Table of Contents
- What is a business credit card for travel?
- Should I get a business credit card for travel?
- How to choose a business credit card for travel
- Pros and cons of business credit cards for travel
- Am I eligible for a business credit card for travel?
- How to apply for a business credit card for travel
- How to use a business credit card for travel
- Alternatives to a business credit card for travel
- Travel business cards FAQ
Travel business credit cards are designed for business owners whose work takes them overseas.
If you travel a lot for work or if your business regularly spends money abroad, consider getting a business credit card with low or no overseas transaction charges – letting you spend fee-free wherever your business takes you.
Some travel business credit cards offer low or no fees for spending overseas in Europe, while others are completely free of foreign transaction (FX) fees no matter where in the world you’re traveling (and spending).
They may even come with additional benefits – like cashback and the ability to earn rewards points.
What is a business credit card for travel?
Many UK business credit cards charge foreign exchange fees when spending in any currency other than Sterling.
Overseas spending fees vary from one business credit card to the next, but in some cases they could amount to around 3% of the value of your foreign transactions.
This means you could end up paying roughly £3 in fees for every £100 you spend on your business credit card while you’re abroad.
What makes travel business credit cards different is that they are designed to be used overseas. Typically, travel business credit cards come with low or no fees for spending in other currencies, and they may also have various perks to reward frequent travellers.
Should I get a business credit card for travel?
While many UK credit cards charge foreign exchange fees for overseas use, there are some business credit cards on the market which have no foreign transaction fees.
Bear in mind, however, that some of these cards come with annual fees for holding the card – and some are only fee-free in certain overseas territories.
Before you apply for a business credit card with no or low foreign transaction fees, check the small print to make sure you’re covered for the countries and currencies you plan to spend money in.
Also try to weigh up whether any potential savings on foreign exchange fees might be outweighed by other fees associated with using or holding the card.
If you travel a lot for your business – and spend a reasonable amount of money overseas – then a foreign use business credit card with low (or no) fees for overseas spending may be the best fit for your business.
Just remember that some cards are fee-free in Europe but charge foreign transaction fees when used further afield… so take time to triple check you’ll be covered in the right countries.
How to choose a business credit card for travel
When weighing up which credit card is best for your business, you could consider the following factors:
- Foreign transaction fees: How much will you be charged for using your business credit card abroad? Some travel business credit cards come with absolutely no fees for overseas use, which could be important if you travel a lot for work and plan on spending in foreign currencies.
- Annual charges: Is there an annual fee for holding the card? Think about how much you’re willing to pay, and ask yourself whether the card’s benefits are likely to outweigh the cardholder fee.
- Interest rate: If you don’t pay off your card in full each month, how much interest will you be charged?
- Regional fees: Not all travel business credit cards are created equal. Some cards offer fee-free overseas transactions globally, while others are only fee-free in certain parts of the world. Make sure the territories where you plan on using the card are covered.
- Rewards: Some business credit cards come with rewards for your regular spending. Look for rewards which suit your business – anything from cashback or airline points. Just bear in mind that rewards cards are more likely to come with a higher cardholder fee, so calculate whether the rewards will be worth the extra expense.
- Offers: Can you find a card with an introductory offer for new cardholders? These limited-time deals could save you money on fees or provide you with extra rewards.
- Expense management tools: If you need credit cards for your employees, make sure you have oversight on what and where they’re spending. Many cards provide the main cardholder (i.e. you) with controls to manage supplementary cards.
Pros and cons of business credit cards for travel
As with all varieties of business credit cards, there are pros and cons to business credit cards for travel.
Advantages of business credit cards for travel
- Cheaper overseas spending: Because travel business credit cards are designed to be used abroad, you can expect to pay lower fees for overseas spending compared to other business credit cards.
- Help with cash flow: Business credit cards – including cards designed for fee-free overseas spending – can ease the cash-flow pressure on your business by letting you spread the cost of big purchases.
- Perks and bonuses: Some travel business credit cards also provide cashback or access to reward points. You may even be able to convert these rewards into airline loyalty points to save on your next business trip.
- Boost your business credit score: Using a business credit card responsibly and paying off the balance in full every month shows that your business is a reliable borrower, which will help your business credit score.
- Separate your finances: By keeping all your business spending on a business credit card, you can clearly separate your personal and business finances.
Disadvantages of business credit cards for travel
- Annual fees: Some business credit cards have no overseas transaction fees but make up for this by charging an annual fee to use the card.
- Personal guarantees: You may be required to provide a personal guarantee before your business is approved for a business credit card – including cards with no overseas transaction fees.
- Credit score requirements: Your business credit score will be considered when you apply for a business credit card. If you haven’t been trading for long, your personal credit score could be checked as well. Just know that if you apply for multiple lines of credit in a short time, your business credit score could be harmed by the repeated ‘hard’ checks carried out by lenders.
