The 7 Most Common Business Credit Card Fees Explained
Consider researching business credit card fees when choosing and using a business credit card and using it wisely.
A business credit card can be a great tool to help you build your company’s credit, earn business-specific rewards, and keep business and personal finances separate. Unfortunately, it can also be a great way to rack up unwanted fees — if you don’t choose and use your business credit card wisely.
Business credit cards are exempt from certain consumer protections afforded to personal credit card users through the Credit Card Act of 2009. Unlike a personal credit card, there is no limit to what a credit card company can charge a business credit card user in fees.
Though many credit card issuers voluntarily extend consumer protections to business card customers, it’s important to read the fine print before signing up for a credit card. You can find out about possible fees by checking a credit card’s terms and agreements or by contacting the issuer.
If you’re shopping around for a business credit card, here are a few possible fees to factor into your decision.
Does the Business Credit Card Have an Annual Fee?
Some business credit cards, like consumer cards, charge a yearly fee for use of the card. The annual fee, anywhere from $59 to $450, is automatically deducted from the account each year. To understand the card’s true cost, weigh the annual fee against its benefits and rewards. Generally, the higher the annual fee, the more benefits a card should offer.
While some issuers will waive the annual fee the first year as a sign-on incentive, remember that the annual charge will follow you for the life of the card, whether or not you continue to take advantage of its rewards. If you’re looking for a card with no annual fee and competitive rewards, check out Zions Bank's AmaZing business credit cards.
Does the Business Credit Card Have a Late Fee?
A nearly universal credit card fee, the late fee is charged by 99 of 100 cards, according to an annual survey by CreditCards.com. Because there is no legal limit on the amount business credit cards can be charged in late fees, check with the card issuer before you commit to a card, and certainly before you make a late payment. Opt for automatic payments to avoid late fees.
Does the Business Credit Card Have a Balance Transfer fee?
A credit card balance transfer — paying off one credit card with another — can be a smart strategy for a small business owner who needs more time to pay off debt or wants to transition from a personal credit card to a business card. Before you sign off on such a transaction, however, calculate the cost of the balance transfer fee, which is typically 3 to 5 percent of the transfer amount; the upfront fee may offset the potential savings.
Does the Business Credit Card Have a Cash Advance Fee?
When your company needs fast cash, you may be able to use your credit card for a short-term cash loan at an ATM or bank. But keep in mind that a cash advance can be a costly transaction. You will be charged a percentage of the amount you borrow (usually 3 to 5 percent) or a minimum flat fee (perhaps, $5 to $15). In addition to the cash advance fee, you may have to pay a fee to the owner of the ATM or the financial institution that gives you the advance.
Does the Business Credit Card Have a Foreign Transaction Fee?
Choosing the wrong credit card can cost you beaucoup bucks in foreign transaction fees if you frequently do business abroad. Some carriers charge a fee of up to 4 percent for transactions completed in a foreign currency. If you plan to use your business credit card for purchases overseas, scout out a card with minimal foreign transaction fees.
Does the Business Credit Card Have an Over-Limit Fee?
Though nearly extinct in the personal credit card world, a handful of business credit cards continue to charge fees to customers who exceed their credit limits. A 2017 CreditCards.com review found that only four out of 100 cards surveyed charge over-limit fees, and all were business credit cards. While personal credit card customers can’t be charged an over-limit fee unless they opt in to be allowed to exceed their credit limit, the same isn’t true for business credit card customers.
Also, caps on penalty fees, including over-limit fees, don’t apply to business credit cards. Factor in over-limit fees as you compare credit card costs, and once you have been approved for a card, make sure to stay well under your borrowing limit.
Does the Business Credit Card Have a Penalty APR?
While annual percentage rates (APR) are generally displayed clearly and prominently in advertising materials, “penalty” or “default” APRs can be hard to find if you don’t know where to look. Many issuers apply penalty APRs of nearly 30 percent when a payment is missed, late, or returned unpaid. This increased rate is often in place indefinitely, and applies to all outstanding balances and future transactions. You can find Penalty APRs listed among other fees, terms and conditions in the “Pricing and Terms” section of business credit card applications.
Not sure which business credit card is right for your business? Compare Zions Bank’s AmaZing business credit cards, which come with terrific benefits and no annual fee. Visit your nearest Zions Bank branch location to apply.