Compare the best and cheapest business credit cards

18 min Read Published: 16 Nov 2020

Compare the best and cheapest business credit cardsIf you run a business, a business credit card can help you to manage expenses, as well as benefit from perks such as cashback or travel rewards. In this article we explain how business credit cards work and take a look at some of the best and cheapest options.

What is a business credit card and how does it work?

A business credit card is similar to a personal credit card but is designed to be used by a business rather than an individual. You can usually apply for more than one card on the account which means you can issue cards to employees in your business if you wish to. The account will have an overall credit limit but limits are typically higher than on a standard credit card. Credit card repayments are made each month and if the balance isn’t paid off in full, interest will be charged.

Whether a business credit card can affect personal credit will depend on the type of business you run. If you are a sole trader, you will have responsibility for the debt so if you are late with payments or are unable to pay back the amount borrowed, your personal credit is likely to be affected. If, on the other hand, the business is a limited company your personal credit won’t be affected as the credit is borrowed against the name of the company.

With a personal credit card, purchases over £100 and up to £30,000 are protected under section 75 of the consumer credit act. This means the retailer and your card provider are jointly liable if the goods don’t turn up or are faulty, so you can apply to get your money back. Unfortunately, however, this protection does not extend to business credit cards. For more information about Section 75, read our article Section 75 of the consumer credit act explained.

Business cards can usually be used abroad but you may be charged a foreign transaction fee of around 2.75% to 2.99%. If you make a cash withdrawal on your card abroad, you may be charged an additional fee of around 3%, plus interest will be charged from the day of the withdrawal. If you are planning to regularly use your business card abroad it is best to compare your options carefully and look for one that won’t charge you for overseas use.

Do I need a business credit card?

You may find a business credit card useful for managing cash flow or making purchases for your company over the phone or online. Business credit cards are also a good way of separating your business finances from your personal finances and some have the added benefit of helping you to track and manage your spending.

These cards can also be useful for managing your employees’ expenses. Employees can use a business card to pay for work-related purchases rather than having to make an expenses claim which can help save time and resources. A business credit card can also help build up a credit profile, which is particularly important if the business is new.

Best business credit card summary table - November 2020

The table below shows some of the top business credit cards as of November 2020.

Card APR Fees Best for Bonus
Capital on Tap Business credit card 39.90% £0 Small businesses No fees for overseas spending or cash withdrawals
Capital on Tap Business Rewards credit card 39.90% £99 annual fee Rewards 1% cashback or 1 Avios for every £1 spent. Bonus cashback offered
Santander Business Cashback credit card 23.70% £30 annual fee Medium businesses 1% cashback on all business spend. No foreign transaction fees on purchases abroad
Metro Bank Business credit card 14.90% £0 Those looking for a straightforward, fee-free credit card No foreign transaction fees in most European countries
Royal Bank of Scotland Business Plus credit card 29.00% £70 annual fee per cardholder Earning cashback 2% cashback on eligible trade/business supplies, 1% on eligible fuel and accommodation and 0.5% on everything else
Clydesdale Bank Business credit card 22.40% No annual fee for first year, then £28 Managing cash flow Discounts at a range of participating retailers
British Airways American Express Accelerating Business credit card 80.30% £210 annual fee Larger businesses and business travel Earn 1.5 On Business Points for every £1 spent with British Airways to book business travel. Earn 1.5 Avios points on every £1 spent on your card to redeem on flights

Best business credit card for rewards

The Capital on Tap Business Rewards credit card is one of the best options for businesses looking to earn rewards. It offers 1% cashback or one Avios for every £1 spent on the card, as well as 10,000 bonus points that can be redeemed for £100 cashback or 10,000 Avios when you spend £5,000 in the first three months. Avios can be redeemed on flights with certain airlines, or hotels and car hire.

The card also offers a credit limit of up to £50,000 and there are no foreign exchange or ATM fees, but keep in mind there is a £99 annual fee to pay. Note that Capital on Tap is not a bank, it is only a lender, however, it is authorised by the Financial Conduct Authority.

Best business credit card for small businesses

The Capital on Tap Business credit card is a good choice for small businesses as it allows you to transfer cash directly into your bank account which can be useful if you need a short-term cash injection. This is fee-free, but keep in mind you will still pay interest. If you manage the account well, however, the interest rate may be reduced. Again, the card offers a credit limit up to £50,000 and there are no foreign transaction or ATM fees.

Best business credit card for medium businesses

The Santander Business Cashback credit card is a good option for medium businesses. To be eligible you need to be a sole trader or your business needs to be a partnership or private limited company with no more than two partners, members or directors. In return for the £30 annual fee (which is lower than many other cards), you will receive 1% cashback on all your business spend. You can also add another card for an employee at no additional cost. Plus, should you need to travel for business, the card charges no foreign transaction fees.

