Updated: Jul 16, 2024

Should Freelancers Get a Business Credit Card?

Find out whether it is a smart financial move for freelancers to apply for a business credit cards. Learn when it makes sense for the self-employed to use a small business credit card. See if it is worth earning the rewards on business expenses or whether the interest rates and fees are make it impractical.
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Many people believe that having multiple streams of income is more beneficial and secure than relying solely on a single employer for income.

If you earn freelance income through full-time contract work or side gigs, you may be wondering if a business credit card would benefit you.0

While credit card companies may offer cashback on expenses like meals, office supplies, gas, and cable bills, it's essential to consider if getting a business credit card is a wise decision.

Moreover, are there any reasons why you should avoid getting a business credit card?0

Perks of a Business Credit Card

There are several advantages to having a separate business credit card.

Smoother cash flow

If you are spending lots of money related to your business, you may not want to put up your own cash and wait to be reimbursed.

For example, if you are a contract expert witness and need to travel to another part of the state for a deposition, you may not want to use your debit card to buy your airline ticket, meals and Uber rides you will be invoicing for.

Airline rewards or cash back benefits

The cash back and airline miles incentives for business credit cards are enticing.

Many cards offer a generous rewards rate on common business expenses such as office supplies and utilities.

Moreover, you might get a large sign-up bonus (usually after you've reached a certain amount of spending within the first few months of owning the card).

Better terms than personal credit cards

With a business credit card, you may have a higher credit limit, or even an extended billing cycle, which may help cash flow issues.

For example, the Plum Card from American Express OPEN, allows credit card holders to carry a balance for up to 60 days without being charged interest. If they pay their balance early, they receive a 1.5 percent discount.

Simpler bookkeeping

When it comes time to do your expense accounting, it will definitely be easier to keep business expenses separate from your own everyday personal expenses.

You won’t have to comb through your personal credit card, using a calculator and creating excel spreadsheets to organize your business and personal expenses.

All of your business expenses will be neatly organized in one account.

Building a business credit profile

If there is a possibility you will need to take out a business loan in the future, a business credit score will help you and demonstrate to lenders that you have the ability to pay.

Can Freelancers Apply for Business Credit Cards?

Freelancers can absolutely apply for and use a small business credit card.

To get a business credit card, you do not need to set up a business, such as an LLC or a corporation, although many people do so.

You do not need a federal tax ID number or EIN, you can apply with your Social Security number as a sole proprietorship.

There may be benefits for both asset protection and tax savings to receive freelance income through a business vs. a sole-proprietorship.

Talk to a tax advisor, tax attorney or CPA if you have questions regarding your freelance business tax structure.

When you apply for a business credit card, the issuer will most likely perform a personal credit check to make sure they feel confident extending credit to you.

If you have an LLC with a partner, you may have a cosigner sign with you to get higher credit or a lower interest rate.

Who can benefit from a business credit card?

  • Nannies and babysitters paying for gas and groceries to be reimbursed from families.
  • Contract pilots that are booking airline flights, rental cars and hotels for trip expenses, then being reimbursed after invoicing trip expenses.
  • Real estate agents who pay for their own marketing expenses, realtor dues, and travel costs, then make their income on home sale commissions.
  • Mobile notaries public who must travel to meet clients, then are paid traveling fees.
  • Consultants who travel to meet clients, and then are paid later.
  • People who manage their own Airbnb or VRBO rental home. This may be as a sole proprietor, or through an LLC. Rent is paid either to the individual or to the LLC account, and expenses for cleaning, maintenance and upgrades are paid by the individual or the LLC.
  • People who drive for Uber or Lyft. The majority of Uber and Lyft drivers are sole proprietors who will report their rideshare earnings on their Schedule C tax form, but some may have an LLC, corporation, or other tax entity that you prefer to operate under.
  • Anyone else working in a freelance capacity.

Many people are independent contractors or freelancers.

For example, if you go to the hospital emergency room, the doctor you see may be a freelance doctor, directly contracting with the hospital.

Browse through your favorite magazine, and the articles you read may be written by a freelance writer.

Your Uber driver giving you a ride home from the airport is a freelancer.

Why It Might Not Make Sense

Generally, the applicability of “should you get a business credit card” is the same criteria of “should you get a personal credit card” – with some differences:

If you don’t have very many expenses at all...

If you make a full-time income as an employee and do occasional work on the side, such as writing a blog post once a week, it might not make sense to open a business credit card.

If you do, make sure you choose one that has no annual fees ever.

If you can’t separate your expenses...

As a general rule, you should never use your business credit card for personal expenses.

Check with your card issuer for any hard and fast rules on this.

For example, Chase has enforced this in the past, even going so far as to send an email to cardholders.

Be as organized as possible, and you’ll spare yourself headaches and possible tax problems down the road.

Although a business credit card should make it easier to separate personal and business expenses, you should not lean on your business cards to cover personal expenses while you wait to receive income.

If you’ll need to carry a balance...

A business credit card can help with short-term cash flow issues of a business, but should not be used as a line of credit, which allows you to draw on funds as you need them.

Typically, interest rates on lines of credit are generally low, and limits are higher.

Tips for Business Credit Cardholders

When using a business credit card, always keep note of these rules.

Don’t take on too much debt

You will be better off if you do not think of your business credit card as a free line of credit.

Be smart with your finances and plan your marketing and business expenses based on what you can afford, not how much credit you have been extended.

Monitor your interest rate

The low interest rate you got when you opened up your credit card may not continue, even if you pay the minimum or full balance every month.

Keep an eye on your statement for your interest rate and changes to your annual fee.

Monitor your annual fee

Most credit cards do not charge you an annual fee the first year, but will charge fees in subsequent years.

If you are paying a $400 annual fee to keep a credit card, you should weigh whether the card, and the benefits, are really worth the cost.

Because many people do not want to close accounts while trying to build a credit card history, they will simply keep the card and pay the annual fee.

You will be better off shopping for a card with no annual fee instead of a nice sign-up bonus and a steep annual fee.

Have a business advisor or mentor

Depending on the nature of the work, running a business can be stressful, take nerves of steel, and require discipline.

If you don’t know what you’re doing, seek out a mentor or coach to guide you, and set up a regular meeting schedule.

If you can afford it, have a tax advisor or CPA check your tax return and advise you if your business is structured the best possible way, and you are making smart financial decisions.


If you are a freelancer, you probably enjoy being independent and are willing to deal with the drawbacks of working for yourself vs an employer.

You will be responsible for paying business expenses and costs, doing your own taxes, providing your own health insurance, and setting aside money for retirement.

A business credit card can be a powerful tool when used responsibly.