If you’re like most people, you can’t live without your personal debit card. A business debit card can be equally useful. Instead of carrying large sums of cash or a time-consuming spend-and-reimburse process, you can pay for business expenses with a debit card linked directly to your business bank account—and avoid incurring debt in the process.
If you are eligible to open a business bank account, you are almost certainly eligible for a business debit card as well—no business credit is required. Here’s more information on how business debit cards work.
Can I Get a Debit Card for a Business Bank Account?
Savings, checking, credit cards, and merchant services are the four types of business bank accounts (to accept payments for goods or services). You’ll most likely receive a debit card linked to your business checking account, though you may also be able to get one linked to a savings account.
To open a business bank account, you may need a business license or a federal Employer Identification Number (EIN). You can get one from a variety of banks and credit unions. Account types and features, including debit card features, can vary significantly, and so be prepared to shop around for the best fit.
How Do Business Debit Cards Work?
A business debit card functions similarly to a personal debit card in that it can be used to make purchases, pay bills, and withdraw cash from an ATM. Business bank accounts may include features that personal accounts do not, making a debit card linked to this account more useful.
For example, you might come across a business account that redirects idle funds into profitable investments. Some business checking accounts offer interest or serve as a money market account. These accounts typically have higher fees or lower minimum balance requirements. Consider the cost of opening and maintaining a business bank account when selecting one:
- Monthly service fees
- Minimum opening deposit
- Minimum balance
- Overdraft fees
- Cash deposit fees
- Foreign transaction fees
- ATM fees
- Additional service fees and penalties
Fees and benefits can vary greatly between financial institutions and accounts. You may also discover a variety of digital capabilities, which can influence how you use debit cards in your business. Your business bank account may include digital money management tools that integrate seamlessly with your accounting software, allowing you to manage your business finances from your mobile phone, for example. Your banking app may be able to capture receipts, track spending, and even place limits on your credit cards.
Card controls can aid in the management of debit cards for your employees. Rather than having your delivery staff pay for gas out of their own pockets and submit bills for reimbursement, you could issue debit cards that only work at gas stations and have a weekly spending limit of, say, $60. Digital tools can assist you in keeping track of your money and spending, both for yourself and across the enterprise. If you value a capable digital experience, look for a financial institution that offers the options you require.
At the same time, don’t go overboard with bells and whistles if they aren’t necessary. Your business banking relationship will evolve over time, so if you only require a basic business account with a debit card right now, go with that option. You can always upgrade to a more feature-rich account as your business grows and your needs change.
Business Debit Card vs. Business Credit Card
You may want a business credit card in addition to a debit card. Which is superior? In reality, having both is preferable. Debit cards help you avoid running up a credit card balance every time you make a purchase because they draw directly from your checking account.
A business credit card, on the other hand, can help you build business credit, which is a valuable asset when starting and growing a business. A credit card can also assist you in smoothing out cash flow issues or financing equipment and other expenses. Business credit cards can earn rewards, which can be substantial if you use your credit card to pay for large expenses. If you’re not sure what type of business credit card you’re eligible for, you can check your business credit report online.
Compare the costs and consider how you’ll use the cards before getting a debit or credit card for your business. Who will be able to use these cards, and how will they be used? What safeguards do you have in place to prevent misappropriation or fraud? If you aren’t ready to issue and track debit or credit cards to your employees, you could use prepaid cards for everyone except yourself. Prepaid cards can be loaded and reloaded with enough money to cover essentials without jeopardizing your bank balance or credit line.
Finding the Right Debit Card for You
Obtaining a business debit card is a significant step: It goes hand in hand with opening a business account and establishing your company’s financial operations. To find the best fit, compare banks, credit unions, business banks, and online banks. The account you require exists somewhere, and it is linked to the appropriate business debit card.