How to choose a business credit card

Business credit cards can be a valuable tool for short-term borrowing, offering flexibility and convenience. They allow you to make purchases or cover expenses for your business on credit, with the option to repay the balance at a later date, often without interest if paid in full each month.

What types of business credit cards are there?

As with personal credit cards, there are different types of business credit cards. The right one for you will depend on how you plan to use it and what you need it for. In some cases, it may even be worth having different cards for different purposes.

These are the main types:

• 0% on purchases credit cards: Make purchases with the card and pay no interest on your spending for an introductory period - e.g. six months

• Cashback credit cards: Get cashback on purchases, such as 1% of your spending

• Reward credit cards: Earn perks on your spending, from cashback and loyalty points to Avios that can be used toward travel or other business-related expenses. Some cards are tied to specific retailers or airline schemes, which can be particularly valuable if your company regularly makes purchases in those areas.

• Travel credit cards: As well as giving you points, some cards come with other travel perks, such as access to airport lounges and travel insurance

• Low-interest credit cards: If you won’t be paying off your credit card in full each month, you should consider a card with a low interest rate to keep your borrowing costs to a minimum. Purchase interest rates typically range from 15% to 30% for a business credit card, although some charge more.

Business credit card fees

It’s important to compare business credit card fees when choosing one. Most have an annual fee — typically around £28 to £150 (or more) — although some don’t charge for this in the first year. 

Other fees to watch out for include:

• Late payments and exceeding your credit limit: Credit card providers can’t charge you more than £12 for these

• Balance transfer: If the card lets you transfer a balance from another credit card, you could pay 3% of the amount as a fee

• Cash withdrawal: If you use your card to take out cash from an ATM, you may have to pay 2.5% to 3% of the transaction. Providers also tend to charge interest on any withdrawals from day one

• Foreign usage: Most cards charge a fee when you use them abroad. These range from 0.99% of the transaction amount to 2.99%. There are cards with no foreign usage fees, while others don’t charge when you use them in the EU, so choose one of these if you plan to use the card abroad

Other factors when choosing a business credit card

Cards have eligibility criteria you need to meet to apply for one. For example, your business must typically be based in the UK and have a turnover over a certain amount. 

Your business credit score plays a key role in whether a provider approves your credit card application and how much credit it offers. For smaller businesses, personal credit history may also be considered. It’s worth checking your business credit report before applying to understand your score and see if there’s anything you can do to improve it.

Use credit card eligibility checkers online to see which cards you’re likely to get before applying. This reduces your chances of being turned down for a card and ending up with multiple searches on your credit report, which can harm your credit score.

Read our How to apply for a business credit card guide to learn more.

Bear in mind that while using a business credit card can boost your business credit score, it can also damage it if you don’t pay your credit card bills on time.

What can you use a business credit card for?

You can use a business credit card for anything you need to pay for in your business, such as:

• Equipment

• Office supplies

• Business travel

• Invoices

• Expenses

• Entertaining clients

• Software

• Utility bills

• Advertising

Using a business credit card can help you manage cash flow more effectively while keeping your business and personal finances separate.

Credit cards are useful for making relatively small payments, especially if you pay your bill in full each month so you don’t pay interest on your spending. However, if you need to purchase more expensive items over a longer period, using another type of business finance, such as a business loan or invoice finance, could be more efficient. 

Can you use a personal credit card for business?

If you're a sole trader, you can use a personal credit card for business expenses, but it’s generally not recommended. Doing so can make it harder to manage your accounts and comes with a few key downsides:

• It doesn’t contribute to your business credit score

• It complicates tracking business costs and tax-deductible expenses

If you run a limited company, the rules are stricter. You must keep your business and personal finances separate, which means using a dedicated business account and credit card.

Find out more about using a personal credit card for business.

Advantages of business credit cards

While it might seem easier to use a personal credit card when you’re starting out, a business credit card offers several key advantages.

You can request additional cards for employees, making it simpler to manage and track their spending. This also removes the need for expense claims, as all costs can be paid directly from the same account and settled in one go.

Many business credit cards also come with perks tailored to companies, such as discounts on travel, free accounting tools, or vendor offers. Plus, they often integrate with accounting software, helping you streamline bookkeeping and stay on top of your finances.

Read more…

• What is a business credit card?

• How to apply for a business credit card

• Can you use a personal credit card for business?

• Should you get a business credit card or business loan?