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Q: What are the main differences between consumer and small business credit cards? — Ajay Jain

A: Personal cards and small business cards are very different animals. And because business cards provide a more detailed picture of your expenses, they're generally the better bet.

A business card will help you separate business and personal purchases, a key consideration at tax time. Most provide quarterly and annual reports that break out spending by type of merchant, product, and tax categories. They also detail the expenditures of any employees you add to the card's master account.

If you are starting out, or if you have no financial history with the bank issuing your card, you may need to offer a personal guarantee when applying. "An issuer could ask a small business owner to put $5,000 in a CD and will issue a line up to $5,000," says Mitch Uretsky, managing associate of credit card consulting company Auriemma Consulting Group in Westbury, N.Y. The entrepreneur's credit history, not the business' history, will most often determine the card's credit line.

When choosing a card, compare the annual percentage rates, annual fees, and rewards programs. Rates on small business cards for those with the highest credit scores average about 14%, compared with 12% on consumer cards, according to Creditcards.com. Business cards' credit lines average about $50,000, compared with $15,000 for personal cards.

If you expect to carry a balance, finding a low annual percentage rate (APR) is vital. In late September the Advanta Platinum with Rewards had a fixed 7.99% rate on purchases. Paying off the balance each month? A slightly higher APR and an annual fee might be fine if you get useful features, such as a rewards program that translates into office products or airline tickets. Some cards, such as Chase Business Cash Rewards, give you up to 5% cash back on purchases with no limit. Annual fees are all over the map. The Citibusiness/AAdvantage MasterCard has no fee the first year, as well as no fees for additional employees who use the card, but the American Express Platinum Business is $400, with an additional $200 annually for each added employee.

Q: I got a tip on a real estate deal and am now buying a $5 million building. The tipster, who is a licensed real estate agent, is now asking for a $100,000 finder's fee. What, if any, is an appropriate fee to give him? — Paul Adler

A: The $100,000 check your tipster wants you to write is nearly twice the average finder's fee for a deal of that size. Typically, real estate finder's fees are paid by the listing broker, who represents the property's seller. A standard finder's fee for a real estate deal is 10% to 20% of the commission earned by the listing broker. That commission is usually 5% to 7% of the total price, says Yildiray Yildirim, associate professor of finance at the Whitman School of Management at Syracuse University. A reasonable finder's fee for your particular deal, therefore, is between $50,000 and $70,000. The listing broker would typically pay after the deal closes.

However, if none of the parties inked an agreement that spelled out exactly what your tipster would earn if the deal closed, you and the listing broker may not owe him anything. Even if the deal was initially discussed in casual conversation—as many real estate deals are—the tipster should have been clear with both you and the seller that he expected to be compensated for sharing the information. And he should have drawn up the appropriate contracts as the deal evolved, says Guy Ponticiello, managing director of Jones Lang LaSalle, a real estate consultancy. Without a legal document in hand, you are not required to pay a fee.

Given that many deals rely on unwritten "gentleman's agreements," though, you and the seller may not want to burn bridges with your tipster. But whether he is due the fee he has asked for, or any fee at all, is up to the listing broker.


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