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Last updated
July 23rd, 2024

What are business charge cards?

Business charge cards are financial products designed specifically for businesses and provide a convenient way to make purchases and manage expenses. Unlike credit cards, charge cards require the full payment of the outstanding balance each month. This feature encourages responsible spending and ensures that businesses have the funds available to cover their expenses.

Business charge cards often come with a range of perks which can be handy for your business. Perks can include travel insurance, access to airport lounges, concierge services, breakdown cover, rewards and cashback. However, many business charge cards also come with an annual fee.

How do they work?

Business charge cards can be used to make purchases in the same way as a credit card. But unlike credit cards, they tend not to have a pre-set spending limit. This doesn’t mean you can make unlimited purchases on your card, but you can usually spend more as your company builds a good payment history. 

Business charge cards don’t allow you to carry over a balance from month to month and you must instead repay the balance in full. Failure to clear your monthly balance will result in late payment fees and interest might also be applied to the amount you owe. 

What's the difference between charge cards and credit cards?

The key distinction between charge cards and business credit cards lies in their payment requirements. With a credit card, users have the option to carry a balance and make minimum monthly payments, whereas with a charge card you need to pay off the balance in full every month. Charge cards typically have higher spending limits compared to credit cards, making them a potentially good option for businesses with large expenses or purchases to make.

If you're looking to make a large purchase for your business then a business charge card could be worth thinking about. You'll need to pay the balance off in full each month so it encourages good spending habits, and if you use the card sensibly you can start to build a good credit score at the same time.

Who can get a business charge card?

Business charge cards are available to various types of businesses, including sole traders, partnerships, and limited companies. Whether you're a small startup or an established enterprise, there are charge card options tailored to meet your specific needs. Typically, providers will assess your business's financial situation, creditworthiness, and ability to meet the payment requirements before approving your application.

How to get a business charge card

To get a business charge card, follow these general steps:

Compare

Research different business charge card options to find the one that best aligns with your business's needs and preferences.

Apply

Visit the website of your chosen provider and complete the application process. Be prepared to provide information about your business, such as its legal structure, financial details, and estimated monthly spending.

Approval

After submitting your application, the provider will assess your eligibility based on various factors, such as creditworthiness and financial stability. Once approved, you'll receive your business charge card.

Costs and fees of business charge cards

The costs and fees associated with business charge cards can vary depending on the provider and the specific card you choose. While some charge cards may have an annual fee, others may have fee-free options.

It's also important to consider foreign transaction fees, interest charges on late payments, and any other applicable fees.

Carefully review the terms and conditions of each card to understand the costs before making your decision so you can be sure it's the right option for your business.

Where can you use business charge cards?

Charge cards are not as widely accepted as credit cards, so you’ll need to check or make sure you have an alternative payment method with you. You may be able to use your charge card:

  • In certain shops, restaurants or other businesses

  • Online

  • In cash machines

  • Over the phone

  • In other countries (fees may apply)

  • For mail order services

Benefits of business charge cards

Different providers may have different perks and benefits, but typically charge cards offer the following benefits:

Enhanced expense management

Business charge cards offer robust expense management tools, including detailed statements, categorisation of expenses, and spending controls. These features enable businesses to track and manage their expenditures more effectively.

Rewards and incentives

Many business charge cards come with rewards programmes tailored to the needs of businesses. You can earn cashback, travel rewards, or points that can be redeemed for various benefits. These rewards can provide significant savings and additional value to your business.

High credit limits

With higher spending limits compared to credit cards, business charge cards offer greater purchasing power. This flexibility can be particularly useful for businesses with large or frequent expenses.

Streamlined employee spending

Business charge cards allow you to issue additional cards to employees, enabling them to make authorised purchases on behalf of the company. This simplifies expense tracking and eliminates the need for reimbursement processes.

Pros and cons

Encourages responsible spending habits
Enhanced expense management tools
Rewards programmes and incentives
Increased purchasing power
Streamlined employee spending
Requires full payment of the balance each month
Some charge cards have annual fees
Late payment fees and interest can apply if you don’t clear your balance
Not suitable for businesses with irregular cash flow

Alternative to business charge cards

While business charge cards offer many advantages, they may not be the ideal fit for every business. Consider these alternative products:

  • Business credit cards: If you prefer the flexibility to carry a balance, business credit cards provide the option to make minimum monthly payments.

  • Prepaid business cards: Prepaid cards allow businesses to control spending by preloading a specific amount onto the card. This option is useful for budgeting purposes and limiting expenses.

  • Corporate expense management software: Instead of relying solely on cards, businesses can opt for expense management software that integrates with company bank accounts, providing real-time visibility and control over spending.

FAQs

Are business charge cards only for large businesses?

Business charge cards are available to businesses of all sizes, including small businesses and startups.

Can I use a business charge card for personal expenses?

It's generally advised to keep business and personal expenses separate. However, some providers may allow limited personal use under certain conditions.

Can I have multiple business charge cards for different employees?

Yes, many providers allow you to issue multiple cards to authorised employees, facilitating better expense management and control.

What happens if I don't pay the full balance on time?

Failing to pay the full balance on time may result in late payment fees and interest charges, and can impact your business's creditworthiness.

How can I maximise the benefits of my business charge card?

To maximise the benefits, take advantage of rewards programmes, track and categorise expenses, and ensure timely payment of the balance each month.

Remember, before making any financial decisions, carefully review the terms and conditions of each business charge card and consider seeking professional advice to ensure it aligns with your business's specific requirements and financial goals.

About the author

Kyle Eaton
Kyle joined the money.co.uk team in 2023 and has a long history both of writing and working in financial services and with small businesses.

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