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Best Small Business Credit Cards in June 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication. This site may be compensated through a credit card partnership.

Small business credit cards not only make it easier to separate personal and business finances, they offer business owners advantages they may not need or be able to get with a personal credit card. You might find the number of business credit card options overwhelming, so identifying your priorities will help you choose. Do you want rewards? Or do you merely need a card for short-term financing? The best small business credit card for you will depend entirely on your needs and goals.

Best small business credit cards for financing

0% intro APR financing

When to consider business cards with intro 0% financing: A business card with an intro 0% APR period can save you hundreds of dollars on interest compared to cards without 0% APR introductory periods. During the intro period, new purchases won’t accrue interest, and you can take your time paying off large purchases such as laptops and desks for your business.

The Blue Business℠ Plus Credit Card from American Express

The information related to The Blue Business℠ Plus Credit Card from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

The Blue Business℠ Plus Credit Card from American Express

Regular Purchase APR
15.49% - 21.49% Variable
Intro Purchase APR
0% for 12 Months
Annual fee
$0
Rewards Rate
2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners. 2X applies to the first $50,000 in purchases per year, 1 point per dollar thereafter.
Credit required
good-credit
Excellent/Good

Why we like it: The Blue Business℠ Plus Credit Card from American Express offers small business owners the chance to finance new purchases with the longest intro period for purchases of any business card at intro 0% for 12 Months; 15.49% - 21.49% Variable APR after. Plus, you can earn rewards, receive purchase protection and get extended warranties — all with a $0 annual fee.

What to watch out for: You can lose the intro APR if a penalty APR applies to your account for any reason. To avoid this, always pay your minimum amount due.

Low interest rate

When to consider business cards with low interest rates: If you find your business has to carry a balance from time to time, it can be beneficial to have a low interest credit card that won’t cause you to rack up as much interest as other cards. But as a rule of thumb, try to pay your balance in full every month to avoid interest charges.

Why we like it: The Bank of America® Platinum Visa® Business credit card has the lowest APR at 11.49% - 22.49% Variable APR. If you qualify for the lowest rate and end up carrying a balance, you’ll be charged substantially less interest than other cards with high APRs. Although there are no rewards, new accounts can earn an $300 statement credit when you make at least $3,000 in net purchases within 90 days of your account opening That’s the lowest spending requirement to get a bonus on a business card.

What to watch out for: You may not qualify for the lowest rate because the APR varies based on your personal or business’ credit worthiness.

The information related to Bank of America® Platinum Visa® Business credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Cash flow management

When to consider a business card for cash flow management: Some small businesses may not have a consistent cash flow, and that’s where a card with a flexible payment option comes in handy. You may be allowed to carry a balance interest free until your next statement if you make the minimum payment.

The Plum Card® from American Express

The information related to The Plum Card® from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

The Plum Card® from American Express

Regular Purchase APR
N/A
Annual fee
$0 introductory annual fee your first year, then $250.
Rewards Rate
Get a 1.5% discount when you pay early, with no cap on what you can earn back.
Credit required
good-credit
Excellent/Good

Why we like it: The Plum Card® from American Express has an uncommon payment option where as long as you pay your minimum due, you can pay your balance in up to 60 days without accruing interest (terms apply). This ‘grace period’ is uncharacteristic of business cards (and all cards in general), providing you with twice as much time as other cards do to pay off your statement without incurring interest charges. There are no rewards, but you can Get a 1.5% discount when you pay early, with no cap on what you can earn back.

What to watch out for: To benefit from the extra-days-to-pay feature, make sure you pay your minimum due, or else you’ll miss out on the offer. Also, make sure this card is the best choice for your business because there’s a $0 introductory annual fee your first year, then $250.

Imperfect credit

When to consider a business card for imperfect credit: If you or your business has less-than-good credit, odds are you’ll not only have trouble qualifying for a credit card, but the terms you do qualify for won’t be ideal. However, you’re not out of luck — we found a card that considers small businesses with imperfect credit, and it has decent terms plus the foundation for you to improve your credit with responsible behavior.

Capital One® Spark® Classic for Business

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on Capital One’s website

Capital One® Spark® Classic for Business

Annual fee
$0
Rewards Rate
1% Cash Back on every purchase
Regular Purchase APR
25.24% (Variable)
Credit required
bad-credit
Average/Fair/Limited

Why we like it: The Capital One® Spark® Classic for Business is for business owners with Average/Fair/Limited credit. Capital One considers Average/Fair/Limited credit as someone who’s defaulted on a loan in the past five years or has limited credit history (holding credit for less than three years). So, if you or your business has less-than-perfect credit, you may have better odds qualifying for this card compared to the majority of business cards, which require good or excellent credit.

