From low fees and competitive interest rates (APR) to cashback and rewards, this article will cover all you need to get the ideal credit card for your business.
While credit can be an essential business growth tool, choosing a business credit card with fair terms and no hidden fees can feel daunting. Each differs in interest rates, annual fees, rewards and benefits, credit limit, fees and penalties, customer service, security and fraud protection.
That’s why I’ve conducted an in-depth comparison of the top cards available in the market today. As a financial expert with decades of experience, my goal is to help you make appropriate and sensible decisions that support your business journey.
This article is based on my comprehensive analysis of each credit card’s features, benefits, fees, and customer reviews.
- The Best Business Credit Cards in the UK
- Business credit card eligibility check
- What are the downsides or risks of using a business credit card?
- Does using a business credit card build credit?
- Frequently Asked Questions (FAQs)
Compare the Best Business Credit Cards in the UK
|Card Name||Key Features||Rating||Register|
|Capital on Tap Business Credit Card||Competitive rewards program, low fees, flexible credit limits||⭐⭐⭐⭐⭐||Check My Eligibility|
|American Express Business Gold Card||High reward rates, comprehensive travel benefits||⭐⭐⭐⭐⭐||Check My Eligibility|
|Metro Bank Business Credit Card||Low APR, suitable for carrying a balance||⭐⭐⭐⭐⭐||Check My Eligibility|
|Santander Business Cashback Credit Card||Cash back on purchases, low annual fee, interest-free periods||⭐⭐⭐⭐⭐||Check My Eligibility|
|Barclaycard Select Cashback Credit Card||Straightforward cashback scheme, no annual fee||⭐⭐⭐⭐||Check My Eligibility|
|RBS Business Plus Credit Card||Competitive interest-free period, purchase protection||⭐⭐⭐⭐||Check My Eligibility|
|American Express Basic Charge Card||No-frills option with good introductory offers||⭐⭐⭐⭐||Check My Eligibility|
|Juni Business Card||virtual cashback charge card for e-commerce companies||⭐⭐⭐⭐||Check ,my Eligibility|
Compare the Top Business Credit Cards
This section includes my detailed reviews of each of the top business credit cards available in the UK.
These reviews will provide insights into each card’s various features, benefits, and potential drawbacks.
I’ll discuss the reward structures, interest rates, fees, and other key aspects that can influence your choice.
Overall Best Business Credit Card: Capital on Tap
The Capital on Tap Business Credit Card is my top overall pick due to its impressive suite of benefits tailored for small businesses, a competitive 1% cashback reward scheme, and flexible credit limits of up to £250,000.
This verdict is backed up by superb independent review ratings: Capital on Tap has received excellent reviews on Trustpilot, with a TrustScore of 4.7 out of 5 based on 10,757 reviews.
Why Choose Capital on Tap?
In general, the Capital on Tap card would appeal to small businesses, particularly those with a turnover of £24,000 or more.
The APR, as low as 15.5%, is competitive within the market, particularly as it’s coupled with a lack of fees – annual, ATM, and foreign exchange. This could result in notable savings for businesses with international operations. However, the lowest APR is likely reserved for those with exemplary credit scores, and businesses with lesser credit may encounter a higher rate.
The card’s 1% unlimited cashback on purchases is a notable perk, and for businesses willing to pay the annual £99 fee for the Business Rewards program, the rewards could add up, given the point collection and the range of redemption options.
However, the card does come with certain limitations. Its eligibility requirements exclude businesses with a turnover less than £24,000 and only private limited companies or partnerships are permitted to apply.
Read our full Capital on Tap review
- Uncapped 1% Cashback on all card spending.
- Lowest APR is 15.5% (variable), and an interest-free period of up to 56 days on card spending.
- Flexible Credit Limits of up to £250,000.
- Unlimited Free Company Cards with tailored spending limits.
- Real-Time Spend Tracking and auto-sync with accounting software,
- Trusted by more than 200,000 businesses, with over £4 billion spent on Capital on Tap Business Credit Cards.
- No annual fees, foreign exchange fees, or UK ATM fees
- 24/7 Support.
- User-friendly website and quick application process.
- Getting a quote won’t affect your credit score.
- Option to apply for multiple business credit cards.
- No regular account fees.
- 1% cashback is available to all customers.
