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Business Credit Cards

Understanding which credit card is right for your business

A business credit card could make your financial admin easier and offer big benefits, from travel insurance and cashback to 0% on purchases

By Tim Heming

Published: 21 October 2021

Man paying in a shop

Looking for a credit card?

Should I get a business credit card?

Whether you’re a director of a company or a sole trader, there could be plenty of advantages to getting a credit card for your business.

A business credit card can help you 

  • Establish a credit history for your business. Small businesses and start-ups can get turned down for loans because they have no credit history. A business credit card can help build up the firm’s credit score and allow it to get better deals 

  • Reduce administration: It can be easier to manage expenses when employees use a company credit card. This is because purchases are itemized in one place rather than a series of personal expense claims 

  • Control cashflow: Business credit cards offer a revolving line of credit. You will typically have up to 56 days before interest is charged, which can help with budgeting 

  • Separate your finances: A business credit card allows you to separate your personal and business spending 
     

What is a business credit card?

Business credit cards are designed to be used by a business rather than an individual - although they will need the name of someone from the company to be printed on the card.

They work in exactly the same way as standard credit cards. You can make purchases for goods and services, and some business credit cards also offer extra benefits such as cashback and travel insurance. 

Business credit cards are available to companies of any size, from start-ups and sole traders to big corporations. They can be used to help build a credit profile, as well as manage employees’ expenses. 

How do business credit cards work?

Business credit cards provide companies with easy access to a line of credit – up to a set limit. They can be used to make purchases and can help your company manage cashflow. In some cases you may be able to switch a card balance to a new business credit card (balance transfer) to take advantage of better rates. They may also come with perks, such as cashback, rewards and travel insurance, and some will charge a fee.

In the same way as personal credit cards, businesses can avoid paying interest on their card borrowing if they repay the debt on the card in full each month. If this isn’t possible, you should pay at least the minimum monthly repayment to avoid extra fees and charges. The minimum monthly repayment will be printed on your credit card statement.

The interest rate on your business credit card is sometimes based on the type of transactions you make with your card. Cash withdrawals usually have higher interest rates, for example. Read the provider’s terms and conditions so you know how much interest will be charged and when. 

Be aware that if you fail to pay off the business credit card and you’re the primary account holder it can negatively affect your credit rating. Most small business credit card issuers include a personal guarantee into the agreement to hold you liable for repayment of any debt accrued with the card, even if the charges were for your business.  

If you’re an authorised user on your employer's small business credit card, it could still affect your credit score - although less significantly. This can work both negatively and positively depending on how the card is managed.

What types of business credit cards are there?

Business credit cards are similar to personal credit cards and can be used in the same way.

Rewards business credit cards

Many business credit cards offer rewards such as cashback or other perks when you spend. While not always, they may also come with a fee, which is sometimes waived for a fixed initial period. But if there are fees it’s important to make sure any benefits will outweigh these charges.

Purchase business credit cards

You may be able to get a business credit card that allows you to spend for a fixed period, such as three or six months, without being charged interest. You must still make your minimum monthly repayments on the card. But this could help company cashflow.

Balance transfer business credit cards

While there is nothing to stop you shifting your debt to a business credit card through a balance transfer, balance transfers are most appealing when there is an introductory offer with low or 0% interest for a set period, such as six months or a year. It is rare to see specific balance transfer business credit cards available.

What perks do business credit cards offer?

Different types of business credit card offer different benefits, with many offering a mixture of perks. These can include:

  • Cashback: Some cards will return a proportion of your card spend as cash. For example, up to 5% cashback on your bill at selected restaurants, or cashback on payments for tax returns, courier or printing services

  • Shopping discounts: Some business credit cards offer discounts or vouchers for shopping in certain stores

  • Rewards: Other cards offer reward points (that can be exchanged for cash or vouchers) or air miles, which can then be spent on flights or other travel-related purchases 

  • Insurance: Some business credit cards offer travel insurance as a free perk

  • Fee-free transactions abroad: If you do a lot of business travel it may be advantageous to have a card that offers fee-free spending and free cash machine withdrawals overseas

  • 0% interest on purchases: Some cards offer zero interest on purchases for a set period, typically this could range anywhere from three to 30 months depending on the card

How do you get a business credit card?

