Finance Types

Business Credit Cards

Business Credit Cards

Business credit cards work in a similar way to a personal credit card: you can buy something now, with access to a revolving line of credit with a set limit.

You then receive a monthly statement and repay anything between a minimum amount and the full amount you owe. Business credit cards let you (and, if you choose, your employees) make a purchase and repay the credit card issuer later.

Interest is charged on a monthly basis on the amount outstanding if you do not pay the balance off in full by the date on the credit card statement.

You must make your minimum monthly repayments on time (but you can pay off a higher amount, which will reduce the amount of interest you end up paying). Your business will receive regular, itemised statements detailing purchases, how much you owe and how much interest is being charged.

If you fail to make a payment, you’ll be charged a higher interest rate and possibly a late payment fee, which varies from bank to bank and will be outlined in the credit card terms and conditions.

A business credit card can be a useful tool if used responsibly. It provides the flexibility to spread out the cost of purchases with up to 56 days of interest-free credit depending on the dates of purchases and your statement (and on you paying the balance in full after such a purchase).

Business credit cards can also enable you to allow employees to pay for travel (for example) and other expenses, which are then charged to the business. Always keep an eye on your balance to ensure your repayments remain affordable.