Having a business credit card can help you manage expenses and cash flow in a convenient and flexible way. It can be used by both you and your employees to make company purchases and can help you build up your business’ credit rating.
Much like a personal credit card, you can choose to pay the balance in full or meet the minimum payment requirements. Your business is responsible for making the payments.
Credit cards are a type of unsecured lending and the and limits can be quite strict. Of course, have to meet the lender’s criteria - they’ll want to look into your credit history, trading history, turnover and profit.
Your credit limit - usually anywhere between £1,000 and £10,000 - will very much depend on your credit rating, as will your interest rate, interest-free period and rewards.
The deal you’re offered can depend on your business' size and level of financial stability.
Types of business credit card
There are lots of business credit cards on the market today. Some of the most popular include:
Good for: Companies that frequently travel internationally for business - you can accumulate air miles and get discounted or free flights.
Good for: Companies planning on using the credit card for purchases - you receive a percentage back on what you spend.
Good for: Companies that want to earn points on what they spend and exchange them for vouchers or other rewards.
Low or interest-free
Good for: Companies that don’t want to be charged interest for an initial period of time (for example, six months).
Frequently Asked Questions
What are the costs associated with business credit cards?
Business credit card costs include:
It’s more common for business credit cards to charge a yearly fee, however not all of them do. Also, some might have a fee-free period of up to a year.
In most cases, you’ll have to pay interest on your balance if you don’t pay your credit card balance off in full each month. Interest rates vary - always check the terms and conditions before you apply.
Depending on the credit card in question, you may also be charged for:
- Late payments
- Going over your limit
- Cash withdrawals
- Transactions abroad
- Inactivity fees
Who are business credit cards for?
A business credit card is typically used by:
- A company’s employee(s)
- A business owner/director
- A sole trader
Keep in mind that certain banks will only offer you a business credit card if you open a business account with them. The deal you’re offered can depend on the size of your business and how financially stable it is.
Can I request several cards for one account?
Yes, if you need to give credit cards to various members of your team you can do so - you’ll still pay one bill.
What perks can I expect?
Different cards provide different benefits. These can include:
- Cashback, where a percentage of what you spend is returned as cash to your card
- Reward points you can exchange for cash, vouchers air miles or other travel services
- Discounts at specific stores
- Travel insurance
- 0% interest on purchases - usually for between three and 30 months
You might also want to check out these alternatives to business credit cards.