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4 types of credit card for SMEs

4 types of credit cards for SMEs

by Kim Latham - 4 April 2019


First things first. The difference between a regular credit card and a business credit card is that the card is registered in the name of the company rather than the individual.

This type of credit card is used by business owners and employees to make necessary purchases for the company and it is the firm’s responsibility to make the payments. It allows you to keep your company and personal spending habits completely separate and can also bring along certain benefits with it.

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There are hundreds of credit cards out there and choosing the right one depends on the type of business you’re in and what kind of benefits you’re looking for – cashback, air miles, rewards, or perhaps a low interest rate. Whatever you need, make sure you read the terms and conditions before deciding which is the best fit for you and your business.

  • Air miles credit cards  spend your money and get rewarded with air miles points. The more you splash the cash, the more points you’ll get. If you have regular business meetings in a specific country it’s best to choose a card with an airline that regularly flies there. Can you pay off the amount in full or do you need to spread the payments?  Bear in mind that if you need to spread payments you may end up paying more interest than the air miles are worth!
  • Cashback credit cards – cashback credit cards do what they say on the tin – they pay back cash every time you spend. The top card pays 5% cashback for the first three months, according to Money Saving Expert, Martin Lewis. The level of cashback you can earn depends on the individual card.

For example, you could receive a cashback yield of 0.5% for every £1 spent, meaning if you spent £100 on your credit card you would earn 50p of cashback. It is best to check whether a particular cashback card has any limit on how much you can earn over a certain period. Do your research on the available cashback cards by working out how much you’re likely to spend each month and compare the best incentives from cash back, air miles, and reward cards to make the most of the benefits on offer and to work out which one is best for you.

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  • Reward cards – spend your cash and get rewarded for it by earning points from what you spend on your card which translate into vouchers and gifts.  These are reward points for your spending. The reward rate will clearly depend on which card you choose although these days supermarkets and most major retailers are offering rewards to loyal customers.

Cards that offer reward points are often affiliated with a retailer or supermarket and offer higher reward points on money spent in store compared with that spent elsewhere. For example, you could earn one point for every £1 you spend in store, but only one point for every £2 spent at another retailer. Typically, reward points accrue over one month or three months and are then given to the cardholder in the form of a voucher.

  • Low or interest-free cards – your company won’t be charged interest on purchases for an agreed period of time with certain cards. Remember though, if you miss a payment you’ll potentially miss out on the initial low interest rate!

The type of credit card you choose should also depend on whether you’re a small business or a large corporation as clearly each has its own specific needs and a credit card can help maximize your requirements and help you save money on interest each year.

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Disclaimer: The advice provided here are our own interpretations and opinions. We have tried to simplify the main points to create this article and the information provided is for general informational purposes only. While we try to keep the information up-to-date and correct, there are no representations or warranties, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services, or related graphics contained in this eBook for any purpose. Any use of this information is at your own risk.