Everything you need to know about business credit cards
A business credit card could be an invaluable asset to your business, simplifying your accounting, improving your cash-flow and making it easier to buy what you need.
Read on for everything you need to know about business credit cards and find out how to pick the right card for you and your business.
What are the advantages of a business credit card?
- If you pay your credit card bill in full, you can expect to receive up to 56 days interest free credit on your spending, which could help to spread the cost of your business expenses and improve cash-flow.
- Many business credit cards have high spending limits, or, in some cases, no limit at all – which can boost the purchasing power of your business.
- Using a business credit card makes it easier to buy what you need online or over the phone, and can also be a better option than using the company cheque book.
- A business card is a real asset if you or your employees have to travel abroad for business. As well as being a convenient way to pay for business expenses while travelling, some cards offer preferential exchange rates, free worldwide travel and medical insurance, and even other perks, like hotel discounts, upgrades and concierge services.
- Using a business credit card can help you to simplify your business finances. A monthly statement means you can keep track of expenses and see them all in one place. It can also cut the need for petty cash – you may get supplementary credit cards for your employees, making it easier to administrate employee expenses. Your statement will show who spent what and when, and you can set personal spending limits for each supplementary card.
- Business credit cards offer fraud protection. If there is fraud on your card, as long as you report the fraud within a designated period, you won’t be liable. Some card issuers even offer Cardholder Misuse Insurance, to protect you in the event that an employee misuses their credit card.
- A number of business credit cards offer discount and reward schemes. Your credit card could entitle you to discounts on everything from flights to office suppliers, depending on the card provider. You can also earn rewards points like AirMiles or Nectar points with some business credit cards.
Things to consider when choosing a business credit card
Think about how you plan to use the credit card – knowing what you want to get out of it will make it easier to pick the right deal. There are a few important criteria to consider when choosing the right credit card for you:
- Are you planning to borrow on your business credit card? If you are planning to borrow beyond the interest-free period, the APR is key. Introductory rates can look very appealing, but check that the standard APR is also competitive, or look for a credit card with a low standard APR.
- Will you pay the balance in full every month? If you are going to pay your balance in full each month then discounts and rewards packages might be more important to you than the APR. Look for a business credit card that offers the discounts or rewards that will be of the most value to your business.
- Do you need supplementary business credit cards? If you want to give supplementary cards to your employees, look into the supplementary services offered by the different providers, for example is there any charge for supplementary cards or a limit to the number you can have?
- How much can you afford to borrow? Think about how much you can realistically afford to repay and the maximum amount your business is likely to need to spend in a month. Even if you are offered a higher credit limit, do not be tempted to accept it.
Always compare business credit cards and the different offers available to make sure you get the right deal for your business.