Best business credit card for large businesses

The British Airways American Express Accelerating Business credit card is best for larger businesses, particularly those that have offices across the world. The card allows you to earn 1.5 'On Business Points' for every eligible £1 spent with British Airways which can be redeemed on business travel across the British Airways, Iberia and American Airlines networks. You will also earn a bonus 2,200 On Business Points if you spend £3,000 in the first three months. In addition, the card allows you to earn 1.5 Avios on every eligible £1 spent which can be used to book flights with British Airways or hotels and car hire.

The On Business Points scheme has several other benefits, including the ability to book a flight up to one day before travel, as well as change or cancel flights free of charge - providing this is more than 24 hours before departure. The card also provides travel accident protection and travel inconvenience insurance. The downsides of the card, however, are the hefty annual fee of £210 and the high APR - so be sure to clear the balance in full each month.

Best business credit card for travel

The Capital on Tap Business credit card is one of the best options if you need to use your business card overseas, as you won’t have to pay a fee for foreign transactions or cash withdrawals. Just remember interest will still be charged on cash withdrawals, however.

Alternatively, if you are only travelling to Europe, the Metro Bank Business credit card won’t charge you for using it in most European countries, and the APR is much lower at 14.9%.

Best business credit card for cashback

The Royal Bank of Scotland Business Plus credit card is a good option for earning cashback. It offers 2% cashback on eligible trade/business supplies, 1% cashback on eligible fuel and accommodation and 0.5% cashback on everything else. Cashback is limited to £400 a year per card account. The card also won’t charge for foreign transactions. But keep in mind there is a £70 annual fee and this applies to each cardholder.

Best business credit card for freelancers

The Capital on Tap Business credit card is the best business card for freelancers as it allows you to move money straight into your bank account if you need a cash boost. What’s more, should you need to travel for work, the card won’t charge for foreign transactions or ATM withdrawals.

Best business credit card for no fee

The Metro Bank Business credit card is best for those looking for a straightforward credit card with no fees. As well as no annual fee, there are no fees for spending on the card or withdrawing cash in most European countries and it has a comparatively low APR of 14.9%.

Best business credit card for tools & functionality

The Clydesdale Bank Business credit card is a good option for anyone looking for support managing their business finances. Its SmartData online accounting system offers online access to card spending data and tracks and reports all card spending. It also offers record keeping for taxes, with yearly reports. In addition, the card offers anti-fraud technology and discounts at a number of participating retailers. There is no annual fee to pay for the first year but after this you will be charged £28 a year.

Pros and cons of a business credit card

Pros

  • A business credit card can help with cash flow problems, for example, if an invoice hasn’t been paid. Most credit cards offer around 56 days’ interest-free on purchases.
  • You can separate personal finances from your business finances.
  • You can usually take advantage of a higher credit limit than on a standard credit card.
  • A business credit card can make work expenses easier to manage.
  • Some credit cards allow you to earn rewards or cashback.

Cons

  • There is no purchase protection under section 75 of the consumer credit act.
  • Annual fees and interest rates can be high.
  • Stringent checks are carried out when applying for a business credit card. Start-ups and new businesses without a credit history may find it harder to get accepted.
  • You are still personally responsible for the debt if you are a sole trader

Things to consider before getting a business credit card

Before applying for a business credit card, it is important to consider the following:

  • Interest rates - Check what interest rate you will be charged as the APR on business credit cards can be much higher than on personal credit cards.
  • Spending habits - It’s important to consider how you and your employees plan to use a business credit card. If you won’t be able to pay off the balance in full each month, try to choose a card with a lower APR. If, on the other hand, you can afford to clear the balance each month, you may want to opt for a card that offers rewards and other benefits.
  • Fees and charges - Many business cards charge an annual fee so make sure this is affordable. Also check fees for late payments, exceeding the credit limit, foreign transactions and cash withdrawals.
  • Interest-free days - Most business credit cards give you up to 56 days’ interest-free on purchases, providing you pay your balance in full and on time. However, some give you less than this and others give you more, so check carefully.
  • Minimum payments - These are often set at very low levels so always try to pay off more than the minimum each month if you can.
  • Extra perks - If you are looking for a card that offers rewards, choose benefits your company will make full use of. For example, if your business travels regularly, Avios or other flight rewards may suit you best.
  • Eligibility - If your business is new and hasn’t built up a credit profile, you may not qualify for certain credit cards. Your business’ credit profile can also affect the APR you are offered - lenders only have to offer the advertised APR to 51% of applicants. Keep in mind too that with some credit cards, you may be required to open a bank account with the same lender.

Alternatives to a business credit card

If you are not sure a business credit card is right for you, you could also consider a business charge card. These allow you to make purchases in the same way as a credit card but there is no credit facility which means you will need to pay off your balance in full each month. Business charge cards do not usually have a limit on how much you can spend and do not have an APR as you cannot use them to borrow money.

However, be aware if you do not manage to pay off your balance in full, you will have to pay hefty fees as well as interest and this can affect your credit rating. On the plus side, business charge cards often offer benefits and rewards such as travel insurance, concierge services, access to airport lounges and cashback.

Alternatively, if you need long-term funding, a business loan might be a better option as this can work out to be a cheaper way to borrow.

 

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