- Possibility of a high credit limit based on creditworthiness.
- Relatively few fees, including no annual fee or foreign transaction fees.
- Option to redeem Avios points only available to paid Business Reward customers.
- High APR compared to some competing cards.
- Limited noteworthy perks, even for a no-annual-fee card.
- High sign-up bonus spending requirement.
Best Business Credit Card with Rewards: American Express Business Gold Card
The American Express Business Gold Card is designed to reward your business spending. And those rewards translated into flights, hotels, purchases at your favourite shops or even donations to charity through Just Giving.
Here are the key features of the AMEX Gold Card:
- Earn 20,000 bonus Membership Rewards points if approved and spend £3,000 in the first three months of Cardmembership
- No annual fee for the first year; thereafter, the fee is £175 per year
- Enjoy up to 54 days payment period on purchases and no pre-set spending limit, allowing for flexible money management
- Gain 1 reward point for almost every £1 spent, with extra points for higher quarterly spending and for purchases made on American Express Travel
- Gain access to AmexExpense, a free business expenses solution
- Enjoy a variety of discounts with Airbnb, Amazon.co.uk, British Airways, BP, Deliveroo, Lidl, Nando’s, Now TV, Hackett, PayPal and Sainsbury’s, among others
- Complimentary Employee Cards for trusted colleagues, helping to manage and control business expenses
- Customer service support is available anytime, anywhere
- Insurance and protection options to keep your business secure
The American Express Business Gold Card aims to make business spending more rewarding by offering points for purchases that can be redeemed for expenses, subscriptions, and more.
The card also provides a degree of payment flexibility, which can help with cash flow management. To be eligible for the card, the business must have a current UK Bank or Building Society account, and the applicant must be over 18 years old with a permanent UK home address.
The card also includes an annual fee of £175 after the first year of Cardmembership. It’s important to note that if you currently hold a Membership Rewards enrolled American Express Card or have held one in the past 13 months, you won’t be eligible for a Welcome Bonus award.
This is an overall excellent credit card but don’t forget the balance must be paid off in full every month.
- Wide range of rewards and a generous sign-up bonus.
- No annual fee in the first year.
- Additional bonus points for high spenders.
- Complimentary employee cards with points flowing to the primary cardholder.
- Extended payment period of up to 54 days.
- £175 annual fee from the second year.
- High spending thresholds for some rewards.
- Quarterly earning of bonus points.
- Lack of acceptance by some suppliers.
- Charge card requiring full monthly payment.
Best Business Credit Card for European Travel: Metro Bank Business Credit Card
Metro Bank’s Business Credit Card is designed to effectively manage your business’s spending, offering a streamlined service with a focus on simplicity and accessibility.
- One Simple Rate: All Metro Business Credit Cards come with a single rate of 14.9% APR.
- No Annual Fees: There are no annual fees for the usage of the card.
- Instant Card Issuance: Whether you’ve just opened your credit card account or have misplaced your card, you can walk out of any of Metro’s stores with a new one ready to go.
- Free Transactions in Europe: Metro Bank won’t charge you any fees for using the credit card in most European countries.
- No Annual Fee: Metro Bank does not charge an annual fee for their Business Credit Card.
- Competitive Rate: The credit card comes with an APR of 14.9%, which is quite competitive compared to other business credit cards.
- Ease of Access: Metro Bank prides itself on customer accessibility, with credit cards that can be instantly issued in-store, and a policy of being open seven days a week.
- Free Transactions in Europe: The card can be used for free in many European countries, a feature that can be beneficial for businesses with frequent travel or operations within Europe.
The Metro Business Credit Card stands out in the market for its simplicity and accessibility. Its no annual fee policy and a competitive 14.9% APR make it a cost-effective choice for many businesses. Additionally, instantly receiving a new card at any Metro store adds to this card’s convenience.
One of the major perks of the Metro Business Credit Card is its policy on transactions in Europe. Businesses that frequently conduct transactions or travel within Europe can significantly benefit from the absence of fees for card usage in most European countries. This feature could lead to substantial savings for companies with extensive European operations.
The card has a straightforward fee and interest charge structure. The card has no annual fee and carries a 14.9% APR Representative (Variable), meaning the interest rate may vary over time. Moreover, the card offers an interest-free period of up to 56 days on purchases, provided you pay your balance in full and on time.
