Business credit cards

Credit cards are an extremely popular tool in the UK, with the total credit card spend in the UK reaching £22.5 billion as of July 2024 and over a third of all purchases being made with a credit card.

But are they helpful for businesses?

Every business is different and how helpful a single financial tool could be will vary greatly depending on the nature of the business.

If you’re considering taking out a business credit card, this page tackles some of the biggest questions you may have, including which risks and drawbacks to be aware of going in and what could happen if you go over your credit limit.

Read on, or, if you’re already sure a credit card is the way you want to go, click the link below to get connected to our expert support team, who can help you figure out if you’re eligible for a credit card from one of our 120+ lenders offering between £1000 and £20M in business finance.

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What is a business credit card?

Business credit cards provide your business with a convenient source of short-term funding to cover expenses like travel and boost your immediate cash flow. As you gear up to apply for a business credit card, knowing what options are available to you is vital. 

A business credit card is similar to a personal credit card—it provides your business with short term funding to be spent on business related expenses, which you must then repay within a pre-agreed given period, usually a month. The funds are then replenished and available for reuse, usually, until either you or the lender cancels the card.

Credit cards are a type of revolving credit facility, which is the term for credit agreements where a preapproved limit is set and you are able to draw from the limit multiple times. Credit cards have the specific feature of being card based, meaning an account is tied to a physical, or digital, card. This makes credit cards suitable for expenses such as online purchases, acquiring inventory, and equipment. Their card based nature makes them less suitable for paying employees, forwarding funds to suppliers, or paying rent—for these payments, a business loan may be more suitable.

There is usually a set credit limit that determines how much money you can spend and like a standard personal credit card, interest is often applied to the withdrawn balance until you make a full repayment.

Many business credit cards offer 0% interest rates if the funds are returned within the month. This can make credit cards a helpful tool for maintaining health cash flow, as you can use the card to purchase inventory or pay for technology subscriptions, deliver services to your client over the course of the month, then pay off the credit card when your client pays your invoice, all without paying interest. However, do take extra care, as many credit cards do charge very large interest rates if the one month grace period has passed and payment hasn’t yet been made. 

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What are the benefits of a business credit card?

Business credit cards come with a range of helpful benefits that can be used to help manage your business cash flow, here are some of the main ones.

Expense separation

When you first start running a business, it can be tempting to pay for business expenses with a personal card, simply for ease. However, this can quickly become unmanageable as more team members join your company and your bills stack up, creating the need to spend longer and longer categorising and separating these expenses.

Business credit cards intrinsically allow you to separate personal and business expenses, simplifying your accounting processes. They provide you with a card that can be used only for business costs, many even connect to your financial accounting tools.

Simplified business expense management

Speaking of integration with financial tools, business credit cards often come with a range of additional features that assist in expense management, including detailed records of every expense, the ability to export expense statements, the ability to categorise expenses, adding additional users, and setting spending limits.

These last two are particularly noteworthy. As you grow as a business, the ability to add users and set individual spending limits becomes critical for maintaining financial control as a business. Furthermore, once you’ve connected your accounting tools, you’ll gain real time visibility into company wide spending.

A company credit card also enables you to eliminate the need for petty cash, which can be a huge help in reducing administrative burdens. Pretty cash often requires a substantial amount of time spent chasing down and categorising receipts for what are often objectively very small payments—a credit card partnered with an accounting tool can help streamline this substantially.

Card specific rewards

Rewards are one of the best benefits of business credit cards. While the other benefits are more about optimisation and streamlining, rewards can be a little more exciting.

As you spend, many credit cards provide rewards. These can come in the form of points, which can be used to purchase additional products, miles, which can be used to purchase flights, or other rewards such as new technology tools.      

Over time, these rewards can grow and stack up, turning into significant savings or perks. The nice thing about rewards is you don’t usually need to change anything about your company spending habits beyond using the credit card when making purchases rather than a different card, and you still get rewarded—it’s like a bonus just for doing business as usual. 

The drawbacks of UK business credit cards

As with any funding solution, there are pros and cons to consider. There are potential risk factors you need to be aware of before choosing to take out a company credit card. We’ve outlined some of these below.

Interest rates are high

While interest rates are usually 0% or very low if you pay the funds back within the agreed revolving timeframe, if you miss a payment, interest rates can skyrocket. As that interest compounds, costs can become unmanageable until you end up in a debt cycle. If you have any intention of missing payments, business finance is likely not a suitable option and business credit cards in particular are very unsuitable.

Even if you have every intention of making your monthly payments, it’s worth taking a few days to consider how you will repay your credit card if you’re taken by surprise with an emergency cost that depletes your cash reserves or if a particular client refuses to pay. Taking out a company credit card can be a good catalyst and opportunity for setting up an emergency fund—a reserve of money within your company that you can use to make payments even if an emergency occurs.

