When it comes to business credit cards, the first names that pop in your head are probably American Express, Chase, and Capital One… but that’s only because they advertise them more heavily, not because they are always better than Discover business cards.
Just like their consumer cards, the small business credit cards from Discover pack a lot of punch when it comes to rewards…
Discover Business Card
Annual Fee: $0
Rewards: The rewards on this are arguably not as good as their consumer More card for the following reasons:
- 0.25% to 1% on regular purchases – With the More card, before you begin earning 1% you first have to spend $3k (and on that $3k you only earn 1/4%). Meanwhile with this business card the threshold is even higher; you only earn 1% after you make $5,000 in qualifying purchases annually and .25% on your first $5,000 and all warehouse purchases. Unfortunately gas stations and office supplies do not count towards the $5,000 threshold.
- 2% at gas stations – You get this on the first $2k spent annually at gas stations. After that it drops back to 1%. Admittedly, 2% on gas isn’t that impressive when compared to other business card offers, but it’s still a nice perk.
- 5% on office supplies – Also applies to the first $2k spent annually for this category. It is given at office supply stores like Staples, Office Depot, etc. You will not get this if you buy office supplies at say, Walmart or Target.
Discover Business Miles Card
Annual Fee: $0
Rewards: This card gives you “miles” instead of cash back, but in reality it’s easier to think of it as cash back. Why? Because 1 mile = 1 cent you can redeem for a travel purchase. You can make these travel purchases on your own, from whoever you want, as long as you charge it to your Discover card. Then afterward you can request a statement credit using these miles. So let’s say you buy a vacation that costs $820. If you had 82,000 miles you could then turn them into a statement credit for that amount.
- 1 mile per dollar on regular spending
- 2 miles per dollar on travel and gas purchases (applies to the first $5k in annual spending on these categories combined)
And now for the drawbacks…
The fact that these cards have no annual fee and respectable rewards are definitely a benefit, but you also need to review these 3 drawbacks:
1. Not as widely accepted as Visa/MasterCard
Discover actually has really good acceptance in the United States (you can use it at over 90% of the places which take Visa/MasterCard). However if you travel internationally for your company, you may run into some problems. It’s widely accepted in some Asian countries but elsewhere you probably will have a tough time using it.
2. Good benefits, but not great
The Discover business card benefits are actually quite good when you compare them to consumer cards. For travel on common carrier, you can get up to $1M in travel accident insurance, up to $500 for purchase protection, 1 year extended warranty program, and up to $50k in rental insurance for qualifying auto rentals.
While those are certainly nothing to sneeze at, American Express and Chase throw in even more benefits, including discounts and perks at their partners.
Not to mention, the tiered rewards on non-category spending is a letdown.
3. Discover business card reporting
Perhaps the biggest complaint is the fact that a Discover business credit card will be reported to your personal credit file. Normally with business cards, they only report to your personal credit report if you default on your account. Aside from that, they normally don’t show up.
So for Discover to do this is unusual (Capital One is the other major issuer that does the same). If you carry big balance, using a high amount of your credit limit, you probably don’t want that on your personal credit since it could hurt your credit score. For this reason, it’s a drawback for sure.
Verdict for 2013?
Despite the drawbacks, the business credit cards from Discover are still quite respectable. Although I don’t personally use them for my business, I’m definitely not opposed to them.
However the reason I don’t use them is because you can get more bang for your buck with some of other guys on the market. For my business, I use the Chase Ink Visa and recommend you at least check that out before applying for a Discover. Go here to review what I consider to be the best business credit cards.