What is a business credit card?

Who can get one?

You can take out a business credit card whether you are a sole trader or help run the finances of a larger company.

It is a credit card that businesses can use to make purchases. They work just like any other credit card.

They let you separate your business and personal finances because the card is in your business' name, not your own. This means your own finances remain private and it avoids mixing up your own money with your company's.

What are the benefits?

  • Manage your cash flow so you can pay for things when you are waiting for incoming money, like a customer paying a bill.

  • Supplementary cards are available from some providers, so you can issue several employees with cards that are linked to one account with just one bill for you to pay.

  • Work expenses can be paid for on a credit card instead of your employees using their own money. You will not need to waste time on expenses forms and refunding them.

  • Itemised statements for each card lets you keep track of what the whole company, a department or an individual is spending.

  • Accounting is easier if you use these records instead of receipts and paperwork. If you use Excel or specialist accounting software, you can often download your credit card statement information directly into the program.

  • Emergency money: you could use your credit card for immediate access to funds.

  • No interest will be charged for up to 56 days if you pay your statement in full.

How are they different to normal credit cards?

Although they work much like any other credit card, there are some differences.

When a credit card company looks at your application, they will base their decision on:

  • What they think your business can afford

  • Your company's assets

  • Your business' credit history

If you are a sole trader, they may also look at your own finances.

They will also use this to decide on the credit limit they offer you, meaning business credit cards can usually offer higher credit limit than personal cards if your business makes more money than your personal income.

If you meet all your repayments on time, you could build your company's credit profile, which could help you get loans or other credit in the future.

What can you use a business credit card for?

You can use it to buy anything you could normally pay for with a credit card. You can use it online, in person, over the phone or by mail order.

You could use it for business equipment like office supplies and furniture, for paying invoices or for expenses when you, or your staff, travel in the UK or abroad.

If you are able to pay it back quickly, you could even use the card for larger purchases instead of a short term loan.

Who can get a business credit card?

You can get a business credit whether you are a sole trader or work for an international corporation.

There is usually a minimum amount your business will need to earn to qualify, and some cards only accept certain types of company. For example, one might only accept sole traders with turnover of 250,000 or less.

Some banks offer different products and services depending on the size of your business. For example, NatWest offer different products to:

  1. Start up businesses

  2. Companies with turnover of up to 2 million

  3. Companies with turnover of more than 2 million

  4. International businesses

Business credit cards are only available if you are over 18 and live in the UK. Your business must to be registered in the UK (or the Isle of Man, Channel Islands or Gibraltar in some cases). Some cards are only available if you also take out a current account with the provider.

How to apply for a business credit card

You can apply for a business credit card in the same way you would get a card for yourself: online, by phone, in a branch or by post. When you apply, you will need to provide details of your business, including:

  • Company name

  • Contact details

  • Income and turnover

  • How many employees you have

  • When your business was established

  • What countries your business trades with

Here is everything you need to know about how to apply for a credit card.

How much does a business credit card cost?

Business credit cards' interest rates and fees can be higher than on standard cards, and more of them charge annual fees (although some are free for the first year).

The main costs of a business credit card are:

  • Any annual fees

  • The interest rate if you do not clear the balance in full every month

  • Charges for things like going over your credit limit

Here are the credit card charges you could pay and how to avoid them.

If you plan to pay off the card in full every month, the annual fee is likely to be the main cost. If you will need longer to pay off what you spend, the interest rate will affect how much your card costs.

What credit limit will your business get?

The credit limit is the maximum balance you can owe on your card.

The credit limit you are offered will depend on your business' financial strength and credit score rather than your personal circumstances.

If your business has a strong credit history, you will usually be offered a higher credit limit as well as a lower interest rate.

If you give supplementary cards to several employees you can sometimes set an individual credit limit to each person, depending on how much you are happy to let them spend each month.

What types of business credit card can you get?

Business credit cards can come with the following features; our guides tell you more about how these features work and how to make the most of them:

Our business credit card comparison includes cards of each type.

Protection on a business credit card

The protection available differs to personal cards, and Section 75 does not apply on business credit cards.

However, some card providers offer:

  • Online guarantees to cover you against fraudulent online use of your card

  • Insurance to cover misuse of the card by an employee

  • Extra insurance to cover any fraud or misuse of your card

Some also add free travel insurance cover for medical expenses, accidents and lost luggage.

What are the alternatives?

You could spend on the debit card linked to your business' current account or get a charge card instead.

You have to pay off the balance of a charge card in full every month, meaning you cannot use them to borrow beyond the repayment date or build up debts.