Company and personal credit scores

Missing payments on your credit card would also have a negative impact on your company credit score, affecting your ability to take out funding in the future, which can affect your ability to grow.

Not just that, but depending on your agreement with the lender, missing payments on your company credit card could even affect your personal credit score. This is particularly true if you have been asked to provide a personal guarantee as a company director.

Even without missing payments, the lender will likely run a credit check when you apply, which adds a hard search to either your personal or company credit record, sometimes both. Having your personal credit score impacted negatively can affect your ability to take out personal loans, lease a car, and even buy a house in the future.

Recurring fees

Some credit cards function like subscriptions, where you pay a monthly fee to be able to use the card. This fee can eat into your profits and stack up over the years. The recurring fee can range anywhere from a few pounds up to hundreds of pounds, depending on the card.

If you are considering taking out a credit card with a high recurring charge, carefully consider the benefits the card offers. Some cards offer access to airport lounges, better rewards systems, and even access to business events. Try to calculate the benefits of the rewards and weigh that against the cost.

For instance, access to a business event could be a good opportunity to network and close new deals, which could make the fee worth it. And access to an airport lounge may be a nice benefit that will ensure your employees arrive home after long business journeys happy to work. But the improved rewards system could amount to a minimal benefit if your company doesn’t usually make large purchases or if the rewards are not aligned with your business needs. 

What can I use a business credit card for?

Business credit cards can be used for a wide range of purposes, including:

• Running costs including office and inventory expenses

• Travel costs, including flights, hotels, and car rentals

• Marketing costs

• Surprise emergency costs, for example, repairs or equipment replacements

• Gaining cashback rewards 

• Buying new company equipment 

• Entertaining clients 

• Business meals 

• Cost of sales 

When comparing different business credit cards, pay attention to details like APR, rewards, additional fees, and interest-free periods. These factors help you find the most suitable card for your business’s current needs. 

What types of business credit cards can I get in the UK?

When applying for a business credit, understanding the different types of cards available to you is vital for choosing the best option for your business. The four main types of business credit cards include:

• Rewards business credit cards: These cards offer rewards like cashback for specific purchases, such as business meals at restaurants. Keep in mind that rewards credit cards can come with additional fees.

• 0% or low-interest business credit cards: Zero percent or low-interest business credit cards provide an introductory period where you do not accrue interest (typically for around one month).

• Travel business credit cards: Travel cards help you cover business-related travel costs (flights, hotels, etc.), as well as provide you with extra perks like lounge access and travel insurance. 

• Balance transfer credit cards: Balance transfer credit cards enable you to move debt to a different business credit card provider, potentially helping you avoid higher interest rates. 

Who can get a business credit card?

In the UK, you must be over 18 and must generally be a sole trader, limited company, or partnership to obtain a business credit card. The eligibility criteria can vary depending on the business credit card provider and can include requirements such as account records or a minimum monthly revenue. 

Most business credit card providers will check your business’s creditworthiness, and some will review your personal credit history as well. Once you have the card, missed or late payments can negatively impact your business’s creditworthiness. 

What fees do I need to pay for a business credit card?

Along with knowing the different types of business credit cards, it’s also important to be aware of the fees that come with these cards. Aside from your annual percentage rate (APR) – aka, your rate of interest – you may also face the following fees:

• Monthly or annual fee 

• Late or missed payment charges

• Charges for cash withdrawals

• Charges for going over your limit

• Foreign transaction fees

What are the alternatives to a UK business credit card?

If a business card isn't the right solution for your company, there are plenty of business credit card alternatives to choose from, including:

• Merchant cash advances: A merchant cash advance enables you to borrow money and pay it back through a percentage of your customers' card transactions.

• Revolving credit facilities: A revolving credit facility lets you withdraw money, make purchases for your business, repay the borrowed amount and then withdraw it again when you need it. If you’re looking for something similar to a credit card but without being tied to a card, a revolving credit facility may be for you. 

• Invoice finance: Invoice finance allows you to use your unpaid invoices as security for funding. allows you to use your unpaid invoices as security for funding. 

• Asset finance: Asset finance allows you to spread the cost of the purchase, or lease instead of buying.

Business Credit Cards FAQs

We’ve answered some of your most pressing questions about business credit cards below. 

Find a business credit card with Funding Options by Tide

We’re Funding Options by Tide, we help connect UK businesses to suitable business credit card providers. Through the Funding Options platform, we match eligible borrowers with business credit card options from our panel of more than 120 lenders. Click the link below to let us know how much financing you need, what you need it for, and how quickly you need it, and we’ll let you know if you’re eligible for a business credit card. 

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.