Your feedback is essential to help us improve - click here to take our 3 minute survey.
Female Owner Of Start Up Coffee Shop Or Restaurant Turning Round Open Sign On Door

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

By:  Karl Talbot | 29th November 2021

If you’re a business owner or have permission to make purchases on a company’s behalf, then you may be wondering about the benefits of a business credit card.

So how do business credit cards work? And how do they differ from normal credit cards? Here’s everything you need to know.

What is a business credit card?

A business credit card is a type of credit card that can be used for making purchases on an organisation’s behalf. This type of card is available from a number of big-name banks and card providers, including Lloyds, RBS and Barclaycard.

Like a normal credit card, a business credit card attracts interest unless the balance is cleared in full by the payment due date.

Lots of business credit cards come without an annual fee. However, this is rarely the case for cards that come with perks, such as rewards for hitting set spending triggers.

If you’re looking for a new credit card for your business, see our list of top-rated business credit cards.

How do business credit cards work?

Business credit cards work in much the same way as normal credit cards. Any purchases made will be added to your company’s card balance. When this balance is due, your company must fully repay it before the due date to avoid interest.

Business credit cards often provide the option to add a number of additional cardholders, though some card providers will charge extra fees for this.

What can you use a business credit card for?

Business credit cards are designed for purchases required to run a business. For example, they can be used to purchase laptops, stationery, chairs or other office furniture.

Who can get a business credit card?

Generally speaking, if you’ve registered a business and have started trading, you can apply for a business credit card. However, do bear in mind that you’ll still have to pass a credit check. So if you’re a sole trader and you’ve got a poor credit score, you’re unlikely to be accepted.

Before applying, you can use our Credit Card Eligibility Checker to determine whether you’re eligible for a business credit card.

If you don’t own the business, then you can still get your hands on a business credit card if the company you work for designates you as a supplementary cardholder.

What are the benefits and drawbacks of business credit cards?

Now we’ve covered how business credit cards work, let’s explore the pros and cons of using them.

Pros

Cons

How can you get a business credit card?

Applying for a business credit card can be as easy as submitting an online application and sending across any supporting documents. However, some card providers may require you to visit a bank branch in person to prove your identity.

You’ll also be credit checked, so remember that you’ll need to have a decent credit score to be accepted.

To find the best business credit card for you, check out our list of top-rated business credit cards in the UK.

Still have questions?

If you didn’t find everything you were looking for on this page, we have other ways to help:

Was this article helpful?
YesNo



Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.