Business credit cards should be chosen carefully, different providers offer perks and benefits that will suit different businesses, so it’s worth spending time researching different offers.Get Card
A business credit card is a credit card used by business owners as an additional line of credit for business expenses. The business credit is a revolving credit facility, with a monthly credit limit that can be used for anything that you need to purchase for your business. You simply use the card throughout the month, and pay off the balance in full every month. Business credit cards are ideal if you are in a position to repay the entire loaned amount within the billing period, otherwise, you will incur interest charges and late payment fees. You can also use one to improve your organisation’s credit profile.
This will depend on the credit card provider, but in most cases you can apply online, or at a branch. You will need to provide the details of your business (trading years, turnover etc) along with some personal details. In many cases, you will get an answer almost instantly, with your physical card arriving in the post within 2-4 working days.
There is not much difference between a personal and business credit card, other than one being used for your business and the other for yourself. You are also free to give business credit cards to your employees to use for business expenses. This can be a much more convenient way to manage employee expenses, rather than each individual submitting expenses. Of course, that depends on how many employees you have.
Most businesses use a business credit card, as they are convenient for day-to-day expenditure. They offer many advantages including the following:
Separation of personal and business purchases
Businesses can spend despite negative cash flow
Improves the administration of employee expenses
Makes it easier to spend on business trips abroad
It won’t affect your personal credit score
Can choose a card with benefits that suit your business
There are many occasions when a business credit card is more convenient than using bank transfers, a debit card, or cash payment for business expenses. If you are sure that you can clear off any outstanding balance at the end of the month, then a business credit could be a good option for your business.
You will be eligible for a business credit card if this sounds like you:
You own a small business
You are a sole trader, limited company, or a partnership
You make business-related purchases for a company you work for
You have consistent monthly revenue
Even if you don’t meet the above criteria, there are many lenders who specialise in specific business credit cards, that might match your needs. For example, there are lenders that will expect to see two years of accounts, and others that will demand a minimum monthly revenue of £5,000. This is why it is helpful to use a lending marketplace to quickly identify the best available deals.
Depending on your business, and the industry you operate in, different credit cards will suit your needs. Let’s take an example. If you are planning to purchase an item of machinery, and you plan to spread the repayments over many months, a credit card with a low APR (annual percentage rate) could be suitable. In contrast, if it will be used for daily spending, a business credit card with an interest-free period might be a better option. You will have to compare the market, and look at different business credit card offers.
Before you apply for a business card, make a list of ten different providers, and jot down what each of them offers, there are cards with benefits, and for instance, if you fly a lot for business, you can find cards that offer great deals on air miles. You earn airline points doing your normal everyday spending and when you've collected enough, they can be converted into flights. Availability is more limited than when paying for flights with cash, so you'll usually need to be flexible when booking.
If you're looking for a cashback or reward card, something from the American Express range is most likely to suit you best. Check out who offers what in terms of intro bonuses, and ongoing rewards when compared with the rest of the market.
You will need to shop around, as many credit cards are free for the first year, and others don’t charge annual fees. However, eventually, you will have to pay fees. Bear in mind that interest rates can vary widely among different providers. Different fees will apply if you withdraw cash or make purchases abroad, and the big one is exceeding your credit limit or missing a repayment. Letting the balance roll from one month into the next is likely to be expensive, when it comes to fees.
There are many perks and benefits to using a business credit card. As mentioned earlier there is cash back, where you get a percentage back in actual cash, as a reward for using your card. Other providers offer free insurance, like travel or mobile phone insurance. Others offer discounts at certain retail outlooks. You can also claim a 0% interest deal, and get an interest-free card for a limited time. One of the main rewards is air miles that can be redeemed for flight tickets, or to upgrade to business class.
Credit card providers will check your business's finances and credit profile when you apply for a business credit card. However, they may also review your personal credit history if you are a sole trader. If you are a business with bad credit, there are specialist lenders that will take a holistic view of your business and will want to see a business plan, and how you have regularly paid off other types of debt. It’s not a bad idea to get a copy of your credit report to see what items you can improve on, otherwise, you won’t get the best deals on a business credit card.
In most cases, you will not need a business current account to apply for a business credit card. That said, having a business current account will make it easier to monitor your total business spending and to ensure spending limits are not exceeded. You might miss repayments, if your business current account and credit cards are not on the same account, as if you are transferring money from a separate account, it might take a few days to appear on the credit card.Get business credit card