What to watch out for: Although this card states it’s for business owners with Average/Fair/Limited credit, that does not guarantee you will be approved. As with any credit application, lenders look at a variety of credit factors.

Available for service members

When to consider business cards for service members: The following business credit cards are provided by credit unions for service members and have added perks, such as low interest rates, rewards, special offers and discounts. These cards require credit union membership, but you can typically qualify depending on where you live or work.

Navy Federal Credit Union Visa® Business Card

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on Navy Federal Credit Union’s secure website

Navy Federal Credit Union Visa® Business Card

Regular Purchase APR
10.15% - 18.00% Variable
Annual fee
$0
Rewards Rate
Rewards up to 1% return on each dollar spent
Credit required
excellent-credit
Good/Excellent

Why we like it: The Navy Federal Credit Union Visa® Business Card has a $0 annual fee and provides an up to 15% discount on qualifying business purchases with Visa SavingsEdge®. You can receive discounts at restaurants, travel and shipping services, IT solutions and more at no additional cost. As a member of NFCU, you can also receive a discount on Geico auto insurance and access an Auto Buying Program where you can save on new and used cars — great if your business requires you and your employees to drive. Terms & limitations apply.

What to watch out for: The interest rate you receive depends on your creditworthiness, so you may not receive the lowest APR. Because membership is restricted, check here to see if you qualify for membership with Navy Federal Credit Union.

Navy Federal Credit Union Mastercard® Business Card

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on Navy Federal Credit Union’s secure website

Navy Federal Credit Union Mastercard® Business Card

Regular Purchase APR
10.15% - 18.00% Variable
Annual fee
$0
Rewards Rate
Rewards up to 1% return on each dollar spent
Credit required
excellent-credit
Excellent

Why we like it: The Navy Federal Credit Union Mastercard® Business Card has the Mastercard Easy Savings® Program, which provides you with an up to 10% discount on a wide range of purchases including car rentals, gas purchases, products and services like Bing Ads and Monster, and more. This can simply save your business money on everyday purchases and the program is free. NFCU members have access to perks that suit businesses that require driving for work, like the ability to save on Geico auto insurance and access to an Auto Buying Program where you can receive savings on new and used vehicles. Terms & limitations apply.

What to watch out for: The APR varies based on your creditworthiness, so you may not qualify for the lowest rate. Because membership is restricted, check here to see if you qualify for membership with Navy Federal Credit Union.

RBFCU Business Select Mastercard® credit card

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on Randolph-Brooks Federal Credit Union’s secure website

RBFCU Business Select Mastercard® credit card

Regular Purchase APR
12.15% - 18.00% Variable
Annual fee
$0
Rewards Rate
2% cash back on all purchases
Credit required
good-credit
Excellent/Good

Why we like it: The RBFCU Business Select Mastercard® credit card has a great cashback program with unlimited 2% cash back on all purchases. This flat rate is rare among business cards that tend to favor high rates only on select purchase categories. In addition to a cashback program, members of RBFCU can benefit from members-only pricing at select merchants like TurboTax® and Sprint® to save your business additional money. Terms apply.

What to watch out for: Not everyone will qualify for membership with RBFCU, so fill out this online form to check.

Best small business rewards credit cards

Travel perks

When to consider travel business cards: If you or your employees travel often, a travel card can be more valuable than typical credit cards because many offer travel insurance, airline fee credits, free Wi-Fi access and other travel-related perks.

The Business Platinum® Card from American Express

The information related to The Business Platinum® Card from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

The Business Platinum® Card from American Express

Regular Purchase APR
N/A
Annual fee
$595
Rewards Rate
5X Membership Rewards® points on flights and prepaid hotels on amextravel.com and 1.5 Membership Rewards® points per dollar on each eligible purchase of $5,000 or more.
Credit required
good-credit
Excellent/Good
Welcome Offer: Earn 50,000 Membership Rewards® points after you spend $10,000 and an extra 25,000 points after you spend an additional $10,000. Earn 50,000 Membership Rewards® points after you spend $10,000 & an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Offer ends 8/8/18.