To apply for a business credit card you’ll need to be a director of a business or sole trader. You need to have registered your business and started trading. You can apply either in a bank or online.

Business credit cards are a type of unsecured lending so the provider will have to be confident your firm is creditworthy. For this reason lenders will do a full credit check and look at your business finances. In some cases, particularly if your company has a short trading history, they may also check your personal credit score.

Some credit card companies offer different rates and credit limits depending on the size and financial strength of a business, and some banks may only offer credit cards if you open a business account with them.

As well as a company director or sole trader, business credit cards could also be used by the employees within a company. 

Can a start-up or new business get a business credit card?

Yes, a new business can apply for a business credit card. But if the business has limited financial records, it may not be get offered the best APR or interest rate, or be given a high credit limit - at least to begin with. 

Each credit card company has different requirements, and some may only issue cards to businesses that have a minimum annual turnover, for example.

Can I use a personal credit card for business?

You can use a personal credit card for business expenses, although it may be better to use a dedicated business credit card for the following reasons:

  • Liability. If you use a personal credit card there’s a risk you’ll be held personally liable – rather than the company – for any debts

  • Clarity. You won’t become confused between personal and business expenses. If you use your personal card, it might be more difficult to track tax-deductible purchases

  • Privacy. If an employee is entering your expenses on your behalf from a personal credit card, they’ll be able to view other personal expenditure and personal details which you may wish to keep private 

  • Credit profile. If you use a business credit you can start to build up a credit rating for the company – useful if you want credit, such as a business loan, in the future. Likewise, if you put business expenses on your personal credit card and miss a repayment, your own credit score will be damaged 

Are there costs to having a business credit card?

MoneySuperMarket does not offer business credit cards, but we can help you compare great deals on a wide range of business finance products, including both short term business loans and longer term business loans. Via our business finance partner FUNDING XCHANGE, we can also offer access to invoice finance and asset finance options.

All you have to do is answer a few questions about your business and how you plan to use the extra funds. We’ll then be able to give you a tailored list of quotes to consider.

How can I choose the best card for my business?

The best business credit card for your company will depend on how you intend to use it. Think carefully about what you’ll need from a card – low interest rates, rewards and perks for example, this will help you make the right decision for your business so you can match credit card deals to your requirements.

If you want the best deal at the start. Look for cards offering great introductory offers. These might be business credit cards without fees or offering initial perks when you sign up. Or it could be a card that offers 0% interest for a fixed period, allowing you to spread your initial spending over several months.

Many business credit cards offer rewards when you spend so it’s worth comparing options. Look for particular types of reward, from cashback to points to air miles, and where you might be able to recoup them, for example, at selected retailers. It’s also worth having an idea of your monthly spending on the card as you’ll want to ensure the perks or cashback will outweigh any monthly or annual fee charged on the card – if there is a fee. 

If you want to use the card abroad look for deals with fee-free transactions overseas and competitive exchange rates. Some additional perks might even extend to travel insurance.

If you think you might not be able to pay off the card in full each month think carefully about whether a business credit card will suit your needs. It can be easy to slip into debt if you’re building up a card balance and incurring interest. If you still need a card but you know you won’t clear the balance every month, seek out cards with the lowest interest rates to be sure you pay as little as possible for your borrowing.

Other useful guides

Find out more about finance options for businesses:

Compare business bank accounts  

Business loans

Business savings  

Compare credit cards with MoneySuperMarket

While MoneySuperMarket does not compare business credit cards we can show you personal credit cards from our leading panel of providers. 

We’ll just ask you a few quick questions about your finances and what you’re looking for, then show you the cards that are most suitable to your needs.

It’s a soft search so won’t affect your credit rating. We’ll also show you your chances of being accepted and if you’re pre-approved for any card deals.

 

 

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.