When it comes to using the card abroad, Metro Bank takes a customer-friendly approach. Many European countries have no charges for non-sterling transactions or cash withdrawals. For transactions outside of Europe, a 2.99% fee applies, with an additional £1.50 fee for cash withdrawals.
To apply for a Metro Business Credit Card, you must hold a Business Current Account or Commercial Current Account with Metro Bank. Existing account holders can simply visit a store, and a Local Business Manager will assist with the application process.
Regarding customer support, Metro Bank offers in-store service seven days a week without needing appointments. Commercial customers can also directly speak to their Relationship Manager or Local Director.
Best Business Credit Card for Amazon Rewards: Amazon Business Prime American Express Card
For businesses that buy a lot from Amazon, or Whole Foods Market UK, the Amazon reward credit card from American Express has many benefits.
The card provides rewards on purchases, with 2% Amazon Rewards on selected Amazon purchases and 0.5% on all other purchases. Additionally, you have the option to extend payment terms by 90 days on Amazon purchases, helping to improve cash flow
- Welcome Offer: Upon approval for the card, you receive a £100 Amazon.co.uk Gift Card.
- Rewards on Purchases: You can earn 2% Amazon Rewards on purchases made at Amazon.co.uk, Amazon Business UK, and Whole Foods Market UK. Additionally, you earn 0.5% Amazon Rewards on all other purchases.
- Extended Payment Terms: Instead of earning rewards, you can extend payment terms by 90 days on each purchase made at Amazon.co.uk, Amazon Business UK, and Whole Foods Market UK.
- Complimentary Employee Cards: You can request up to 99 complimentary Employee Cards for your employees, allowing you to consolidate business expenses and earn rewards.
- Redeeming Amazon Rewards: You can easily use your Amazon Rewards to pay for purchases at Amazon.co.uk and Amazon Business UK, either partially or in full. Alternatively, you can offset your monthly statement with your rewards.
- Flexible Benefit Options: You can choose between earning rewards or enjoying extended payment terms on a purchase-by-purchase basis.
- American Express Experiences: Cardholders gain access to exclusive experiences curated by American Express, offering memorable opportunities.
Santander Business Credit Card
The Santander Business Cashback Credit Card offers a rewarding way for businesses to manage their spending, with an array of features tailored to suit the needs of small and medium-sized businesses.
- Cashback on All Business Spend: Earn 1% cashback on all business spending, with no cap on the amount you can earn.
- No Foreign Transaction Fees: Pay no fees on foreign transactions when using the card abroad and paying in the local currency.
- Additional Cards at No Extra Cost: Up to three additional cards can be issued at no extra cost beyond the card’s £30 annual account fee.
- Control Over Additional Cardholder Spending: The ability to set spending limits for each additional cardholder.
- Interest-Free Period: No interest is charged if the balance is paid off in full and on time each month.
The Santander Business Cashback Credit Card offers businesses a great way to manage their expenses while also earning rewards. With 1% cashback on all business spending, businesses can earn money back on their regular expenditures. The cashback earned each month is paid onto the Business Cashback Credit Card and is reflected in the monthly statement.
One of the unique advantages of this card is the absence of foreign transaction fees when used abroad for purchases in the local currency. This can make it a great choice for businesses that frequently travel or conduct transactions abroad. However, it’s important to note that while there’s no foreign transaction fee, a cash withdrawal abroad will still incur a 3% cash transaction fee (minimum £3) along with interest charges.
Additional cardholders can be added at no extra cost, making it a good option for businesses requiring multiple employees to access a company card. Importantly, the primary account holder can control the amount each additional cardholder spends by setting monthly spending limits.
The card carries a £30 annual fee, which is charged as soon as you activate the card and then each year in the same month you took the card out. The card has an 18.9% variable APR, and the credit limit will be confirmed upon acceptance for the card. It’s important to note that the card must be used for business purposes only.
To be eligible for the Santander Business Cashback Credit Card, applicants need to be either a sole trader or a business in a partnership, limited liability partnership, or private limited company with no more than two partners, members, or directors. All partners, members, directors, or shareholders must be aged 18 or over and UK residents. The business must be based or registered in the UK and have an existing 1|2|3 Business Current Account or Business Current Account with Santander.