Why we like it: We looked at business cards that offered travel perks, and The Business Platinum® Card from American Express emerged as the best overall business travel card because of its extensive benefits for business owners, including rewards potential, Welcome Offer, and added perks. You can take advantage of standout perks like access to over 1,000 airport lounges, credit for Global Entry or TSA Precheck and a $200 airline fee credit. Terms apply. These benefits can save your business a substantial amount of money and make travel less of a hassle.

What to watch out for: There is a steep $595 annual fee for this card. However, considering the value you receive with this card, the annual fee may be worth it. For example, the airline fee credit and Global Entry fee credit are valued at $300, decreasing the effective annual fee for this card.

Ink Business Preferred℠ Credit Card

The information related to Ink Business Preferred℠ Credit Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Ink Business Preferred℠ Credit Card

Regular Purchase APR
18.24% - 23.24% Variable
Annual fee
$95
Rewards Rate
Earn 3 points per $1 on the first $150,000 spent in combined purchases on travel, shipping purchases, Internet, cable and phone services, advertising purchases made with social media sites and search engines each account anniversary year. Earn 1 point per $1 on all other purchases—with no limit to the amount you can earn.
Credit required
excellent-credit

Excellent

Why we like it: The Ink Business Preferred℠ Credit Card allows you to increase the value of your points by 25% when you redeem for travel through Chase Ultimate Rewards®. This is a great way to increase the effective value of your points. Additional travel benefits include trip cancellation/trip interruption insurance and travel and emergency assistance services.

What to watch out for: The higher rewards rate only applies to select categories, so if you primarily spend outside the select categories, you’ll earn a subpar cashback rate. Consider other travel business cards that suit your spending more.

Capital One® Spark® Miles for Business

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Capital One® Spark® Miles for Business

Regular Purchase APR
19.24% (Variable)
Annual fee
$0 intro for first year; $95 after that
Rewards Rate
2 Miles per $1 on every purchase, everywhere
Credit required
excellent-credit
Excellent

Why we like it: The Capital One® Spark® Miles for Business offers a hard-to-find flat-rate rewards program at 2 Miles per $1 on every purchase, everywhere. This rate allows you and your employees to earn the same amount of miles on any purchase with no bonus categories or caps. You can easily redeem miles for travel, and there is no minimum redemption amount.

What to watch out for: This card comes with an annual fee at $0 intro for first year; $95 after that, and although it’s lower than most travel business cards, it may not be ideal for everyone. Keep in mind you will need to spend $4,750 a year (after year one) to recoup the fee.

Big intro bonuses

When to consider business cards with big intro bonuses: A large intro bonus can be a simple way for business owners to earn extra rewards within the first few months of account opening — as long as you fulfill the requirements. You can use the rewards you earn in a variety of ways, from travel to statement credits that can lower your business’ expenses. Many cards that have big intro bonuses also have good rewards and perks, providing long-term value in addition to the short-term reward.

Ink Business Preferred℠ Credit Card

The information related to Ink Business Preferred℠ Credit Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Ink Business Preferred℠ Credit Card

Regular Purchase APR
18.24% - 23.24% Variable
Annual fee
$95
Rewards Rate
Earn 3 points per $1 on the first $150,000 spent in combined purchases on travel, shipping purchases, Internet, cable and phone services, advertising purchases made with social media sites and search engines each account anniversary year. Earn 1 point per $1 on all other purchases—with no limit to the amount you can earn.
Credit required
excellent-credit

Excellent

Intro bonus: Earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.

What to watch out for: There are requirements that you need to follow in order to receive the intro bonus, so make sure you spend the required amount in the stated time period. Also, you miss out on added value by redeeming points outside of Chase Ultimate Rewards, so try to use the portal to receive the 25% more value on travel.

The Business Platinum® Card from American Express

The information related to The Business Platinum® Card from American Express has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

The Business Platinum® Card from American Express

Regular Purchase APR
N/A
Annual fee
$595
Rewards Rate
5X Membership Rewards® points on flights and prepaid hotels on amextravel.com and 1.5 Membership Rewards® points per dollar on each eligible purchase of $5,000 or more.
Credit required
good-credit
Excellent/Good
Welcome Offer: Earn 50,000 Membership Rewards® points after you spend $10,000 and an extra 25,000 points after you spend an additional $10,000. Earn 50,000 Membership Rewards® points after you spend $10,000 & an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Offer ends 8/8/18.

