfer fee.

When is it better to stick with your current business credit card issuer?

They say the grass is greener on the other side, but not always with business credit cards. If your issuer still meets your needs, there may be little benefit in switching.

“If you value an existing rewards balance, long credit history or rapport with your bank, stick with your current card,” Lokenauth says. “Larger established companies often retain original cards for stability and prestige perks.” And in today’s higher-rate environment, “sticking with your current issuer might be more practical to avoid potentially higher rates with a switch,” Camberato adds.

Here are a few additional reasons to stick with your existing issuer.

You might be able to avoid a credit check

A new card with a different issuer will usually require a hard credit inquiry, which can hurt your score if you’re planning to borrow again in the near future. If you’ve established a relationship with your current personal or business card’s issuer, it may approve another small-business card without a credit check, helping you to protect your score. Check for pre-approved offers or just call your issuer and ask what options are available.

You can maintain (and grow) your rewards

Top rewards cards can deliver strong cash back or travel perks, and outgrowing your current card doesn’t mean you have to give up on its rewards program. Many issuers let you “grow” with them by switching to another business rewards credit card in their roster.

In that case, contacting your issuer and requesting a product change or upgrade could result in a card that better meets your needs, allows you to keep and continue earning valuable rewards and avoids a credit check.

“They may be able to switch you to one of their other cards, perhaps one that suits you better from a rewards perspective, or maybe a card with a lower annual fee or a lower interest rate,” Rossman points out. “A product change is better for your credit score than canceling a card because you keep the available credit.”

When should you consider switching to a new business credit card issuer?

Here’s how to know if now’s the time to replace that existing card issuer completely.

• You’re eager to build business credit
  

  Building business credit is crucial for demonstrating creditworthiness as your business grows. Major business credit reporting bureaus include Dun & Bradstreet, Experian Business, Equifax Business and the Small Business Financial Exchange. If your issuer doesn’t report to them, it may be time to switch.

• Your issuer doesn’t have the options you need
  

  Many big banks offer multiple business cards, but not all do, and you may have outgrown your issuer’s options and need to move on to better rewards, business accounting features or business support.

  “When your business expands or grows, you could be leaving benefits or points on the table with your current card,” Tayne advises. “See which spending categories your business typically engages in to learn if it aligns with the same spending categories of a new business rewards card.”

• You need a larger line of credit
  

  Whether stated or not, issuers set a limit on the amount of credit they’ll extend, and it can be either across multiple cards or on a single line. If you need more and feel as though you can handle it responsibly, consider a new issuer. You don’t have to close your old account; in fact, your credit utilization will thank you for leaving the old card open.

What to do with your original credit card when switching

You don’t necessarily have to close your existing business credit card after getting a new one, “and, in fact, maybe you shouldn’t,” Rossman says. He recommends keeping the old account open to preserve credit history and as a backup card.

“But if you really want to cancel the account, you can usually dispose of the card by cutting it up if it is plastic. Metal cards sometimes need to be mailed back to the card issuer for proper disposal,” he adds. Rossman also warns, “Make sure to redeem any card rewards before canceling it, since those are usually forfeited upon account closure.”

The bottom line

It’s smart to shop around for a business credit card, especially if your company is growing, so you can maximize rewards and benefits tailored to entrepreneurs like you. Compare business credit cards carefully, paying close attention to interest rates, fees, rewards, bonuses and other incentives to find the best fit for your needs.