Small business credit cards are usually the most profitable credit cards for issuers because:
(a) small business owners and entrepreneurs typically spend more more than the average consumer since they might be buying inventory, equipment, etc. for their company
(b) the processing fees on them (the “interchange” that merchants must pay the card networks like Visa, MasterCard, Discover Card and American Express in order to accept their cards at the point of sale) are quite a bit higher than regular consumer credit cards
This is why you’ve seen so many commercials for the Chase Ink during the past couple years. However if Capital One® has their way, they would love to steal that thunder with their latest lineup of Spark℠ business credit cards. Like the Ink, there are several versions available. But how do they stack up? (hint: they are definitely giving Chase a run for their money!)
As you can probably guess from the word “Classic” in the name, this is more of an entry level credit card in the Spark series. It’s geared towards those with average credit (all the others require excellent credit).
The annual fee is $0 and the rewards are an unlimited 1% cash back. The purchase APR is a variable 22.9% at time of publishing.
There’s 1.5% cash back on all purchases with a one-time $100 bonus after spending $3,000 in the first 3 months..
The variable APR on this ranges from 12.9% to 20.9% and the Capital One sites lists this as being for “excellent credit” specifically (versus card #1, which is geared towards those building credit). However you get a 0% intro APR on purchases until June 2015. There’s no annual fee.
This is similar to the Spark Cash Select, except you get miles rather than cash back.
The card gives 1.5 mile per dollar spent on purchases (awarded each billing cycle). The interest rates listed are the same as the Cash Select. In addition, you can get a one-time bonus of 10,000 miles after spending $3,000 within the first 3 months. There is also a 0% intro APR on purchases until June 2015.
The Capital One Spark Cash comes with a $59 annual fee ($0 intro for first year) but with that, comes higher cash back – 2% on all spending. There are no gimmicks or tricks with this.
Capital One also lists this as a business credit card for “excellent credit” and the lower APR reflects that – a variable 13.9% to 20.9% as I write this review.
You can apply here to get a one-time $250 cash bonus simply for spending $5,000 on purchases within the first 3 months, and earn a one-time $50 bonus when you sign up one or more employee cards within the first 60 days.
This echoes #4, except you earn miles instead of cash back.
Since it gives a full 2 miles/dollar and each mile is worth 1 cent when used for travel purchases, it’s also essentially earning you a full 2% rebate.
This Spark card also has the identical APR, annual fee and excellent credit score requirement as #4.
Apply with this offer for a one-time bonus of 25,000 miles which you will get after making $5k in purchases within the first 3 months, and the opportunity to earn a one-time bonus of 5,000 miles when you sign up one or more employee cards within the first 60 days.
The simplest way to look at these are…
These 5 Capital One Spark credit cards can really be reduced down to 3 basic categories, when comparing the value of their miles and cash back rewards:
- 1 card with no annual fee and 1% rewards value. For average credit.
- 2 cards with no annual fee and 1.5%
- 2 cards with a $59 annual fee ($0 intro for first year) and 2% rewards value.
That’s the most high-level and straightforward way to view the rewards on these five different Spark card offers. Although having so many options might seem a bit overwhelming at first glance, it really isn’t. It simply comes down to your credit quality and rewards preference (and obviously you need to take into account the different interest rate options as well if you intend to carry a balance over time).
How about the benefits?
The Spark card benefits are quite good. Spark offers the following:
- No foreign transaction fees – a nice perk if traveling or ordering goods from outside the US
- No cost for additional cards – In case you want extras for employees.
- Year end summary – extremely useful during tax time for you and your CPA.
- Card design customization – You have the unique benefit of being able to add your company’s logo or any other image you desire.
- Visa Business Card benefits – Purchase Security and Extended Protection, Auto Rental Collision Damage Waiver, Travel and Emergency Assistance Services. Please consult issuer for benefit terms and conditions.
How will they affect your personal and small business credit?
The Spark Classic is listed as for those who want to build credit, but does this mean it’s different than their other small business credit cards? Can you apply under your business tax ID without supplying your Social Security number? Using the convenient chat feature on the Capital One website, this is what I found out…
1. Personal guarantee is required
There is no way you can apply for any of the Spark cards without your SSN. The approval of the card is based on your personal credit history. As a result, both you (as the Authorizing Signatory) and the Company will be bound to the terms of this agreement.
2. Can help build business credit
Using any of the Spark cards responsibly can help in building stronger credit for both you and your business. This is actually a huge benefit you won’t find everywhere. For example, none of the American Express business cards report to the business credit bureaus. As a result, they are useless for building biz credit. Fortunately, all of the Spark cards will report, assuming you supply your company’s tax ID number on the application.
3. Sole proprietors can apply
If you don’t have a LLC or corporation, you can still apply. The EIN/TIN field is not required if you are applying as a sole proprietor.
Want the best rewards? Want to build credit for your company? Now you can have the best of both worlds. As a recap, here’s a quick review of the 5 signup promotions currently available:
- Spark Classic – 1% cash back. No annual fee. For fair credit (others require excellent or good credit).
- Spark Cash Select – 1.5% cash back on purchases with a one-time sign-up bonus of $100 after a $3k spend in the first 3 months. No annual fee. 0% intro APR on all purchases until June 2015.
- Spark Cash – 2% cash back. $0 intro annual fee for the first year; $59 after that. Onetime Bonus = one-time $250 after spending $5k on purchases within first 3 months. Plus receive $50 by signing up one or more employee cards (which don’t cost extra).
- Spark Miles Select – 1.5 miles per dollar spent on purchases. An initial, one-time bonus of 10,000 miles after spending $3,000 in the first 3 months. No annual fee. 0% intro APR on all purchases until June 2015.
- Spark Miles – 2 miles per dollar. $0 intro annual fee for the first year; $59 after that. One-time Bonus = 25,000 miles after spending $5k on purchases within first 3 months. Plus receive 5,000 miles by signing up one or more employee cards (which don’t cost extra).
This review was written or last updated November 19, 2014