What to watch out for: You need to satisfy two spending requirements to earn the full Welcome Offer — Earn 50,000 Membership Rewards® points after you spend $10,000 & an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership. Offer ends 8/8/18.

CitiBusiness®/ AAdvantage® Platinum Select® World Mastercard®

The information related to CitiBusiness®/ AAdvantage® Platinum Select® World Mastercard® has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

CitiBusiness®/ AAdvantage® Platinum Select® World Mastercard®

Regular Purchase APR
17.99% - 25.99%* (Variable)
Annual fee
$99, waived for first 12 months*
Rewards Rate
2 AAdvantage® miles per $1 spent on purchases at telecommunications merchants, cable and satellite providers, car rental merchants and at gas stations*, Earn 1 AAdvantage® mile per $1 spent on other purchases*

Sign-up Bonus: For a limited time: Earn 70,000 American Airlines AAdvantage® bonus miles after making $4,000 in purchases in first 4 months of account opening*.Why we like it: The CitiBusiness®/ AAdvantage® Platinum Select® World Mastercard® is one of few airline-specific business cards. This card has the largest limited-time offer compared to competitors and a typical spending requirement. In addition, there are great perks when you fly on American Airlines, such as in-flight discounts, first checked bag free and preferred boarding.

What to watch out for: This is an airline-specific card — if you don’t fly with American Airlines, you’ll miss out on some of the best perks.

Cashback rewards

When to consider cashback business cards: Cash back is a simple and straightforward way for your business to be rewarded for purchases. You can easily redeem your cash back as a statement credit, which is a great way to reduce your bill (just remember that redemptions can’t be applied to minimum payments).

Capital One® Spark® Cash for Business

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Capital One® Spark® Cash for Business

Regular Purchase APR
19.24% (Variable)
Annual fee
$0 intro for first year; $95 after that
Rewards Rate
2% Cash Back for your business on every purchase, everywhere
Credit required
good-credit
Excellent/Good

Why we like it: We looked at business credit cards offering cashback rewards and analyzed their rewards rates, fees and APRs, and among the group, The Capital One® Spark® Cash for Business rose to the top. It has a standout cashback program earning you 2% Cash Back for your business on every purchase, everywhere. There are no bonus categories or caps — you’ll earn the same rate on every purchase. You can even make redeeming your rewards simple by setting up automatic redemption, great for businesses that don’t want to fuss with rewards.

What to watch out for: The annual fee is $0 intro for first year; $95 after that — so after year one, you will need to spend $4,750 a year to break even.

Capital One® Spark® Cash Select for Business

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on Capital One’s website

Capital One® Spark® Cash Select for Business

Annual fee
$0
Rewards Rate
1.5% Cash Back on every purchase
Regular Purchase APR
15.24% - 23.24% (Variable)
Credit required
good-credit
Excellent/Good

Why we like it: The Capital One® Spark® Cash Select for Business has a decent rewards rate for business owners who want to avoid an annual fee at 1.5% Cash Back on every purchase. This card is a good alternative to the Capital One® Spark® Cash for Business, offering all the same perks plus a $0 annual fee.

What to watch out for: The cash back rate is below the ideal 2%, and you can do better with a higher flat-rate card or with bonus category cards. But be aware they may have an annual fee.

Hotel rewards

When to consider business cards with hotel rewards: Traveling for business can get costly, but hotel rewards cards can help you save money on hotel stays and other expenses you may incur like meals. Whether you favor a specific hotel or often choose the best priced hotel, there are business cards for you that can earn you rewards and other money-saving discounts. Because hotel loyalty varies, we’re highlighting two cards with exceptional hotel rewards.

The Starwood Preferred Guest® Business Credit Card From American Express is our top pick for businesses looking to earn rewards and perks on hotel stays. SPG® has numerous participating hotels where you and your employees can stay, and there are flexible redemption options for your points. For example, you have the ability to transfer points on a mostly one-to-one basis to over 30 airline frequent flyer programs. Additional benefits include credits towards SPG elite status, travel accident insurance and free Wi-Fi with Boingo and at SPG participating hotels (terms apply). This offer and/or promotion may have since changed, expired, or is no longer available.

What to watch out for: The rate you earn on purchases outside of SPG and Marriott Rewards® hotels is lower than other hotel rewards cards, like The Hilton Honors American Express Business Card mentioned below. So, if you’re looking to earn a high rate on all purchases, check out other hotel rewards cards.

