Exploring Different Types of Business Credit Cards

Woman Holding Capital On Tap Card To Camera

As a small business owner, having access to capital and managing cash flow are critical to the success and growth of your company. One effective way to support these needs is by getting a business credit card that is suited to your specific expenditures and financial goals. But with so many options out there, how do you choose the right card for your small business? In this article, we’ll explore the main types of business credit cards and key factors to consider so you can find the best match.

Key takeaways

  • There are lots of different types of business credit cards, like basic ones, rewards cards, and cards for specific industries, so you can pick what suits your business best.
  • Find out how to choose wisely by thinking about rewards, fees, and easy tricks to make your card work harder for you with cashback and perks.
  • Explore simple ways to make your business thrive with the right credit card, whether it's about saving money, getting rewards, or managing expenses wisely.

Traditional business credit cards

Traditional business credit cards operate similarly to personal credit cards but are designed specifically for companies' spending and finances. They come with distinct credit limits and statements, separate from the business owner's personal finances. Business owners can usually set spending permissions and limits for employee cards issued under business accounts.

These cards tend to not have rewards programmes, avoiding annual fees. Their interest rates also align with those of personal credit cards. The simple structure of traditional business cards makes them straightforward to manage with minimal costs. They suit business owners seeking to clearly track expenditures without worrying about points systems. However, the lack of rewards means missing out on potential savings from cashback or travel perks.

Rewards-based business credit cards

Rewards business credit cards allow cardholders to earn points, miles, or cashback on purchases, much like personal rewards cards. Popular redemption options include cash, travel, gift cards, and more. These cards provide a way to offset larger business costs by redeeming earned rewards. Business owners can also use points towards future work-related travel expenses like conferences, client meetings, or employee incentives.

For those focused on shrinking expenses, it helps to pay close attention to categories with frequent spending like shipping, tech, office supplies, etc. Tips to maximise rewards include setting up recurring bill payments on the card and putting large one-time business purchases on it when possible. However, higher reward rates often accompany higher annual fees. So it's important to estimate whether the value of points earned outweighs the yearly card cost.

Capital on Tap offers a free business credit card with straight 1% cashback on all card purchases. You can also redeem your points as cash to your business bank account, gift cards, flights, hotels, and more. 

Cashback business credit cards

With cashback business credit cards, users receive reliable savings from a fixed percentage of cashback on expenditures. Typical cashback rates range from 0.5% to 1.5%, which can yield considerable long-term savings. These cards provide easy to understand rewards compared to more complex tiered bonuses. Spend can be estimated out to calculate total expected cashback based on a company's forecast annual expenses.

Cashback funds come as statement credits, allowing businesses to reinvest the earnings. One approach to maximise this cashback is to route as many expenses as possible through the card to stack rewards. For simple and steady cashback, a no category-restrictions card that provides across-the-board rewards makes sense for many small businesses.

Travel business credit cards

Travel business credit cards cater specifically to people and teams travelling frequently for work. Offerings and benefits may include travel point sign-up bonuses, additional points on expenses like airfare and hotels, and complimentary elite status with select hotels or airlines.

For entrepreneurs and teams constantly booking flights, these cards can subsidise some of that expensive travel through rewards redemptions. But before pursuing a dedicated travel card, it helps to estimate yearly expenses on flights, hotels, etc. to determine if hitting the cards' bonus spending tiers seems realistic. These travel cards also tend to have heftier annual fees. For businesses with more occasional or limited work-related travel, a no fee cashback card used just for booking may be the better option.

The Capital on Tap Business Rewards Card presents a practical option for businesses aiming to earn Avios points through their regular spending. The flexibility to redeem points for Avios provides versatility beyond just flight rewards, extending to hotels and other travel-related expenses. For businesses seeking a down-to-earth approach to travel rewards without hefty commitments, this card serves as a useful tool in the realm of business credit cards.

Secured business credit cards

For early-stage entrepreneurs still establishing personal and business credit, secured credit cards allow an opportunity to qualify when you may not with traditional cards.

Secured cards require a cash security deposit upfront that becomes your spending limit. Using the card responsibly and making monthly payments builds your credit history. After about a year of on-time payments, credit scores typically improve allowing upgraded cards and lines.

The key benefits a secured business credit card offers are:

  • Ability to qualify without long credit history
  • Ideal for those recovering from financial struggles
  • Chance to demonstrate responsible usage and payments
  • Builds business credit profile alongside personal scores

While not packed with rewards, secured card spending and payment patterns give issuers confidence in your reliability. Pay your balance on time and your credit limits - along with approval odds - will grow over time.

Charge cards for business

Charge cards represent an additional category of business credit cards focused on short-term financing flexibility rather than extended credit. With charge cards, balances must be paid in full each billing cycle instead of allowing revolving debt that carries over.

Key attributes of business charge cards include:

  • No preset spending limit allowing big purchases
  • Designed for convenience and cash flow flexibility
  • Interest-free grace period before full payment due
  • High credit lines subject to application review

For qualified applicants, the main advantage is the ability to float major purchases for a month or longer depending on the grace period offered before payment comes due. This gives breathing room over tying up huge sums in a checking account.

As the name suggests however, charge cards require discipline - you must pay in full or risk account closure, late fees, etc. But for financing large essential buys before accounts receivable comes in, they can provide useful liquidity.

Speciality business credit cards

In addition to basic cashback and travel rewards cards, some credit cards are tailored to specific industries and business types. Here are a few examples:

  • Fuel cards: Fuel cards give extra rewards or cashback when you buy fuel. These can save transportation businesses a lot of money.
  • Retail store cards: Retail cards give better rewards at supermarkets, restaurants, shops, and other retail businesses. This encourages customer loyalty.
  • Construction cards: Construction cards give more cashback at hardware stores and timber merchants. This suits contractors who have to buy supplies regularly.
  • Professional cards: These cards make travel cheaper for consultants, lawyers, advisors, and others who attend conferences and meetings. They get more points on flights, hotels, and event tickets.

The industry-specific cards can save a lot if your spending matches the extra rewards they offer. But be careful not to overspend just to get more points. Also watch out for high annual fees. Compare to normal business rewards cards to pick which card best fits your business and spending.

The bottom line

When you’re a business owner, the ability to separate personal and business finances is crucial. Business credit cards can simplify accounting, reporting, taxes, and cash flow management in ways a personal account can complicate.

Yet not all cards are created equal. Review your latest monthly and yearly expenses, credit needs, and financial objectives to determine the ideal type suited for you and your business.

As your business evolves, revisit and potentially upgrade your choice to align with changes in spending power, credit limits, and reward preferences. Capital on Tap offers a tailored business credit card that makes it easy to scale up as your company grows.

The Capital on Tap Business Credit Card provides straightforward savings through 1% cashback on all card purchases. This allows you to estimate potential earnings based on projected annual spending.

Additional benefits include:

  • 42 days interest free on purchases
  • Issue employee cards for free
  • Redeem points as statement credit, cash to your bank account, gift cards or Avios if you upgrade to Business Rewards

If you want a simple, reliable business credit card card to reinvest rewards into your business, apply for the Capital on Tap Business Credit Card now.

This post does not constitute financial advice.

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