A Guide to Business Credit Cards

A business credit card is a credit card that is issued to a limited company or sole trader, rather than a personal banking customer. Often, business credit cards are used to help with staff expenses, to facilitate cash flow, or as a temporary income during financially fraught periods.

 

How do Business Credit Cards Work?

Much like any other credit card, a business credit card will have a set credit limit, and cardholders will have to pay off their balance over an agreed period of time, subject to a minimum amount being paid each month. However, many businesses will opt for more than one credit card, often in accordance to how many members of staff they have.

Moreover, business credit cards often work like regular credit cards, wherein a good credit rating will result in preferable interest rates. In such case, many business credit card providers will check your personal credit score, and so, could potentially blacklist you, precluding you from completing a successful application.

 

Types of Business Credit Cards

There are a variety of business credit cards available, each offering different perks and interest rates, but some of which may only be accessible to applicants with a good credit rating. For instance, if you have a positive score, then you will be eligible for a business credit card that comes with interest-free periods on purchases, or free business transactions. Typically, interest rates of a business credit card are set between an APR of 16% (variable) and 26% (variable).

 

Advantages of Business Credit Cards

As stated, business credit cards can assist with staff expenses, cash flow, and as an emergency source of income. Most simply, business credit cards provide a convenient way to pay for goods and services, particularly when placing orders on the phone or online. Furthermore, the cards allow for easier bookkeeping, whereby businesses can monitor expenditures by sitting set credit limits. Moreover, business credit cards allow limited companies to build a credit profile, in order to procure future business loans.