The Hilton Honors American Express Business Card

The information related to The Hilton Honors American Express Business Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

The Hilton Honors American Express Business Card

Regular Purchase APR
17.99% - 26.99% Variable
Annual fee
$95
Rewards Rate
12X at hotels and resorts in the Hilton portfolio, 6X on Select Business & Travel Purchases, 3X Everywhere Else. Terms & Limitations Apply.
Credit required
good-credit
Excellent/Good

Why we like it: The Hilton Honors American Express Business Card offers great benefits for business travelers who frequent hotels in the Hilton portfolio with a wide range of perks including complimentary Hilton Honors Gold Status. This gives you a 25% bonus on Base Points, space-available room upgrades and more benefits that may make your stays more comfortable. Other Hilton perks include a rewards program that allows you to earn Hilton Honors Bonus Points at a fast rate and Weekend Night Rewards (terms apply). In addition, you receive baggage and travel accident insurance, 10 free visits to over 1,000 Priority Pass airport lounges every year and the ability to connect your credit card transactions to Quickbooks®, among other things.

What to watch out for: You don’t want to carry a balance with this card because there is a 17.99% - 26.99% Variable APR. Although this is a typical range, it’s still high and can lead to large interest charges if you don’t pay your bill in full. But, if you pay in full and on time, this won’t be an issue.

Best category bonuses

When to consider business cards with category bonuses: If you spent a lot in particular categories, credit cards with category bonuses may be a great way for you to earn rewards for that spending. For example, if you drive a lot for business, a card with gas rewards may be ideal. Below we list the business cards that offer the highest reward rates on dining, gas and office-supply spending

Dining & gas

Why we like it: The Sam's Club® Business Mastercard® offers a high 5% cash back on gas (on first $6,000 per year in purchases, then 1%), 3% cash back on dining and travel, and 1% cash back on other purchases. This rate is ideal for businesses that primarily spend on gas because you earn the highest rate on those purchases compared to other cards. Business owners who often take out clients for meals may want to consider this card because of its cashback rate on dining purchases.

What to watch out for: You need to be a member of Sam’s Club to open this card, and as a business owner you may not have a need for a Sam’s Club membership. However, membership starts as low as $45 a year, and considering there’s no annual fee for this credit card, that’s a small amount.

Costco Anywhere Visa® Business Card from Citi

The information related to Costco Anywhere Visa® Business Card from Citi has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Costco Anywhere Visa® Business Card from Citi

Regular Purchase APR
17.49% Variable
Annual fee
$0
Rewards Rate
4% cash back on gas, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases

Why we like it: The Costco Anywhere Visa® Business Card from Citi offers a tiered cashback program with 4% cash back on gas, 3% on restaurants & travel, 2% at Costco & Costco.com, 1% on all other purchases. This is a good rewards program for business owners with Costco memberships if you want to earn cash back in a wide range of categories.

What to watch out for: You need to be a Costco member to open this card, and membership starts at $60 per year. This is higher than Sam’s Club and definitely something to consider if you’re deciding between the two cards. Another important note is that you won’t earn as much cash back with this card as you would with the Sam's Club® Business Mastercard®.

Gas & office supply stores

Why we like it: The Bank of America® Business Advantage Cash Rewards Mastercard® credit card doesn’t require membership with a warehouse club like other gas cards and has a $0 annual fee. Business owners can earn a decent cash back rate at both gas stations and office supply stores, making this card ideal if you often spend in these categories.

What to watch out for: The gas cashback rate is lower than other business cards with gas as a category bonus and won’t earn you as much rewards.

The information related to Bank of America® Business Advantage Cash Rewards Mastercard® credit card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Risks of using small business credit cards

While small business credit cards can provide a wide range of benefits for your company, they have drawbacks.

Here are some of the major risks:

Personal liability. As a business owner, you are solely responsible for all charges made on your account. That means if there are any unpaid balances on your account, whether from your spending or employee spending, you are liable.

Negative impact on you credit. If your account is in poor standing as a result of late payments, overdue balances, bankruptcy or other issues, the credit card issuer may report this information to the credit bureaus. As a result, your personal credit score may take a hit.

Not protected by the CARD Act. Business cards don’t receive the same consumer protections that personal credit cards receive with the CARD Act. The CARD Act requires credit card issuers to provide transparent terms as well as lower fees and interest rates for consumers. But, issuers of business cards don’t have to comply with those requirements. Therefore, a business card may have higher interest rates, more fees and confusing terms.

