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A business credit card can be used to manage regular spending and expenses to help cash flow

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Last updated
May 23rd, 2024

What is a business credit card?

A business credit card works much like a personal credit card - they can be used to help your business with cash flow problems, for regular spending or as back up in the event of unexpected expenses.

This type of credit card is specifically built for businesses so they often come with perks like bigger rewards and higher credit limits. Plus, as they are held by a business rather than an individual, banks will take into account your business’ credit profile, meaning it shouldn't affect your personal credit score. Subject to credit checks, any registered business in the UK can used a company credit card.

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How does a business credit card work?

Your business can use a business credit card for any purchases that take credit card payments. You’ll receive a monthly bill detailing what you've spent and how much money you need to pay off. You can usually pay off the balance in full, or the minimum amount set out in your statement.

Business credit cards have different interest rates, so it’s important to understand how much interest you could be paying if you don’t pay off the balance immediately. Some business credit cards also include an annual usage fee, so always check the terms and conditions to avoid any unexpected surprises.

An alternative option to explore is business charge cards. These can help with bigger monthly expenses as there is normally no set credit limit. However, you’ll need to pay off the card in full each month. 

Why should I get one? 

A business credit card can help with the running of your business. You can use it for day-to-day spending or large purchases while keeping all company transactions separate from personal ones. And because they come with a pre-approved balance, you won’t need to wait for funds to arrive if you have a sudden business expense. 

Many business credit cards also offers a range of benefits and perks including cashback and discounts or rewards like air miles and 0% interest deals. 

Deciding the right card for your business will often depend on the size of your business, the number of employees you have and the type of your business. For small businesses and startups who face more unpredictability - managing cash flow effectively is really important. A business credit card can offer a flexible way to cover expenses and manage finances.

And while they might not be immediately necessary for freelancers or sole traders, they could still prove useful to separate personal and business expenses. This can really help simplify accounting and tax returns.

If you or your employees travel frequently for business, you can benefit from a card that offers travel rewards such as airline miles, hotel points or travel insurance. If you have to pay these expenses anyway, you might as well benefit from the purchase.

It's important for any business considering a credit card to carefully evaluate the terms, fees, and benefits of the card to ensure it aligns with any financial needs and goals.

% of businesses that took out business credit cards in 2022[1]
12%

How to choose the best business credit card

The key to choosing the right business credit card is to think about how you’ll use it.

Spread payments

If you're planning to borrow money and spread the repayments over several months, a card with a low APR (annual percentage rate) could be worth investigating.

Regular spending

If you intend to use the card for spending, a purchase card with an interest-free period may be a good option..

Paying off the monthly balance

You won't be charged interest if you pay the balance off in full each month so consider cards with a low annual fee or good rewards.

Our best business credit card

Our editors have picked out our top business credit card with the lowest annual fee.

Editor’s pick

With no annual fee and a competitive APR, it's a very attractive option. This business credit card also includes 1% uncapped cashback on eligible business spending, so this would work well if you plan on using it for big purchases.

Author image
savings expert
Card
Barclaycard Select Cashback Business Credit Card
Purchase
27.5% p.a. variable
Annual fee
£0
Representative APR (variable)
27.5% APR

Representative example: The standard interest rate on purchases is 27.5% p.a. (variable), so if you borrow £1,200 the Representative APR will be 27.5% APR (variable).

Editor’s pick
Card
Barclaycard Select Cashback Business Credit Card
Purchase
27.5% p.a. variable
Annual fee
£0
Representative APR (variable)
27.5% APR

Representative example: The standard interest rate on purchases is 27.5% p.a. (variable), so if you borrow £1,200 the Representative APR will be 27.5% APR (variable).

With no annual fee and a competitive APR, it's a very attractive option. This business credit card also includes 1% uncapped cashback on eligible business spending, so this would work well if you plan on using it for big purchases.

Author image
savings expert

Am I eligible for a business credit card?

There are different types of business credit cards available, each with specific eligibility criteria. For example, some cards will only be for businesses that don’t exceed a turnover of a certain amount, or you might need to have been trading for a specific number of years. 

In addition to any card-specific criteria, you can usually expect the need to be:

  • 18 or over

  • A UK resident with a UK registered business

  • Able to pass the card provider's credit check

The size and financial strength of your business could determine what kind of card and deal you get - but there are so many cards on the market to cater for many different circumstances, you should be able to find one that's suitable for your business. You'll need to be either a sole trader or a director of the business to apply for a business credit card.

Business credit cards provide essential financial leverage, allowing companies to manage expenses efficiently, access credit quickly, and benefit from rewards and incentives tailored to corporate spending patterns.

What other types of business credit cards are there?

Purchase cards

Purchase cards

With purchase cards, you can often enjoy extended periods of interest-free borrowing when you first get the card. This can allow you to conveniently make significant purchases using your credit card and divide the cost over multiple months. As long as you clear the entire balance by the conclusion of the interest-free period, you will not incur any interest charges.

