How Many Business Credit Cards Is Too Many?

Business credit cards can serve as powerful financial tools for small businesses. They provide an opportunity to cover short-term business expenses, manage cash flow, earn bonus rewards and build business credit.

But as your business grows, you may wonder: How many business credit cards should I have? Is one enough? Do I have too many?

While there’s no one-size-fits-all answer, the decision depends on a combination of your business needs, credit habits and financial goals. Let’s explore the pros and cons of owning multiple business credit cards, how it can affect your credit and when it might make sense to apply for more.

Should I have multiple business credit cards?

Many small business owners are content with just one business credit card, while others find it beneficial to have several. The decision depends on your business’s specific needs. If your current card doesn’t offer all the rewards, perks or credit limits that you require, adding another card might make sense. On the other hand, managing multiple cards can be complex, especially if your spending patterns vary from month to month — or if you already struggle with managing debt.

Multiple business credit cards may also offer financial flexibility, especially for businesses with seasonal revenue. They can also be appealing for businesses that frequently need to juggle expenses across various categories like inventory, travel or advertising.

What are the benefits of having more than one business credit card?

There are several potential advantages to having multiple business credit cards:

Separation of expenses. Having multiple cards can help you categorize expenses by department or purpose. For example, you can dedicate one card for business travel and another for office supplies. This can make bookkeeping easier and more transparent when tax season rolls around.

More available credit. If your business has growing financial needs, one card might not offer enough available credit. With multiple cards, you can spread your expenses across accounts and avoid maxing out a single card, which can negatively impact your credit score.

Maximizing rewards and perks. Not all cards are created equal. One credit card issuer may offer excellent travel rewards, while another may provide cash back on office supplies. By strategically using different cards, you can maximize rewards based on spending categories.

Emergency backup. Having more than one credit card ensures you have a backup in case one card is lost, compromised, or has its credit limit temporarily reduced. This is crucial for businesses that rely heavily on credit to operate.

How does having multiple cards affect your business credit?

Small business credit cards play an essential role in building a business’s credit profile. However, multiple cards can either help or hurt your business credit depending on how you manage them.

How business credit cards can help your credit.

Diversification of credit. Much like personal credit, having different types of business credit accounts — such as small business loans and credit cards — can strengthen your business credit score. Multiple business credit cards, when used responsibly, can improve your creditworthiness.

Lower credit utilization ratio. Your credit utilization ratio, or the amount of credit you’re using compared to your total available credit, is an important factor in determining your business credit score. By having multiple cards with different limits, you can keep this ratio low, which is generally beneficial for your score.

Consistent payment history. Paying off your business credit cards on time, every time, helps establish a strong payment history, which is one of the most significant factors the credit bureaus account for in your credit history and business credit report.

How business credit cards can hurt your credit.

High utilization. While spreading your spending across multiple cards can help keep your credit utilization low, carrying large balances on any of them may still hurt your business credit profile. Each card’s individual utilization ratio matters, so be mindful of how much you charge on each.

Missed payments. Managing multiple cards means managing multiple payment due dates. Missing a payment on even one card can be detrimental to your business credit profile, and late fees can add up quickly. Automating payments or setting up reminders can help avoid this issue.

Hard inquiries. Every time you apply for a new credit card, the credit card provider may conduct a hard inquiry on both your business and personal credit reports, which can temporarily lower your scores. If you apply for too many cards within a short period, this can create a negative impression for lenders.

How many business credit cards is too many?

Similar to personal credit cards, the exact number of business credit cards you should have depends on your ability to manage them. Having multiple cards is only beneficial if you can pay off balances in full and on time, and if each card serves a specific purpose in your business strategy. If you’re juggling too many cards, it may be harder to track spending, which could lead to missed payments or higher-than-expected balances.

A good rule of thumb is to maintain the number of credit cards you can comfortably manage. For some, this may be two or three cards; for others, it could be more. The key is not the number of cards but how well you handle them.

When is the right time to apply for another business credit card?

Timing is critical when applying for new business credit cards. It’s wise to evaluate your business’s current financial situation before applying for additional credit. Some indicators that it might be time to apply for a new card might include:

Expanding expenses. As your business grows, you may need more financial flexibility. If your current card isn’t sufficient to cover new expenses, a second card with a higher limit or better rewards might make sense.

Maximized rewards. If you’ve optimized the rewards programs of your existing cards but still spend in categories where another card offers superior benefits, it may be time to diversify with a different rewards credit card.

Cash flow needs. If you often find your cash flow stretched between paying suppliers, employees, and operating expenses, having an additional card with a longer billing cycle can give you the breathing room you need.

Just keep in mind that applying for multiple new credit cards in a short amount of time could negatively affect your business’s creditworthiness in the short term since they may generate hard inquiries on your business credit report. That could make it harder to maintain eligibility for other major financing in the same time frame.

What are some alternatives to business credit cards?

Business credit cards aren’t the only option available to entrepreneurs seeking flexibility and funding. Some alternatives include:

Business line of credit. A revolving line of credit from a bank provides similar flexibility to a credit card but can often come with lower interest rates. It may be a great option for businesses with fluctuating cash flow.

Business loans. For larger, one-time expenses, a business loan may be a better option than using multiple credit cards. You can secure loans with fixed interest rates and repayment terms tailored to your financial needs.

Trade credit. Many suppliers offer trade credit, allowing you to purchase goods or services and pay later. This can help manage cash flow without adding another credit card to your wallet.

The Bottom Line

Determining how many business credit cards to have depends on your business’s needs, financial management capabilities and credit strategy. Having multiple cards can offer benefits like increased credit limits, more rewards and better expense management, but it requires disciplined spending habits to not take on too much credit card debt. Whether you stick to one card or manage several, the key is to use them responsibly to support your business growth.