Do you need a business card?

Banks offer multiple types of credit cards for business owners, including: 

1. No frills, low-rate cards

Some banks offer low rate credit cards to help you keep business costs affordable and limit the amount of debt you can accrue. You may also find low introductory rates or discounted fees on some cards. However, these cards are considered more basic options, and there might not be bonuses available, like discounts on purchases, cashback, or insurance cover. 

As always, it’s worth comparing different credit cards, including the interest rate, benefits, fees and other costs to find one that best fits your requirements. 

2. Rewards and travel cards

These business cards may offer additional benefits, such as the ability to earn points towards rewards programs or frequent flyer programs, insurance cover, cashback, and lounge access at airports. However, these privileges come at a cost, often in the form of a higher annual fee.

3. Platinum business cards

With platinum business cards, you get several discounts and privileges, such as concierge services, hotel and car rental rebates, free flights, and more. Platinum credit cards are often issued to higher-earning businesses, and may come with a significantly higher annual fee.

Generally speaking, your company and the applicant will need a good to excellent credit score to qualify for a business credit card. A higher score not only improves your eligibility for a business credit card but might also help you qualify for a card that charges a competitive interest rate. 

You’ll also need an active Australian Business Number (ABN) and a business bank account. Most banks also require you to have been in business for at least a year and have no unpaid liabilities or legal rulings against you.

While applying for a business credit card, you’ll have to provide your business contact information, identity documentation, tax statements and other financial documents, and information about shareholders and other executive personnel.

Using a personal credit card for business expenses can become a huge hassle when preparing your Business Activity Statement (BAS) and reporting at the end of the financial year. Keeping your personal and business banking and credit cards separate will help you keep accurate records. It’ll save you time when planning and submitting taxes if you’ve kept all business and personal expenses separate.

Certain industries will experience seasonal revenue swings, and a business credit card will help support these businesses during the slower months. When your sales increase, the additional profit coming in can be used to repay the credit card balance. A business credit card can also be beneficial to meet one-time expenses like inventory build-up or the purchase of equipment needed to build and run the business.

If you opt for a rewards card, you may get the benefit of receiving points for every eligible transaction. These reward points can then be redeemed to help you pay for flights, make purchases, hotel bookings or car hire. Some card issuers also allow you to convert the rewards points on your business credit card to frequent flyer points.

It may be helpful to pay for the flights and accommodation of your employees who travel a lot through the business credit card, to help you accrue rewards points faster. You could even consider offering these employees a supplementary business credit card, so they can easily pay for all the relevant expenses incurred while travelling for business. This may then save them and you the time it would normally take them to ask for reimbursement of those expenses later.

You should consider multiple factors when getting a business credit card. Most people will likely look to the interest rate first and any other fees or charges. So, in addition to the interest rate, you need to check and compare charges like cash withdrawal fees, promotional interest rate, purchase rate, and balance transfer rate. 

Additionally, some card issuers will charge other fees and commissions like cash withdrawal fees, servicing commissions, currency exchange fees, additional card commissions, over-limit fees, and late payment penalties.

You’ll also have to check the credit card limit, minimum monthly payment, interest-free days and introductory offers, supplementary perks and rewards, and cashback offers to make your decision.

You will be best served by comparing multiple business credit cards in the market to ensure you’re getting one that best suits you and your business needs.