Balance transfer cards

Balance transfer cards

Balance transfer cards let you move debt from one or more credit cards to a new one and pay that debt off at a lower interest rate. Many offer lengthy interest-free periods, so all your repayments go towards paying off your debt rather than interest, helping you to pay off your balance quicker and save interest at the same time.

Rewards cards

Rewards cards

Rewards credit cards offer a valuable incentive for your spending. The specific rewards may differ depending on the card, but popular options include earning air miles, receiving vouchers or in-store points for your preferred retailers and supermarkets, and even earning cashback with every card purchase. It's important to note that some of these cards may come with annual fees and higher APRs, so it's essential to diligently pay off your balance each month to avoid accruing unnecessary costs.

What other types of business credit cards are there?

Purchase cards

Purchase cards

With purchase cards, you can often enjoy extended periods of interest-free borrowing when you first get the card. This can allow you to conveniently make significant purchases using your credit card and divide the cost over multiple months. As long as you clear the entire balance by the conclusion of the interest-free period, you will not incur any interest charges.

Balance transfer cards

Balance transfer cards

Balance transfer cards let you move debt from one or more credit cards to a new one and pay that debt off at a lower interest rate. Many offer lengthy interest-free periods, so all your repayments go towards paying off your debt rather than interest, helping you to pay off your balance quicker and save interest at the same time.

Rewards cards

Rewards cards

Rewards credit cards offer a valuable incentive for your spending. The specific rewards may differ depending on the card, but popular options include earning air miles, receiving vouchers or in-store points for your preferred retailers and supermarkets, and even earning cashback with every card purchase. It's important to note that some of these cards may come with annual fees and higher APRs, so it's essential to diligently pay off your balance each month to avoid accruing unnecessary costs.

Pros and cons

Pros

Higher credit limits for businesses
Rewards and perks
Streamline finances and take control of cash flow
Improve your business' credit score

Cons

Annual or monthly fees
Higher interest rates
Debt can increase if not paid off in full each month
Can impact credit score negatively if not managed well

Alternatives to business credit cards

Business charge card

Business charge cards provide a convenient way to make purchases and manage expenses, but unlike credit cards, they require the full payment of the outstanding balance each month. 

Business bank account

A business current account is specifically designed for businesses to manage their finances. It provides banking services such as receiving and making payments, managing cash flow, and keeping business and personal transactions separate. They often come with an overdraft facility too.

Business loan

A business loan is a way to get extra funds to run or grow your business successfully. The loan could cover rent for your business’ property, employee salaries or opening new offices. 

Invoice finance

Invoice finance is a credit facility that pays you for invoices before they're settled by your customer or client.

Alternatives to business credit cards

Business charge card

Business charge cards provide a convenient way to make purchases and manage expenses, but unlike credit cards, they require the full payment of the outstanding balance each month. 

Business bank account

A business current account is specifically designed for businesses to manage their finances. It provides banking services such as receiving and making payments, managing cash flow, and keeping business and personal transactions separate. They often come with an overdraft facility too.

Business loan

A business loan is a way to get extra funds to run or grow your business successfully. The loan could cover rent for your business’ property, employee salaries or opening new offices. 

Invoice finance

Invoice finance is a credit facility that pays you for invoices before they're settled by your customer or client.

FAQs

How long does it take to get a business credit card?

Depending on the provider, it could take a few days or a couple of weeks for the business credit card to arrive in the post. Once you submit your application it will need to be reviewed by the card issuer but that is normally approved quickly.

Is a credit record checked for a business credit card?

Credit card providers usually check your business's finances and credit record when you apply for a business credit card. If your business doesn't have much credit history, your personal credit history may be checked.

Does using a business credit card affect my personal credit record?

Using a business credit card could affect your personal credit card, particularly if you're the main account holder. It's best to use a business credit card sensibly, as you would a personal credit card, If you're worried about repayments you should speak to the card provider as soon as possible.

Can I get a business credit card with rewards?

Yes. You can get business credit cards that give you back a percentage of what you spend back as cashback. Others offer air miles or other rewards, such as shopping vouchers.

Can several employees have their own card?

Yes, you can get several credit cards for one account, meaning selected employees can have their own card with the business paying just one bill.

Do I need a business current account to apply?

No. Having a business current account isn't necessary to get a business credit card, but having one could make paying your bill and handling your finances easier.

Can I get a business credit card as a startup?

Yes, there's nothing to stop you from applying for a business credit card as a startup - it might be a helpful tool as you're starting out too as you try and manage your business' cash flow. But because your business is new, you may need to provide additional information to evidence that you'll be able to keep up with repayments. It will also help the provider determine your credit limit. This might mean providing a personal credit history check, company statements and details of any assets.

About the author

Lucinda O'Brien
Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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References

1. UK business statistics and facts 2023 Our report on UK business statistics for 2023, such as growth and borrowing across various sectors, the impact of the cost of living crisis, and how the UK business landscape compares to previous years.