A guide to business credit cards

Whether to get a small business credit card - and which one to apply for - is a matter of balancing features against interest and fees, and securing the best business credit card offer.

Credit card features and benefits

• Accounting: credit cards can consolidate business expenses into one monthly payment, it's simple to monitor expenses - via multiple cards - with monthly and online statements.
• Cash flow: if you're constantly juggling immediate expenses and uncertain payments, small business credit cards can tide you over - so long as the debt isn't only increasing.
• Credit card rewards: paying for small business expenses via credit can add up to a valuable amount of rewards - especially handy for company travel.

Credit card interest and fees

• Most business credit cards charge higher fees than personal accounts, although they're tax deductible.
• Corporate credit cards typically have higher interest rates than the best low rate personal credit cards, so you'll want to keep ongoing debt to a minimum (or look at some small business loans).
• Business credit card rewards typically involve large annual fees, so you'll want to get rewards value for fees.

Business credit card - or personal?

Many small business owners start out by using their personal credit card for business expenses. But is that the right call?

Advantages include:

• Minimising fees (eg, annual fees) through fewer accounts
• Better interest rates
• Avoiding the pitfalls of multiple accounts - such as fees for missed payments
• Maximising rewards
• Avoiding the hassle of applications and credit checks

Disadvantages include:

• Hassle of separating personal from business expenses
• Difficulty of proving business expenses to tax office
• Personal credit ratings can be damaged (if you miss payments or exceed your limit)

While it may be easier and more cost effective to use a personal credit card for business expenses when you're setting up - for ease, cheap interest rates and fewer fees - the accounting difficulties in the longer term will probably make a small business credit card desirable once you're up and running.