Business credit cards separate company spending from personal spending and give you a short interest-free period if you pay the balance in full. They also carry the same dangers as any credit: interest if you don't, and, for many small firms, a personal guarantee from the director.
What a business credit card is for
- Separating spending. Clean records make bookkeeping and tax returns easier
- Employee cards. Individual cards with their own limits, instead of staff using personal money
- An interest-free period if you clear the full balance on time, with the length varying by provider
- Rewards, on some cards, which are only worth having if you repay in full
- A company credit record, which can help when you later apply for bigger facilities
Check who is liable
Many business credit cards for small companies ask for a personal guarantee from a director, or search a director's personal credit file. That can make you personally liable if the company can't pay. Sole traders borrow in their own name anyway. Ask the provider directly whose credit file will be searched and who is liable if the business fails.
Some protections that apply to personal credit cards may not apply to cards issued to limited companies, so ask what protection the provider offers, including chargeback.
Business credit cards compared with the alternatives
| Option | Best for | Watch for |
|---|---|---|
| Business credit card | Day-to-day spending you repay in full each month | Interest if you carry a balance, and personal guarantees |
| Personal card used for business | Occasional costs for a sole trader | Mixed records, and lower limits |
| Business overdraft or credit line | Smoothing uneven cash flow | Facilities can be reviewed or withdrawn, and fees apply |
| Business loan | A one-off larger investment | Fixed repayments whatever your income |
What to compare
- Annual fee, which rewards need to exceed
- The APR, for the months you might carry a balance
- The credit limit, and how employee cards are controlled
- The interest-free period, and what ends it
- Overseas charges, if you buy from suppliers abroad
- Exports. Statements that feed straight into your accounting software save hours
Keeping on top of it
Treat the card as a cash flow tool, not as extra funding. Set a Direct Debit to pay the full balance, reconcile the statement every month, and keep receipts, because HMRC expects records of business expenses. See our guide to small business accounting software with payroll for recording them, and business loans in the UK if you need larger or longer-term funding.