In conclusion, the Santander Business Cashback Credit Card can be a rewarding choice for businesses that wish to earn cash back on their spending. Its no foreign transaction fee policy and the ability to have additional cards at no extra cost make it a versatile option for businesses of various sizes.
Barclaycard Select Cashback Credit Card
The Barclaycard Select Cashback Credit Card is designed to offer business owners an array of benefits for their expenditures. The card comes with a rewarding cashback scheme and other perks to facilitate business operations.
- Cashback on All Business Spend: The card offers 1% cashback, uncapped, on all business spending. An enticing welcome bonus of up to £85 can be earned for eligible spending of £5,000 or more across the first three months.
- Interest-Free Period: Up to 56 days’ interest-free credit is available when you pay your balance in full and on time.
- No Annual Fees: There are no annual fees associated with this card or the account.
- Additional Perks: The card comes with purchase protection and cardholder misuse insurance. It’s also Apple Pay enabled, offering a convenient, secure, and private way to make contactless payments.
The Barclaycard Select Cashback Credit Card provides an opportunity for businesses to earn rewards on their spending. A lucrative cashback rate of 1% is offered on all business spending, with no cap on the amount that can be earned. As a special introductory offer, new customers can earn a welcome bonus of up to £85 for eligible spending of £5,000 or more across the first three months.
One of the standout features of this card is the absence of an annual fee. This can be a significant advantage for businesses looking to minimize costs. The card also offers up to 56 days of interest-free credit, provided that the balance is paid off in full and on time.
Beyond cashback, the card offers additional perks that can be beneficial for businesses. These include purchase protection and cardholder misuse insurance, providing an added layer of security for businesses. The card is also Apple Pay enabled, facilitating contactless payments for convenience.
As a bonus, cardholders get free access to FreshBooks’ most popular accounting plan, worth £264 per year, aiding in the management of their financials. Additionally, the card offers a whopping 10% cashback on all BT and EE spend, paid into the account within five working days, until 30 June 2023.
To apply for the Barclaycard Select Cashback Credit Card, applicants must be business owners or directors, with all directors and employees being over 18 years old. The business should be based in the UK and have a turnover or new business plan that exceeds £10,000 per year. The business and its owners should not be bankrupt or in bankruptcy proceedings, and existing financial commitments should have been managed well over the past 12 months.
RBS Business Credit Card
The RBS Business Plus Credit Card is a business-oriented credit card that provides users cashback rewards and additional benefits. It is designed to assist business owners with their expenses while also offering them various rewards and perks.
- Cashback Rewards: With the RBS Business Plus Credit Card, users earn 0.5% cashback on all purchases, 1% on eligible travel and accommodation, 2% on eligible trade/business supplies, and 3% at eligible fuel and electric vehicle charging stations. However, cashback is limited to £600 per year.
- No Foreign Transaction Fees: This card eliminates foreign transaction fees on purchases made abroad, making it a suitable choice for businesses with international operations.
- Interest-Free Credit Period: The card provides up to 56 days of interest-free credit on purchases, offering flexibility for businesses in managing their expenses.
- Merchant Offers: Cardholders can enjoy merchant offers with Business Savings from Mastercard, potentially leading to significant savings on business-related purchases.
- Fees and Credit Limit: The card has a £70 annual fee per cardholder, with a minimum credit limit of £500 and a maximum credit limit subject to the business’s financial status.
The RBS Business Plus Credit Card has been awarded a 5-star rating by Moneyfacts, suggesting its reliability and advantageous features for businesses. The card offers flexible monthly payments, where users can pay a minimum or full balance. If users only make the minimum payment, it will take longer and cost more to clear the balance.
Cardholders have access to ClearSpend, a free mobile application available on iOS and Android, designed to help manage and analyze business spending. The card also offers a range of online tools to assist in card management.
Business Savings from Mastercard, a free merchant discount program, is also included with the RBS Business Plus Credit Card. This program allows businesses to earn automatic rebates on things that help run their business.
To apply for the RBS Business Plus Credit Card, applicants must be UK residents aged 18 or over, maintain a business bank account in the same legal entity name with the Royal Bank of Scotland, and the application is subject to status and business use only. Cashback is limited to £600 per year per account.