How to minimize the risks of business credit cards

Monitor employee spending. The ability to open employee cards is a great feature, but if you don’t stay on top of their charges, it can become risky. Some good practices include keeping records of all employees with card access, setting employee spending limits when available and monitoring your credit card statements. This way you can keep track of all spending made on your account and add limits when needed.

Avoid charging personal expenses. Use your business card the way it is intended to be used — exclusively for business purchases. Charging personal expenses makes managing your finances harder and complicates the use of your card.

Do not take out a cash advance. Cash advances are one of the most costly features of credit cards and are rarely a good choice because you’ll be hit with higher than normal interest rates and can rack up debt fast. As an alternative, check out small business loans.

Look at loans for long-term financing. Your business may need to borrow money for purchases like cars or other big-ticket items, and small business loans can be a great way to finance those purchases. Often with straightforward terms, loans can be a good alternative to charging purchases on your credit card. Compare small business loans here.

Do not try to bail out a failing business. If your business isn’t doing well, don’t take out a small business credit card with the hopes of bailing it out. Odds are you’ll only get into more debt and make the situation worse.

Best way to use credit cards for your business

Earn rewards. Almost all of the cards mentioned in this roundup provide rewards, allowing business owners to be benefit from typical business spending. You can use the rewards you earn in a variety of ways, like booking travel, applying cash back as statement credit to cover bills or redeeming them for gift cards for business expenses or employee incentives.

Manage cash flow. Business cards may provide expense-management tools so you can monitor spending and simplify everyday business transactions. You can use your card to automate business expenses like monthly phone bills or regular office-supply purchases.

Build business credit. Opening a small business credit card has the potential to build and improve your business credit. If you make on-time payments and use a relatively small amount of your available credit, your business’ credit can benefit greatly. Having a good business credit score can help you down the line if you plan on taking out a loan or other credit products.

Short-term borrowing. If your business plans on making purchases that can’t be paid immediately, some business credit cards offer 0% intro periods that are ideal for short-term borrowing and can be a better choice than a personal loan — when used responsibly. During the 0% intro period, you can carry a balance without incurring interest, and if you pay it off before the intro period ends, you can save on the interest that you would’ve incurred if you had taken out a loan.

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Alexandria White
Alexandria White |

Alexandria White is a writer at MagnifyMoney. You can email Alexandria at [email protected]

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Credit Cards, Featured, Pay Down My Debt

Guide to Credit Counseling: 7 Key Questions to Ask

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

couple talking to a financial advisor
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If you have little knowledge on the topic of personal finance and are struggling with your own money issues, you might want to think about getting credit counseling.

Credit counselors can help you set a budget and advise you on how to manage your debt, which can include credit card debt, student loan debt and even housing debt.

Reputable credit counseling organizations have certified counselors who are trained in consumer credit, budgeting, and money and debt management. Credit counselors will work with you to come up with an individualized plan to address any money problems you may have. This can be done in person, over the phone or online.

Seeking credit counseling is typically voluntary but can be required when filing for bankruptcy. In this guide, we’ll answer some key questions you might have about credit counseling and whether it’s right for you.

How do you find a credit counselor?

Before settling on a credit counseling organization, do your homework to make sure they are not only reputable but will also be the most helpful for your particular financial circumstances. Check with your state’s attorney general and consumer protection agency to see if there have been any complaints filed against the organization.

Ensure that the organization is accredited and certified. Check to see if they are members of the National Foundation for Credit Counseling or the Financial Counseling Association of America. Most non-profit credit counseling agencies are associated with these organizations.

When researching agencies, first ask what information or educational materials they provide for free. Organizations that charge for information are typically more interested in their bottom line than in helping you. Also, ask about the types of services they offer. Limited services can be a red flag. The fewer services they offer, the fewer solutions they may provide for you.

You should also attempt to understand the organization’s fee system — not only how much services will cost but also how employees are paid. If employees make more based on the number of services you receive, look for another credit counseling organization.

MagnifyMoney has come up with a list of some of the best credit counseling options, which is a great place to start. If you are looking for credit counseling as a pre-bankruptcy measure, the U.S. Trustee Program has a list of approved credit counseling agencies that can provide pre-bankruptcy counseling.

How much does credit counseling cost?

Credit counseling can involve both start-up and monthly maintenance costs. The Department of Justice says that $50 per month is a reasonable fee. Further, the National Foundation for Credit Counseling (NFCC) suggests that a start-up fee should not exceed $75 and monthly maintenance fees should not be more than $50 per month.

