Everything you need to know about getting a business credit card
A business credit card could make your financial admin easier and offer benefits, from travel insurance and cashback, to 0% on purchases for a time
What is a business credit card?
Business credit cards in the UK are designed to be used by a business rather than an individual. Available to companies of any size in the UK, they work in the same way as standard credit cards - you can make purchases using the card and paying it off at a later date. Some business credit cards also offer extra benefits such as cashback and travel insurance.
What should I consider before getting a business credit card?
There are a number of things to weigh up before getting a business credit card.
How will it benefit my business? Make sure you have sound reasons for getting the card. It could be to give more flexibility so employees don’t need to claim back expenses, or it might be to earn rewards or cashback when you use the card, for example
Will it justify the fee? Some business credit cards come with an annual fee, so make sure you’re comfortable. It’s worth paying before applying for a card
Make sure you can pay it off. Be confident your company will be able to repay what you spend every month. Otherwise, any of the benefits you enjoy by using it will be wiped out by interest charges
Choose the features you need. Business credit cards offer a range of incentives such as 0% interest on purchases for a time, insurance or fee-free spending abroad. Pick a card that suits your business needs
How does a company credit card work?
Business credit cards allow companies to make purchases on credit up to a set limit. They often come with perks, such as cashback, rewards and travel insurance. But be aware that some charge an annual usage fee.
Businesses can avoid paying interest on their card borrowing if they repay the debt 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 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.
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 card issuers will hold you liable for repayment of any debt accrued with the card, even if the charges were for your business.
Can I get a company credit card for my start-up business?
You may be able to get a business credit card for your start-up company, providing you meet the card issuer’s acceptance criteria.
They will take into account your business revenue and overheads to check whether they feel you’ll be able to make repayments for any credit card purchases.
As a start-up your revenue may be relatively low compared to your costs, so the potential credit card issuer may also want information on your personal finances and check your personal credit rating before making a final decision.
A business credit card is not the only way of helping the cashflow of a new business in the UK. You could also see whether a start-up loan is more suitable.
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. Here are some typical examples:
Rewards business credit card
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 card
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 card
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 can I use my business credit card for?
Business credit cards can be used for many of the same reasons as standard credit cards. Other examples include:
Paying a bill or invoice
Paying for staff and client entertainment
Covering office expenses
Buying business equipment
What rewards can I get with a company credit card?
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. If this is important to you seek out those cards with the longest low interest or interest-free purchase offers.
What are the pros and cons of business credit cards?
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. But there could be some disadvantages too.
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 itemised 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
Higher credit limits: You can usually borrow more with a business credit card because it is based on your business income, not just your personal income
Separate your finances: A business credit card allows you to separate your personal and business spending
Risk of debt building up: A business credit card is a form of borrowing so if not managed responsibly and you miss repayments, you’ll be charged interest which can mount up over time
Damaging your credit score: While a credit card can be useful in building up your credit score, if you miss payments or make them late it can also have a negative effect, making borrowing more expensive in the future
Annual fees: Many business credit cards charge an annual fee. Make sure you will use the card in a way that can justify this fee before applying
Protection on spending: Section 75 does not apply on business credit cards, although some card providers offer guarantees to cover you against fraudulent online use and insurance to cover misuse of the card by an employee
How to choose the best business credit card
When thinking about which credit card might be best for your business in the UK there are a number of considerations, such as:
What will you need from a card – a permanent low interest rate, rewards and perks for example, low rates and charges for overseas use?
Look for cards offering great introductory offers. These might be business credit cards without fees, offering initial perks, or a card that offers 0% interest for a fixed period.
Estimate your likely monthly spend and where you’ll spend. You can then calculate what perks and rewards will work best for you, and whether they will outweigh any monthly or annual fee charged on the card.
Overseas use. If you want to use the card abroad look for deals with fee-free transactions overseas and competitive exchange rates. Additional perks might even extend to travel insurance.
Interest rate and APR: If you’re worried you won’t clear the balance every month, seek out cards with the lowest interest rates and APR - to be sure you pay as little as possible for your borrowing.
Our expert says...
“Business credit cards can allow you to separate your work and personal spending, reduce the amount of admin your company has to complete and you can often be paid extra perks such as cashback, rewards, or fee-free spending abroad. But as with any type of credit, they only work if you’re using them correctly and responsibly. Used in the wrong way and you could build up expensive debts, wipe out any benefits offered and damage your own credit score.” Rebecca Goodman, Financial Journalist
What are the alternatives to a business credit card?
If a business credit card doesn’t meet your requirements, there are alternative business finance products available. These include:
Other useful guides
We have a wide range of useful guides about business finance, including:
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 UK 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 at all. 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.
What costs and fees are associated with business credit cards?
The main costs of a business credit card are potentially an annual usage fee and the interest charges on your borrowing. There will be higher rates for any cash withdrawals and overseas use.
There may also be charges if you miss a card repayment and sometimes providers can charge a dormancy or inactivity fee if you don’t use the card for a time. Always read the small print of your card and contract terms before signing up to ensure you won’t be hit with any nasty surprise charges.
What will the APR be on a business credit card?
The APR on a business card is the annual cost in interest, expressed as a percentage, if you don’t clear your debt on time and in full. The exact APR offered will depend on your business finances and the view of the card provider. Typically, the better your credit rating and the more confident the card issuer is in your ability to make repayments, the lower the APR offered.
Can I use a personal credit card for business?
You can use a personal credit card for business expenses, but it may be better to use a dedicated company credit card to reduce the risk that you’ll be held personally liable – rather than the company – for any debts.
If an employee is entering expenses on your behalf from a personal credit card, they’ll also be able to view your other, personal expenditure, which you may prefer to keep private.
In addition, having a business credit card allows you to start to build up a credit rating for the company – useful if you want credit, such as a business loan, in the future.
How do you apply for 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. Lenders will do a 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.
Am I eligible for a business credit card?
If you are aged over 18 and run a business in the UK, you may be eligible for a business credit card. Any potential card issuer will first want to be confident you can afford any repayments on your borrowing so they will check your business finances and credit rating and often your personal credit rating too.