In conclusion, the RBS Business Plus Credit Card can be a solid choice for businesses looking for a credit card that provides cashback on spending and other benefits, such as no foreign transaction fees and interest-free credit on purchases. However, businesses should consider the £70 annual fee and the cashback limit when deciding if this card best fits their needs.
The American Express® Business Basic Card
The American Express Business Basic Card is designed to provide businesses with the essential features they need for making purchases, offering flexible spending power and no annual fee. It is a charge card that offers convenience and control to business owners.
- Flexible Spending Power: The American Express Business Basic Card has no pre-set spending limit, providing businesses with dynamic spending power that can adjust to their needs. This flexibility allows businesses to manage their expenses effectively.
- No Annual Fee: This card comes with no annual fee, making it a cost-effective choice for businesses looking for essential purchasing capabilities without additional charges.
- Cashflow Management: With up to 42 days of payment period on purchases, the Business Basic Card helps businesses gain better control of their cash flow. This extended payment period provides flexibility and convenience in managing business expenses.
- World Class Service: American Express is known for its commitment to customer service, providing assistance and support to cardholders whenever and wherever they need it. This level of service offers peace of mind to business owners.
The American Express Business Basic Card offers benefits that are essential for managing business expenses. The flexible spending power allows businesses to adapt their spending to changing needs, while the extended payment period supports cash flow management. Additionally, the card provides access to world-class customer service, ensuring businesses receive the support they require.
To be eligible for the American Express Business Basic Card, businesses need to have a current UK Bank or Building Society account; the applicant must be aged 18 or over and have a permanent UK home address.
Juni Best Business Credit Card for Ecommerce Companies
Juni’s virtual business charge card is a financial tool primarily designed for e-commerce businesses to facilitate easy and efficient financial transactions. Apart from the standard features, the card provides cashback, easy integration with numerous platforms, and quick virtual card creation.
- 1% Cashback: Earn back on every eligible purchase made using the card.
- Instant Virtual Card Setup: Quickly create and deploy virtual cards for business transactions.
- High Spending Limits: Suitable for businesses of varying scales.
- Customizable Spending Controls: Set daily limits to ensure effective budget management.
- Extensive Integrations: Seamless compatibility with over 2,400 tools, including Google Ads, Stripe, and PayPal.
- Currency Flexibility: Available in major currencies – USD, EUR, and GBP.
- No Juni-specific FX Fees: No additional foreign exchange fees charged by Juni.
- Physical Card Option: GBP accounts have the added benefit of obtaining physical cards.
- Safe & Secure: Funds are kept distinct from Juni’s operating capital to ensure user safety.
Pros and Cons of Business Credit Cards
- Improved Cash Flow Management: Business credit cards can allow your business to manage short-term expenses and cash flow, especially during uneven revenue periods.
- Reward Programs: Many business credit cards offer lucrative rewards programs, including cash back, travel rewards, and points for every pound spent.
- Expense Tracking: Track and categorize business spending, making monitoring and controlling costs easier.
- Building Credit: Regular use and timely repayment of a business credit card can help establish a strong credit history for your business.
- Employee Cards: Many card issuers offer free employee cards with customizable spending limits, allowing businesses to manage employee spending effectively.
- Purchase Protections: Business credit cards often provide additional protections such as extended warranty, insurance for travel and rental cars, and protection against fraudulent purchases.
- Access to Capital: Business credit cards can provide quick access to capital for small businesses that may have difficulty securing traditional loans.
- High-Interest Rates: If not managed carefully, business credit cards can accrue significant interest charges, especially on carried balances.
- Potential for Debt: The easy accessibility of funds can lead to overspending, potentially resulting in a cycle of debt that can harm your business’s financial health.
- Impact on Credit Score: If the business credit card is under your personal guarantee, late payments or defaults can negatively impact your personal credit score.
- Complex Reward Structures: While rewards programs can be beneficial, they can also be complex and require a lot of management to get the maximum benefit.
- Annual Fees: Some business credit cards charge annual fees. Depending on how you use your card, these fees may outweigh the benefits.
- Foreign Transaction Fees: If your business involves international travel or transactions, foreign transaction fees on some cards can add up.
- Potential Personal Liability: Some business credit cards require a personal guarantee, meaning you could be personally liable for business debts.
