How to Pick the Best Credit Card for Your Nonprofit

Low interest rate and high rewards make the ideal combination.

Volunteers at a food bank fill bags with groceries, which were probably purchased with a credit card.
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 Jose Luis Pelaez Inc / Getty Images

A nonprofit organization is one that has a tax-exempt status with the IRS. But, nonprofit doesn’t mean your organization doesn’t need money—or credit—to operate. At its simplest, a credit card can make it easier to track expenses and stick to a budget. Picking the best credit card for your nonprofit requires considering your financing needs and comparing credit card features.

Credit card issuers don’t specifically offer nonprofit credit cards. Instead, your nonprofit can apply for a business credit card to use for making purchases for your organization. On the credit card application, you’d enter the employer identification number given to you by the IRS. If your nonprofit hasn’t established a credit history, your personal credit and income may be used to approve the application. In that case, your credit card use will also affect your personal credit history.

Look for a Credit Card With Minimal Fees

As a nonprofit, your goal is to keep operating costs as low as possible. Choosing a credit card with the least amount of fees will reduce your financing costs. Unless you plan to earn rewards on your credit card purchases, look for a card that doesn’t charge an annual fee. And if you plan to use your credit card for purchases in other currencies, look for one that doesn’t charge a foreign transaction fee.

You can avoid most other fees—like a late fee, cash advance fee, or balance transfer fee—by using your credit card wisely.

Shop Around for the Best Interest Rates

There are many credit cards that offer zero percent promotional interest rates for the first few months of having your credit card. Using an interest-free credit card allows you to make larger purchases and pay them off over time without additional finance charges.

If you don’t find a credit card with a promotional interest rate, you can still save on interest costs by choosing a credit card with a low interest rate for purchases.

Choose a Rewards Program That Fits Your Organization

Some credit cards pay higher rewards on dining, travel, or office supplies while others pay flat-rate rewards on all your purchases. Maximizing the rewards you earn means choosing a credit card that fits your organization’s spending habits.

Cashback is the most versatile reward, but choosing another type of rewards card may allow you to earn more. If your nonprofit requires employees to travel, for example, choose a card that pays rewards on travel purchases. You don’t have to use the credit card for large purchases. Instead, you can maximize your rewards by using your credit card for everyday purchases. Just be sure not to overspend.

Many rewards credit cards also offer an initial sign up bonus. After spending a minimum amount on purchases within the first few months of opening your credit card, you’ll receive a lump sum of bonus rewards. If you’re considering a sign up bonus, weigh the minimum spending amount against your projected spending to be sure you’ll be able to earn the bonus.

Consider Whether You Need Employee Cards

Some credit cards allow you to add authorized users or employee cards. If you’ll allow employees to make business purchases, a credit card keeps you from having to reimburse employees for their spending. Make sure you understand and communicate spending requirements to maintain your 501(c)(3) status. This may mean creating company policies that employees must acknowledge and follow if they have an organization credit card.

For-profit businesses usually enforce strict rules about employee personal spending on company credit cards. That’s the company’s money, after all. For nonprofits, the stakes are even higher: personal spending on the organization’s credit cards can put the organization’s tax-exempt status at risk.

Pay Attention to the Qualifications

Qualifying for a rewards credit card often requires a good credit score. Consider getting a credit card that doesn’t offer rewards if you need to work on your credit first. Then, once you’ve improved your credit and your nonprofit’s credit scores, you’re more likely to qualify for a rewards credit card. A secured credit card is also an option if you haven’t established credit for your nonprofit and your personal credit needs improving too.