Business Credit Cards

What is a business credit card?

As the name suggests, a business credit card is designed for business-related spending and cash flow as opposed to personal use. These cards are issued to businesses with an Australian Business Number (ABN), as opposed to individuals, yet function in a similar manner.

Like a traditional personal credit card, business credit cards have access to a predetermined credit limit with monthly repayments required towards the total card balance plus interest. Business credit cards will typically charge an annual fee, with this fee either being for the entire account or per card depending on its structure and the offering provided by the card issuer.

What types of business credit cards are available?

In similar fashion to personal credit cards, there a number of different business credit card options available depending on the specific needs of the business. Typically the most common types of business credit cards are:

• Low-cost cards: Ideal for businesses that seek a no frills credit card with a lower interest rate with no annual fee.
• Rewards cards: Useful for businesses that want to be rewarded for their spending.
• Frequent Flyer cards: These credit cards can be beneficial for businesses with staff who undertake a lot of work-related travel.

There are four main credit card payment networks that provide credit cards in Australia – Visa, MasterCard, American Express and Diners Club. Diners Club operates a little differently in that it offers charge cards. Charge cards usually have no set credit limit but do not have interest-free periods.

Banks and building societies will offer credit cards across these payment networks to Australian businesses, all with differing features and benefits.

Benefits of a business credit card

If you are looking to take advantage of a business credit card, some potential benefits can include:

• Tax deductions.
• Security features.
• Customisable credit limits.
• Additional cardholders.
• Cash flow management.
• Liability options.
• Employee spending insights and money management tools.
• Complimentary extras specifically for businesses.

Disadvantages of a business credit card

Some disadvantages that may be presented with the use of a business credit card can include:

• Expensive fees
• Interest charged if you don’t pay your balance in full every month.
• Account can only be used for business spending.

What to look for when comparing business credit cards

Some of key factors to consider when looking for a business credit card include:

• Business spending habits: Before signing on the dotted line for a credit card, it’s important to first determine business spending habits to make an informed decision on which product is right for you. To determine what your habits are, analyse your eligible purchases, capital expenses, additional cardholder spending and business travel needs.
• Fees: As with any financial product, it’s important to factor-in the fees when considering a business credit card. Business credit cards fees and charges can range from establishment fees, annual fees, supplementary cardholder fees, standard interest rates and over limit fees.
• Benefits: Aside from low rate credit cards which will typically come with no annual fee, business credit cards can come with benefits that include business rewards, complimentary travel insurance, frequent flyer points and expense management systems.

Corporate credit card vs business credit card: Is there a difference?

No matter whether the business is a sole trader or operates as a small, medium or large business, all can generally apply for a business credit card. On the other hand, corporate credit cards or corporate charge cards, are typically only available for large companies that need credit cards for a larger number of personnel.

How to apply for a business credit card

Once you have done your research and found the product that is right for your business, you can apply online but you will need to have the necessary documentation and details ready, including a valid ABN, financial records and details of any additional cardholders.

Eligibility requirements

• Aged 18 years or over.
• Australian citizen or permanent resident of Australia.
• Applicants must have a valid ABN to apply and be registered for Goods and Services Tax (GST) if necessary.
• Applicants must have good credit history.

Documentation

• Applicants must provide contact details for the business and all card users.
• Applicants must provide valid identification including Australian Driver’s Licence or Australian Passport.
• All financial documentation will be required including income, revenue as well as tax returns from the previous two years.
• A list of any assets and liabilities, debts and expenses.
• Details for additional card holders.