- Less Protection: Unlike personal credit cards, business credit cards may not offer the same level of consumer protection against billing errors or merchant disputes.
What is a Business Credit Card?
A business credit card is a financial tool designed specifically for businesses.
It functions similarly to a personal credit card but is tailored to meet the needs of businesses. It provides a line of credit that allows businesses to make purchases, manage expenses, and build a credit history separate from personal finances.
How do I apply for a Business Credit Card?
To apply for a business credit card, you typically need to provide information about your business, such as its legal name, address, and tax identification number.
You may also need to provide financial statements, proof of income, and other documentation depending on the issuer’s requirements.
The application process can often be completed online or through a bank or credit card company.
How does a Business Credit Card work?
A business credit card works by providing businesses with a revolving line of credit. Once approved, you can use the card to make purchases for your business, pay bills, and cover other expenses.
The credit card issuer sets a credit limit, which is the maximum amount you can borrow. You can make payments on the card either in full or in minimum monthly instalments, and any remaining balance incurs interest charges.
Business credit cards may also offer additional perks and rewards tailored to business needs.
Business credit card eligibility check
Certain factors are typically considered to determine eligibility for a business credit card in the UK. While specific requirements may vary depending on the credit card issuer and their policies, here are some common considerations:
- Business Type: The type of business is often a factor in determining eligibility. Different credit card issuers may have preferences or restrictions for certain industries or business structures (e.g., sole proprietorship, partnership, limited company).
- Business Age: Many credit card issuers require a minimum business age to qualify for a business credit card. This requirement ensures that the business has been established and operates for a certain period, often ranging from a few months to a year or more.
- Turnover and Financials: Credit card issuers typically review the financial health of a business to assess creditworthiness. This may involve evaluating annual turnover, profit margins, cash flow, and other financial indicators. Strong financials increase the chances of approval.
- Personal Credit History: In the case of small businesses or startups, credit card issuers may consider the personal credit history of the business owner or director. A good personal credit score demonstrates responsible credit management and increases the likelihood of approval.
- Debt-to-Income Ratio: Some issuers may analyze the debt-to-income ratio of the business to ensure it can handle additional credit. A favourable ratio indicates the business can manage its existing debt obligations and the potential credit card debt.
- Legal Entity and Company Registration: The business must have a valid legal entity status and be registered with Companies House in the UK to qualify for a business credit card. This typically involves having a unique company registration number (CRN).
- Documentation and Verification: During the application process, credit card issuers may require supporting documents, such as business licenses, bank statements, filed accounts, or tax returns. These documents help verify the legitimacy of the business and its financial standing.
- Other Factors: Some credit card issuers may consider additional factors such as the industry in which the business operates, the number of employees, or the business’s trading history.
Do I need a Business Credit Card?
Having a business credit card can offer several advantages for your business.
It helps separate your personal and business expenses, simplifies accounting and expense tracking, and allows you to build a credit history for your business.
Additionally, business credit cards often come with various perks, such as cashback rewards, travel benefits, and expense management tools, which can provide financial benefits and streamline business operations.
Who can get a Business Credit Card?
Business credit cards are typically available to various types of businesses, including sole proprietorships, partnerships, corporations, and limited liability companies (LLCs).
The specific eligibility requirements may vary depending on the issuer, but generally, you will need to have a legitimate business with a certain level of income or revenue.
Some issuers may also consider your personal credit history and financial situation when evaluating your application.
How can I find the right credit card for my business?
Finding the right business credit card involves assessing your business needs and comparing different options. Consider factors such as the credit card’s interest rate, credit limit, annual fees, rewards program, and any additional benefits that align with your business goals.
Research and compare different credit card issuers, their terms, and customer reviews to make an informed decision. Consulting with financial advisors or fellow business owners to gather insights and recommendations can be helpful.
Do I have to pay fees for a Business Credit Card?
Business credit cards may have various fees associated with them. These can include annual fees, late payment fees, cash advance fees, foreign transaction fees, and balance transfer fees.
However, not all business credit cards have the same fee structure, and some cards may offer certain fee waivers or incentives. It’s important to review and understand the fee structure of a credit card before applying to assess its impact on your business finances.
What perks can I get with a Business Credit Card?
Business credit cards often come with perks and benefits designed to cater to business needs.
