Compare The Best Business Credit Cards

What are the benefits of using business credit cards?

There are several key benefits to using a business credit card. 

Firstly, they can improve expense management and tracking. They enable SMEs to easily separate business from personal expenses so business expenses are not missed. 

Similarly, you can separate out specific types of business spending on different credit card accounts (i.e. cards only used for online advertising or fuel). Integrating with popular cloud-based accounting software can improve the separation and tracking of these expenses further 

Secondly, business credit cards are often one of the best ways to access credit if the balance is paid in full each month before interest is charged. Cash flow is often a big challenge for SMEs and commercial credit cards provide flexible finance with an interest-free period of just under two months typically..

Thirdly, business credit cards often offer genuinely valuable rewards such as cashback or air miles. Some of these rewards are universal, such as discounts and free access to other services or insurance. Many rewards, however, scale up as your spending increases, such as spending on travel.

Some additional benefits include: Building your business credit score, monitoring employee spending, and having fees that are tax deductible.

What are the disadvantages?

Business credit cards generally come with higher interest rates than business loans. While they’re more flexible, they can cost more for businesses with longer amortisation periods. There is also the threat that the flexibility itself can lead to accidental high utilisation or late payments, and this can negatively impact your business credit score. 

They can often be more expensive than credit lines and have smaller credit limits, despite offering similar repayment flexibility benefits.

When it comes to purchase protection, they are generally worse than personal credit cards. Business credit cards are not covered by Section 75 of the Consumer Credit Act, which protects purchases up to £30,000. Some providers do offer their own guarantees, however.

How do I find the best credit card for my business?

While the best credit card will depend on the business, the process of elimination remains the same. Businesses are looking for value, meaning you need to get a good grasp of the total costs and pit them against the rewards. 

• APR and annual fee: Focus on the basic costs of a card, such as the interest rate and annual fee. This will help create a rough annualised estimate of the costs. 
• Hidden fees: Check for how expensive the additional fees are, such as FX and withdrawals, and then assess how frequently these will apply to you.
• Interest-free period: Check to see if the card has an interest-free period and if so, for how long? This may make the potentially high APR less relevant for some companies.
• Deal-breaker features: Some benefits and features will be non-negotiable for you, such as being able to issue 20 employee cards or integrate the account with Xero. This can narrow down your options to just a few.
• Scope and relevancy of rewards: Check whether the cashback is uncapped, or if the rewards scale beyond the introductory offer. However, it’s equally important to choose rewards that are most relevant to your business and activity. Discounts are good, but are they partnered with businesses you’re likely to use?
• Attainable rewards: You don’t want to have to try and spend enough to attain rewards, so ask yourself whether they’re likely in your “worst-case” scenario of spending less than usual. 
• Final judgement: After weighing the estimated costs with the rewards and ruling out non-negotiable features, you may still have several options. Make sure to take customer service, UI, reputation, and online reviews into account. 

What are the alternatives to a business credit card?

• Business Prepaid cards
• Bank Overdraft
• Bank Loan (short-term or long-term)
• Asset Finance
• Invoice Finance
• Merchant cash advance

How do I get a business credit card?

Here is a rough step-by-step guide through the process of getting a business credit card.

1. Check your credit score: Getting rejected for credit cards can often impact your credit score, so make sure to gauge your likelihood of approval.
2. Choose according to your needs: Instead of choosing the so-called “best” or highest rewards, assess whether you’re going to make use of the purported rewards and features.
3. Research: Before deciding on a company, check information that goes beyond APR and credit limits. Read the small print to understand hidden fees and agreements.
4. Gather necessary documents: Prepare your personal identification, proof of business registration, and any other information that will be required.
5. Apply and wait: Avoid applying for multiple cards simultaneously. Once approved, read through the agreement terms carefully. Approval often takes between one and two weeks.

Frequently Asked Questions (FAQs)