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Business credit cards, much like personal credit cards, can be a helpful source of finance for buying anything from big ticket items to smaller goods. They can be a good alternative to business loans if your company needs longer-term financing, rather than borrowing a lump sum.

They have similar features to personal credit cards in that they come with credit limits, interest rates and may charge fees. Business cards can also feature additional cards for employees.

What types of business cards are available?

  • Low-rate business credit cards. May be useful for businesses looking for lower rates and low or no annual fees.
  • Platinum business credit cards. May be usefif a business needs a higher credit limit and rewards program. They can come with higher rates and fees, but it’s expected a business can afford these higher costs.
  • Balance transfer business cards. Similar to personal balance transfer cards, these can be used to help give a business breathing room to pay down existing credit card debt.
  • Business rewards credit cards. You can earn rewards points by spending on a business rewards credit card, typically at a rate of 1-3 points per dollar spent.

What to look for in a business credit card

There are a few things to keep in mind when looking for the right business credit card for your company.

  • Interest rates

A business credit card may charge different interest rates for purchases, cash advances and balance transfers. Interest may be charged on individual actions like ATM withdrawals, or on the total balance of any outstanding statements. This is by far one of the biggest factors to consider when choosing a credit card, as interest rates can help to snowball debt if you don’t stay on top of your bills. 

  • Fees and charges

Fees and charges are another major factor to determine the best credit card for your business. These can include annual fees, late payment fees, foreign currency conversion fees, charges for overseas purchases (online or in-store) and more.

Some credit card fees can be harder to avoid than others, such as annual fees on rewards business cards, as these generally help pay for rewards programs. Do your research around what fees your company may be charged by a card provider, and consider whether the benefits are worth the cost, or whether you can find a low or no fee option before applying.   

  • Interest-free periods

The length of an interest-free period determines how long you have before you’re charged interest on your purchases. This isn’t a flexible term that resets for every purchase, but a fixed term determined by your credit card statement.

If you have 55 days interest free, for example, you’ll have 55 days from the day your credit card statement was issued to pay off any new purchases made. If you made a purchase 10 days after your statement was issued, you’d now have 45 days to pay this off before accruing interest.

  • Rewards programs and extras

Some credit cards reward your business for spending money through rewards programs. These allow you to earn points on your purchases that can then be exchanged for flight rewards, such as Qantas points and other frequent flyer points programs. They can also be exchange for retail rewards, cash back offers and/or supermarket rewards.

You may also be offered extras like travel insurance, car rental insurance, concierge services and much more with these types of credit cards. While rewards business credit cards and platinum business credit cards typically come with these features, they often also come with higher annual fees and interest rates.

Pros and cons of a business credit card

Pros:

  • Access to credit.
  • Can be a more flexible, long-term option than taking out a business loan to be paid off over a set term.
  • Access to rewards programs and extras.
  • Travel-specific perks can be beneficial if your business does a lot of travelling.

Cons:

  • Interest charges on outstanding balances.
  • Fees and other costs may occur.
  • May lead to debt and financial stress if not managed or budgeted for appropriately.
  • Can be mismanaged by employees and lead to potential legal and financial issues.