These perks can vary depending on the credit card issuer and your specific card. Common perks include cashback rewards on business purchases, travel rewards, airline lounge access, expense management tools, dedicated customer support, and discounts on business services or products.
Carefully review the perks different credit cards offer to find the ones that align with your business priorities.
Is my credit history checked for a Business Credit Card?
When applying for a business credit card, the credit card issuer will typically check your credit history. This helps them assess your creditworthiness and determine the terms and conditions they can offer you.
While your personal credit history may be considered, the focus is primarily on evaluating your business’s creditworthiness.
This includes factors such as your business’s financial statements, revenue, and payment history. It’s important to maintain good credit for your business by paying bills on time and managing debts responsibly, as it can positively impact your chances of being approved for a business credit card and obtaining favourable terms.
Do I need a Business Current Account to apply?
While having a business current account can be beneficial for managing your business finances, applying for a business credit card is not always a strict requirement.
During the application process, most credit card issuers will require you to provide information about your business, such as its legal name, address, and tax identification number. However, the specific banking relationship or having a business current account may not be mandatory.
It’s advisable to check the requirements of individual credit card issuers to understand their policies regarding business current accounts.
What are the downsides or risks of using a business credit card?
Potential downsides include the possibility of accumulating debt, the temptation to overspend due to high credit limits, the risk of damaging your business credit score if you don’t manage the card properly, and the potential for increased liability compared to personal credit cards.
Does using a business credit card build credit?
Yes, using a business credit card can help build credit, but there are some nuances to consider.
Business credit cards can help build your business credit score, which is separate from your personal credit score. Business credit bureaus such as Dun & Bradstreet, Equifax Business, and Experian Business track the creditworthiness of businesses and not individuals. These bureaus use various factors to determine a business credit score, including credit utilization, payment history, and the length of credit history.
Business credit cards are often used to separate personal and business expenses, which can be very helpful for accounting and tax purposes. Using a business credit card responsibly, such as by making payments on time and maintaining a low balance, can improve your business credit score.
However, whether your business credit card activity will affect your personal credit score depends on the credit card issuer’s policies. Some business credit cards report activity to the personal credit bureaus, which means responsible use of the card can help build your personal credit score. On the other hand, any negative activity, such as late payments or high balances, could also negatively affect your personal credit score.
Before applying for a business credit card, it’s a good idea to check the issuer’s reporting policies if you’re also interested in building your personal credit. Keep in mind that you’re often personally liable for any debt on your business credit card, even if the card is in your business’s name.
Remember, the best way to build credit, either business or personal, is to consistently make on-time payments, keep your balances low, and apply for new credit only when necessary. It’s also important to regularly check your credit reports to ensure they’re accurate and to quickly address any errors.
Frequently Asked Questions (FAQs)
How does the application process for a business credit card work?
The application involves submitting business information and financial statements, the owner’s personal credit check, verifying documentation, and applying online or in-branch, followed by the issuer for approval over typically 2 days to 2 weeks.
What credit score do I need to get approved for a business credit card?
Most issuers prefer good to excellent personal credit scores of 670 and above for the business owner, while those with scores below 650 may face greater difficulty getting approved.
Do business credit cards affect my personal credit?
Though opened in the company name, small business cards may require a personal guarantee, so late payments can lower your personal score and high balances can negatively impact your credit utilization..
Can I get a business credit card if I have a low credit score?
Yes, some credit card companies do offer business cards to those with low credit scores, but the terms may not be as favorable. They might have higher interest rates, lower credit limits, and fewer rewards.
Can freelancers or self-employed individuals apply for a business credit card?
Absolutely. Freelancers, sole proprietors, and self-employed individuals can apply for a business credit card. In fact, having a business credit card can help separate personal and business expenses, making accounting and tax preparation easier.
Can I get more than one business credit card?
Yes, you can hold multiple business credit cards, similar to personal credit cards. Having more than one card can be beneficial for maximizing rewards across different spending categories or for having backup options in case of emergencies.
Is it OK to max out business credit card?
Maxing out a business credit card is not recommended as it leads to high credit utilization, which can negatively impact your business credit score. A good practice is to keep credit utilization under 30% to maintain a healthy credit profile.
Should I pay off my business credit card every month?
Yes, you should pay off your business credit card every month to avoid interest charges and maintain a healthy credit profile.