Credit counseling agencies may offer fee waivers or reductions, depending on your income levels. Where credit counseling is required, the DOJ says that, if household income is less than 150% of the current poverty line, the client is entitled to a fee waiver or reduction.

Other regulations, such as when fees can be collected and circumstances that would warrant a fee reduction or waiver, may also be outlined by your state.

How long does credit counseling last?

While the length of your credit counseling session depends on the complexity of your financial problems, sessions typically last 60 minutes. After the initial session, credit counselors will follow up to ensure you understand the actions you need to take and that you have been able to get started on the plan they developed. Another session may be necessary depending on how your financial situation unfolds following the first session.

What do you accomplish with credit counseling?

According to the NFCC, reputable counseling involves three things. First, there must be a review of a client’s current financial situation. You cannot move forward unless you know from where you are starting. Second, there should be an analysis of the factors that contributed to the client’s bad financial situation. You don’t want bad habits to undermine your progress. Lastly, there must be a plan to address the situation without incurring negative amortization of debt. Negative amortization occurs when the amount of debt you have increases because you aren’t paying enough to cover the interest, even though you are making payments.

Understanding these three factors of good credit counseling gives you a place to start in improving your financial situation.

What is the difference between credit counseling and debt management programs?

A debt management plan is just one solution a credit counselor may recommend based on your financial situation. Having a debt management plan is not the same as credit counseling.

A debt management plan involves the credit counseling organization acting as an intermediary between you and your creditors. Each month you will deposit an agreed upon amount of money to your credit counseling agency, which they will, in turn, apply it to your debts.

The credit counseling agency works with your creditors to determine how the amount will be applied each month, and negotiates interest rates and any fee waivers. It’s important to call your creditors directly to check whether they are open to negotiating interest rates or offering waivers for fees. In some cases, a credit counseling firm may promise to negotiate those items for you but be stonewalled when they discover a creditor isn’t even open to the discussion.

Before agreeing to a debt management plan, make sure you understand any fees associated and any choices you might be giving up. For example, some debt management plans may require you to give up opening up new lines of credit for a specified period of time. Remember that a debt management plan is just one of many solutions a credit counselor may advise you to consider.

How does credit counseling impact your credit score?

Not directly. While the fact you are in credit counseling may show up on a credit report, that does not affect your credit score. The actions you take as a result of credit counseling, however, can impact your score.

For example, if you don’t choose a reputable credit counseling agency, the agency may submit a payment on your behalf late to your creditors. So even though you submitted your payment on time to the credit counseling agency, your score may still be dinged. This is just one reason why it’s important to make sure you use a reputable credit counseling agency.

Who should consider credit counseling, and when?

While credit counseling is sometimes required, such as in instances of bankruptcy, you always have an ability to seek credit counseling.

Boston-based Bankruptcy attorney Julie Franklin explains, “For bankruptcy purposes, there are two course requirements — a debtor must complete the first credit counseling course prior to filing and obtain a certificate that is filed with the court in their initial bankruptcy petition documents. Post bankruptcy filing, the debtor is required to take a second course, and upon completion, the certificate that is issued must be filed with the court in order for the debtor to obtain an order of discharge.”

Anyone struggling with their personal finances can consider credit counseling as an option. Franklin also notes that “the first credit counseling course is a tool for debtors, as it compels the individual taking the course to closely examine the household assets, income, liabilities and spending habits to determine if there’s a way to save the debtor from having to file bankruptcy.”

If you are considering bankruptcy, you will have to attend some credit counseling anyhow, but doing so could also help you avoid filing for bankruptcy at all. Keep in mind that filing for bankruptcy will always have a significant effect on your credit score, and can hurt your changes for getting loans or new credit for years to come. If you can avoid it, you probably should.

Voluntary credit counseling might not help if you are already being sued to have a debt collected. However, you may be able to negotiate terms with the debt collector that result in a withdrawal of the suit if you agree to enroll in credit counseling and possibly a debt management program. Not all creditors will agree to such terms, but it is possible.

