Business Credit Cards Explained

Many small business owners use a personal credit card for business expenses and whilst there is nothing wrong with that, there are a number of benefits that come with using a business credit card instead.

In many cases it is actually more cost effective to use a personal credit card for business expenses, due to the fact that you get charged a lower interest rate and you minimize any account fees by holding fewer accounts. You can also maximise your rewards points by consolidating all of your spending on a single card. However there are also a number of disadvantages to using a personal credit card for business expenses. The most obvious one is that it becomes difficult to separate personal expenses from business expenses. More importantly as a business owner filing tax returns, business expenses have to be proven to the tax office. If a single payment is missed then personal credit ratings take the hit.

Therefore it makes a lot of sense to separate business expenses from personal expenses by using a business credit card.

Business Credit Card Features And Benefits

  • Business credit cards consolidate all business expenditure onto a single card and payment, making it easy to monitor expenses.
  • Cash flow: If you are a business owner managing their cash flow and trying to balance uncertain income against immediate expenses then using a business credit card is a good way to do this so long as debts do not increase.
  • Credit card rewards: A lot of rewards points can be earned by paying for business expenses using a credit card, particularly if they are used when travelling.

Business Credit Card Interest And Fees

  • Business credit card fees tend to cost more than personal credit card fees. However like with all business expenses, they are tax deductible.
  • Interest rates on business credit cards are also higher than personal credit card interest rates, so it is best to carry as little debt as is possible on a business credit card and if balances are carried seek out a business loan instead.
  • Business credit card reward schemes tend to cost a lot in terms of annual fees, so make sure you are getting maximum rewards value.

No matter what you need a business credit for will help you make an informed decision. As a financial comparison site, organises a range of credit card offerings from a huge variety of banks in an easy to understand way that will help you pick the financial product that is most suitable for you.

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