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Business Credit Cards

Manage your company with business credit cards

Credit cards for business use feature a host of benefits including travel insurance, cashback, free additional cardholders, 0% on purchases and itemised billing

By Emily Sullivan

Published: 29 January 2021

What is a business credit card?

A business credit card is designed to be used by a business rather than an individual. Business credit cards are available to companies of any size and can be used to help build a credit profile, as well as manage employees’ expenses. A business credit card is given in the name of a business instead of a person, though it will also have the name of someone from the company printed on it.

You can make purchases as you would with a normal credit card, and some business credit cards also offer extra benefits like cashback and insurance deals. But applying for a business credit card is a slightly different process to applying for a personal credit card. And because they’re designed for companies and not consumers, they aren’t covered by the Consumer Credit Act.

How do business credit cards work?

Business credit cards work a lot like personal credit cards. They provide companies with easy access to a line of credit – up to a set limit. Business credit cards can be used to make purchases and withdraw cash, and can help your company manage cashflow.

Businesses can avoid paying interest if they repay the debt on the card in full each month. If this isn’t possible, you’ll need to make at least the minimum monthly repayment – how much this will be is printed on your credit card statement.

The interest you pay on your business credit card is sometimes based on the type of business transactions you make with your card. You should read the provider’s policy documents before applying for a card so you know how much interest will be charged and when.

Who are business credit cards for?

Business credit cards are a good way to separate your business expenditure from your personal expenditure. A business credit card can be used in a range of situations by:

  • An employee of a company
  • A sole trader
  • A business owner or director

Some credit card companies offer different deals 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.

How much do business credit cards cost?

The main costs of a business credit card are:

  • Annual fee: Not all business credit cards charge an annual fee, but it’s more common than with personal credit cards. Some business credit cards might be fee-free for the first year, then start charging a fee
  • Interest: You’ll pay interest on your balance if you don’t repay your credit card in full each month
  • There may also be charges for:
  • Late payments: If you’re late paying your credit card bill, you’ll be charged a late payment penalty
  • Exceeding your credit limit: You’ll also be charged a penalty fee if you go over your credit limit
  • Inactivity fees: Some business credit cards charge dormancy or inactivity fees – often a certain amount for every month or year you don’t use the card
  • Cash withdrawals: If you withdraw cash from an ATM, your credit card provider may charge an extra fee, and immediately charge interest on the amount withdrawn
  • Foreign transactions: There are likely to be extra charges for using your business credit card abroad

What perks do business credit cards offer?

Different types of business credit card offer different benefits. These can include:

  • Cashback: Some card companies return a proportion of your spend to your card as cash
  • 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 that can be spent on flights or other travel-related purchases
  • Insurance: Some business credit cards offer travel insurance as a free perk
  • 0% interest on purchases: Some cards offer zero interest on purchases for a set period of time, normally between three and 30 months

Why choose a business credit card?

A business credit card can help you establish a separate credit history for your business. Small businesses and start-ups often get turned down for loans because they lack a credit history – so a business credit card can help.

Other reasons to choose a business credit card include:

  • Reduced expenses admin: It’s easier to manage expenses when employees use a company credit card
  • Controlled cashflow: Business credit cards offer a revolving line of credit. You normally have up to 56 days before interest is charged, which can help with cashflow
  • Separate finances: A business credit card allows you to separate your personal and business spending

What you need to know before applying for a business credit card

Business credit card features worth being aware of include:

  • No consumer credit protection: oOn a personal credit card, purchases worth between £100 and £30,000 are protected by Section 75 of the Consumer Credit Act. This means if something goes wrong during the transaction – for example, the items aren’t delivered – you’ll be compensated by the credit card provider. This does not apply to purchases made with business credit cards
  • Stringent checks: Start-ups and new companies with no credit rating might not be able to take out a business credit card. If your application is accepted, you may also be a given a higher interest rate or a lower credit limit than you expected
  • Annual fees: Annual fees are more common on business credit cards than personal credit cards. You can see how these affect the overall cost of the card by comparing the APR, or annual percentage rate
  • Accepted payments: Some suppliers do not accept credit card payments, preferring debit cards or bank transfers instead

How to choose a credit card for your business

Consider the following factors when picking a business credit card:

  • The APR: The APR takes into account both the interest rate charged on the card and any fees (such as an annual fee), and is a handy way to compare different credit card deals. However, an advertised APR only has to be legally offered to 51% of applicants, so you might be offered a different APR to the one you see advertised
  • Rewards: Look for a business credit card offering rewards you will use. If, for example, your staff regularly travel overseas, then travel-related perks will be best. If you spend a lot with a certain retailer, a discount at the retailer in question might save you more money
  • Cards for employees: If you have staff with expense accounts, it could be beneficial for each of them to have a company credit card – so look for a credit card company that can arrange this
  • Foreign transaction fees: If you or your employees travel frequently, it’s worth checking whether a business credit card charges extra for making transactions abroad

Compare business finance products

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.