Bottom line

Many people run into trouble with their finances, whether they have too much credit card debt, are struggling to make their housing payments or just find general budgeting to be a challenge. Some people are dealing with more serious issues, such as potential bankruptcy. There are credit counselors available to help you with any difficult financial situation you may be facing. The most important thing is to ensure you work with a reputable credit counseling agency, so do your research first. A good credit counselor can help you get on the road to financial health, but working with a bad one can lead to more problems than you already have.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Liz Stapleton
Liz Stapleton |

Liz Stapleton is a writer at MagnifyMoney. You can email Liz here

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Credit Cards, Identity Theft Protection

When Banks Can Refuse to Refund Fraudulent Debit Card Charges

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

ATM

Typically, debit cards that are used as “credit” are offered the same protections as credit cards. This means that if you use your debit card in a store and choose “credit” instead of entering your PIN number, you should receive the same protections as if you used an actual credit card. However, we do encourage you to double check the fine print your bank provides on this matter before assuming your debit card will receive those protections.

But here’s a scenario where your debit card is riskier than your credit card. If you withdrawal money at an ATM (or any store doing cash back) using your PIN number, you have additional risk. If someone steals your pin number with a skimming device at an ATM, then he has direct access to your money. This isn’t like credit card fraud with obnoxious charges you need to dispute. This is your hard-earned cash being taken directly out of your checking account. And if you aren’t careful, you might not be able to recoup your losses.

So, what can you expect if you are a victim of debit card fraud?

Timeline for Being Able to Get Your Money Back

If you are a victim of debit card fraud, you are responsible for the following:

  • $0 if you report the loss or fraud immediately and the card has not been used,
  • Up to $50 if you notify your bank within 48 hours of your lost or stolen card,
  • Up to $500 if you notify the bank with 48 hours and 60 days of your lost or stolen card, and
  • All of the fraudulent charges if you don’t notify the bank until after 60 days.

It’s important you don’t delay in reporting the fraud to your bank if you want to be able to get all of your money back. If you were the victim of theft because the crook skimmed your info and used your PIN, then you may be on the hook for the $50 because you couldn’t report to the bank before the card was used. You didn’t know it had happened until the strange transaction showed up!

It may seem unfair to be responsible for charges that you did not actually charge yourself, but to avoid that scenario and protect yourself, consider taking the following precautionary actions.

What You Can Do To Protect Yourself

To protect yourself against debit card fraud, you should do the following:

  • Only use an ATM inside a bank (this will lesson the likelihood that a scanner is on an ATM)
  • Cover your hand when you type your pin into an ATM (to protect yourself against any devices attached to the ATM from getting your PIN)
  • Set up text alerts for each transaction over $0.01 on your card. This way you’ll be immediately alerted if a bogus charge is made
  • Monitor your bank on a regular basis (so you can give notice of fraud immediately)
  • Report stolen funds immediately (so you’re not responsible for the charges)
  • Check-in annually with your bank as to the policies regarding debit card theft (know whether your debit card is specifically protected and to what extent)

While you can notify the bank by phone, it is best to get everything in writing. For purposes of the time requirement, notice is considered given when you put the letter in the mail. It’s even better if you send the mail certified. You can, of course, send notice by mail and call. Whatever you do, keep a record of your communications you have with the bank. This will put you in the best position if you have to escalate your problem.

Remember that if you take the actions listed above, you will be more protected than you otherwise would. Even if you didn’t do anything wrong, like in the example above, you can still find yourself stuck with fraud charges that your bank won’t reverse. These specific steps will help you protect yourself, even when you’re not at fault. This is particularly important if you use your debit card frequently.

Don’t want to use a credit card? Learn how to survive with just debit cards here. 

Debit vs. Credit: How to Decide

Using a debit card forces you to keep your spending in check because you cannot spend more than you have in the bank. However, it may be riskier than using a credit card for the reasons described above. Discover, for example, now offers a Freeze It® on/off switch for your account. If you’re concerned because you’ve lost your card, you can temporarily freeze your account and Discover will not authorize new purchases, cash advances or balance transfers.

Discover it® Balance Transfer

Intro BT APR

0% for 18 months

Balance Transfer Fee

3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*

Regular APR

14.24% - 25.24% Variable

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

If you’re not sure which is best for you, ask yourself what do you value more – your spending being limited or the additional protections from fraud. If you can control your spending, then you may be better off with a credit card. If you are a spender, however, then take the additional steps listed above to make sure you fully understand your specific liability in the event of debit card fraud. If you feel your bank is behaving unethically and should be refunding you, then reach out to the Consumer Financial Protection Bureau to file a complaint.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Natalie Bacon
Natalie Bacon |

Natalie Bacon is a writer at MagnifyMoney. You can email Natalie at [email protected]

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