Table of Contents
There are so many business credit cards on the market that it can be hard to know which one to choose.
From business credit cards with rewards to travel business credit cards and even business credit cards for bad credit, it’s easy to be overwhelmed by all the options. But you can narrow down your choice by thinking about the features, charges and rewards which come with each card.
It’s important to do your research thoroughly before you apply for a business credit card. Below, we suggest six steps to help find the credit card most suited to the needs of your small business.
Think: Why do you need a business credit card?
Business credit cards have a number of different uses. You may want a business credit card to:
- spread the cost of a large purchase
- manage existing credit card debt
- build your business credit score
- protect and manage your business finances
- avoid foreign exchange fees when work takes you abroad
- earn rewards and perks for everyday business spending
You should think about why you need a business credit card before you start looking. Knowing how you’ll use it will help you choose a credit card suited to the needs of your business.
It is also important to remember that your business risks getting into debt if you don’t pay off your company credit card in full each month. Even if you and your business are separate legal entities, a lender could ask you to sign a personal guarantee, which would make you personally liable for any debts unpaid by your business.
You should take this into consideration when choosing a business credit card. As with personal credit cards, you should only borrow what you can afford to repay.
Common types of business credit cards include:
Business credit cards for bad credit
These cards are more likely to be available to businesses with little or poor credit history.
Rewards business credit cards
A rewards card could be best for perks such as cashback and airline loyalty points.
Travel business credit cards
These cards can help you save money on foreign exchange fees when you use your card abroad.
Business charge cards
While they are similar to business credit cards in how they are used, charge cards come with variable spending limits and must be repaid in full each month.
0% purchase business credit cards
Such cards offer an interest-free period and are often used to spread the cost of a large purchase.
0% balance transfer business credit cards
Balance transfer cards are commonly used to pay back existing credit card debt without accruing additional interest (though you must pay everything back before the end of the 0% period to avoid further charges).
Once you know what kind of business credit card is likely to fit your needs, you can start looking at them in more detail.
Learn: How to check your business credit score
Your business credit score can have an impact on the business credit cards you are likely to be accepted for. Generally, a higher credit score signals that your business is a reliable borrower, which can make it easier to access finance on good terms.
Lenders are likely to be more willing to accept credit card applications from businesses with good credit scores – and these businesses may be eligible for higher credit limits and lower interest rates.
You may want to improve your business credit score before applying for a credit card to increase the range of cards you are eligible for. Checking your business credit report for errors could help you boost your score quickly. Filing your company accounts in good time can also help.
The key with any credit card (whether for business or personal use) is to pay back at least the minimum amount on time each month, with the aim to pay back more if possible. If you clear your business credit card balance in full each month, you won’t have to pay any interest. Otherwise, credit cards can be an expensive way to borrow.
Consistently making repayments on time or paying off your business credit card in full will also show the lender that you can manage what you borrow, which could encourage them to increase your credit limit.
This, in turn, will have a positive effect on your credit utilisation ratio – which is a reflection of how much debt you have as a proportion of how much credit is available to you. Maintaining a low utilisation ratio can help your business credit score.
Compare: Business credit card interest rates
Interest rates vary between credit cards. Generally, the higher the interest rate, the more expensive it is for you to borrow money.
When comparing business credit cards, you should look at the representative APR (annual percentage rate) as well as the interest rates offered.
The representative APR shows you how much it will cost to borrow a given amount over a year, taking into account the interest rate as well as the business credit card’s annual fees, if it has any (though it won’t include additional fees such as those for cash advances or late payments). This can help you to compare cards on a like-for-like basis.
As a rule, the lower the APR, the cheaper it will be for your business to borrow.
It is important to remember that representative APR isn’t tailored to the specific circumstances of your business. Bear in mind that only 51% of successful applicants are expected to get this rate, and the remaining 49% could be charged more.
As a result, the actual APR you are offered by a lender could be higher, depending on your business credit score and the circumstances of your business.
Business credit cards with 0% introductory interest
Some providers offer business credit cards with a lower interest rate, or even a 0% interest rate, for a limited period. But make sure you know when this introductory rate ends and what interest rate will then apply.
After the introductory period has ended, you will revert to the card’s standard APR. This means your business may have to pay much more interest on the amount you’ve borrowed.
If you do choose a 0% interest business credit card, check to make sure you can afford to clear your balance before the 0% rate expires. This way, you’ll avoid paying any interest.
Be aware: Are there any other fees?
Some business credit cards charge an annual cardholder fee. Generally, the most expensive business credit cards are the ones with the most generous rewards and the most additional perks and features.
However, if you shop around, you may be able to find a different deal that matches your needs without your business having to stump up quite as much for a fee. Some business credit cards have no annual fees at all.
Other common business credit card fees include:
- late payment fees
- cash withdrawal fees
- foreign transaction fees
- fees for going over your credit limit
These fees can vary between providers, so it is a good idea to check the details of each card thoroughly before making a decision.
Some cards are designed to save you money on foreign transactions, so they won’t charge a fee for overseas spending. If you want a credit card to take on overseas business trips, it’s worth considering a dedicated travel business credit card to avoid unnecessary charges.
Weigh up: Which cards come with rewards… and are they worth it?
Rewards business credit cards let you enjoy various perks and benefits when you spend. These could include cashback on your purchases or points you can use to pay for flights.
Certain business credit cards also offer initial extra rewards when you sign up and start using your card – provided you spend above a set amount on eligible transactions within your introductory period.
It’s also common for business charge cards to come with rewards. The rewards for eligible charge card spending could be fairly generous, but know that you’ll probably need a good business credit score before you can access a charge card.
This is because charge cards work a bit differently to credit cards. Charge cards don’t come with pre-set credit limits, and they must be paid off in full each month. For that reason, they’re best suited to businesses which already have strong cash flow.
You should think carefully about the rewards offered by each business credit card and consider whether you are likely to use them. If you would need to change your spending habits significantly to see any benefit from the rewards offered, then a reward credit card may not be the best choice for your business.
Check: Is your business eligible?
Business credit cards, like many financial products, are subject to eligibility criteria. Providers will check your business credit history and assess whether to accept your application based on the financial circumstances and history of your business.
If you haven’t been trading for long, there’s a good chance that lenders will consider your personal credit score as well as your business credit score when deciding whether to offer your business a credit card.
When you apply, the lender will search your business and/or personal credit record and carry out a hard credit check. This will be logged on your business credit report and could impact your credit rating, so make sure you only apply for a card when you’ve found one that matches your circumstances.
Some providers use a ‘soft’ credit check to let you know whether you’d be eligible before you apply. This way you can see which cards your business may qualify for before you apply, without affecting your credit score.
Image source: Getty Images
About the Author
DIVE EVEN DEEPER
Survey: How UK Business Owners are Prioritising Time and Money in 2025
by Sarah Fleming
Personal Guarantees Explained
by Tim Leonard