Am I eligible for a business credit card for travel?
The eligibility requirements for travel business credit cards will vary from one provider to the next.
However, generally speaking, you may need to meet the following requirements to take out a business credit card:
- You’ll need to be 18 or older and a UK resident.
- You must commit to using the credit card for business purposes only.
- You must have authority to borrow on behalf of your business.
- Your personal and business credit scores must be good enough to pass a credit check.
- You may need a business bank account with the provider, if applicable.
- You may need to provide a personal guarantee.
How to apply for a business credit card for travel
Once you’ve shopped around, compared business credit cards, and settled on the travel business credit card which best suits your business, you can apply directly to the credit card provider.
You will need to provide various personal and financial information as part of your application, as well as information about your business. You may also be required to provide a personal guarantee.
Any prospective lender is likely to carry out a so-called ‘hard’ check on your business or personal credit file. ‘Hard’ credit checks can temporarily harm your credit score, so it’s best to avoid applying for multiple lines of credit in quick succession.
Assuming you are approved, you will then be sent your new business credit card in the post.
How to use a business credit card for travel
By and large, business credit cards for travel work in much the same way as other business credit cards and personal credit cards.
You’ll be able to use your shiny new business credit card for things like paying invoices, covering travel expenses, and buying equipment for your business.
At the end of each statement period, you’ll be sent a statement showing your balance – or how much you owe on the card.
If you just pay off the minimum amount, you’ll be charged interest on the rest. If you pay off your business credit card in full each month, you won’t have to pay any interest.
It’ll always be cheaper in the long run to pay off your business credit card in full and on time each month.
Alternatives to a business credit card for travel
You might be considering a business credit card because you need access to short-term capital – to cover an unexpected cost, for example.
If this is the case, there are other options which might be better for your business than a credit card.
- Invoice financing could help you free up some of the capital tied up in unpaid invoices. Different invoice finance arrangements work in different ways, but you may be able to borrow a sum of money against your unpaid invoices or sell your unpaid invoices at a discount to a company which will collect them on your behalf.
- Business loans or start up business loans could provide your business with more capital for longer (and possibly on better terms) than a business credit card.
- Business bank accounts sometimes come with overdraft facilities, which allow your business to borrow money in the short term in return for paying an overdraft arrangement fee.
Travel business cards FAQ
The best business credit card for travel is likely to depend on your business’s needs.
Try to pick a business credit card which has no foreign exchange fees in the territories you plan to visit. And if you’re looking for a credit card with rewards, choose the perks which are most valuable to your business.
As ever, when comparing business credit cards, consider all fees, charges and the APR before signing on the dotted line.
While most business credit cards will work overseas, many come with foreign exchange fees if you spend in any currency other than Sterling.
Here’s where travel business credit cards come in. These cards are designed to be used abroad, offering fee-free spending either globally or in certain countries.
If your work takes you overseas, getting a travel business credit card could save you money on foreign exchange fees.
Just make sure the territories you want to visit are covered by your card, or you could end up paying those pesky foreign transaction fees after all.
Some business credit cards offer rewards and perks – and in some cases, these perks can include airport lounge access.
Whenever you spend in a currency other than Sterling (i.e. if you go on a business trip and buy something in the local currency), your credit card provider will convert the local currency and debit your card in Sterling. Some business credit cards come with fees for every non-Sterling transaction – typically around 3% of the transaction value.
Prepaid travel cards are plastic cards which work like credit cards, except you’re not borrowing anything and not opening a line of credit. Rather than accruing debt as you spend, these cards must be pre-loaded with money. Generally, prepaid travel cards offer low or no fees for spending in foreign currencies, making them a good choice for overseas trips.
You can use most credit cards to withdraw money from ATMs, but these so-called ‘cash advances’ usually come with high fees. For this reason, it’s generally best to avoid withdrawing cash with credit cards – regardless of the type of card.
With business credit cards, the exchange rate for foreign transactions is determined by the payment network (Visa or Mastercard). This exchange rate fluctuates and will vary based on the exchange rate on the day.
When you buy something overseas, you might be asked whether you want to pay in sterling or the local currency. This is dynamic currency conversion – so called because the currency conversion happens on the spot, according to an exchange rate set at the point of sale.
If you are presented with the option of dynamic currency conversion, paying in sterling will likely incur additional fees. Also, you may not benefit from the best exchange rate if you choose to pay in sterling.
For this reason, you’re almost always better off paying in the local currency. This means you’ll avoid dynamic conversion fees and guarantees you’ll pay the transparent exchange rate set by the payment network (Visa or Mastercard).
Image Source: Getty Images
About the Author
DIVE EVEN DEEPER
Charge Cards For Business
Limited Company Credit Cards
by Ceri Roberts
by Tim Leonard