Business Credit Cards

Updated 23 January 2019
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​Credit cards for business use have many benefits for cardholders, including Airpoints Dollars, free travel insurance, cashback, rewards and free additional cardholders. However, a card for one business may not always suit another. MoneyHub’s guide to business credit card looks at the latest offers, the fees, the benefits and any important terms and conditions. Our guide covers:

What is a business credit card?

A business or company credit card operates very similar to a personal credit card and can help a business manage different expenses. Business credit cards can be used by both business owners and employees and are either paid by the business or employee directly. Like a personal credit card, the business credit card has the name of the person using it as well as the name of the company printed on it.

You can use a business credit card just like you would a personal credit card, although some employers may have policies on what it can and can’t be used for. The benefits can include free travel insurance, Airpoints Dollars, cashback and rewards. 

A business credit card is covered by the Credit Contracts and Consumer Finance Act, so you have the same legal rights and obligations just like you do with a personal credit card. 
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Applying for a business credit card is similar to applying for a personal card, with some minor differences. 
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How do business credit cards work?

Business credit cards operate much like a personal credit card does. Every card has: 
  1. A credit limit: Every card will come with a credit limit, set by the issuing bank. This credit limit is the maximum you can spend on the card.
  2. An interest rate: The card will stipulate what the annual interest rate is for purchases and cash withdrawals. This can range from anywhere between around around 15% to as high as 25%. 
  3. An interest-free period: The card will offer up to 44 or 55 days of interest-free purchases. This means that if you buy something on 1 January, then payment will be due on February 14 or 25, depending on the terms of your bank. Your billing cycle will usually run by month, meaning a purchase made on 31 January would still be required to be paid the following month.
  4. The minimum monthly repayment: Once you have used the card and built up a balance to pay, you have to pay back a certain minimum back on the due date. This is either a dollar amount or a percentage (around 2% to 5%). What amount that remains unpaid after the due date is charged interest. 
  5. An annual fee: This can range from $0 to $XXX based on the business credit cards available today in New Zealand.
  6. Foreign currency conversion fees: If you make a purchase in a non-New Zealand Dollar currency, a fee will apply to convert the amount to New Zealand dollars.  
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Who are business credit cards designed for?

Each card has its specific eligibility requirements, but generally, you can apply for a business credit card if you meet one of the following criteria:
  • Operate as a sole trader
  • Own a company or are a partner in a partnership
  • Work and/or make purchases for a large company
  • What card you are offered and the size of the credit limit will depend on the size and financial capability of your business, and if you have an existing relationship with the bank. 
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How much does a business credit card cost?

The cost of a business credit card is more than just the annual fee. If your business relies on credit to operate, you will also need to consider the annual interest rate, over-limit and late payment fees. 
  1. Annual fees: Almost all business credit cards charge an annual fee, although from time to time offers do exist which waive the fee for the first year. 
  2. Interest rates: This is the significant cost of any credit card; a difference of even 5% between cards can make a $500 difference if around $10,000 is paid late every year. 
  3. Late payment and over-limit fees: If you are late to pay, have a direct debit bounce or go over your credit limit, charges will apply and be added to the credit card balance.
  4. Cash withdrawals: if you take out money from an ATM, a cash advance fee applies, as does an interest charge (which is usually above the standard interest rate). Interest is charged from the moment you make the withdrawal.
  5. Foreign currency conversion fee: If you use your card for any purchases in a foreign currency, you will pay between XX% and XX% to convert the balance back into New Zealand Dollars. This applies to any purchase - overseas orders, online purchases and an overseas business trip.

What types of business credit cards are there?

Different business credit cards offer different benefits. We outline key differences:
  1. Low interest and/or low fee – these are cards that position themselves as being affordable. If rewards or free travel perks are not a priority, generally the lower the interest rate, the better the card for a business (all other things being equal). 
  2. Cashback: Cashback benefits offer a certain percentage of your spend (usually 0.50% to 1.50%) refunded to your card every year. For example, if you spent $10,000 in 12 months, you would get back $200 if the card offered 1% cashback.
  3. Reward points: ASB and Westpac specifically offer these; you earn points for use on products and services. These typically are not as good value as cashback benefits. 
  4. Airpoints Dollars: This allows you to earn credit for travel on Air New Zealand based on what you spend, for example, 1 Airpoints Dollar per $75 spent. You can also earn ‘Status credits’ which help cardholders achieve frequent flyer tier benefits. 
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What are the benefits of a business credit card?

Business credit cards bring many advantages to any business, big or small. These can include:
  1. Interest-free spending: With banks offering between 40 and 55 days interest-free, making purchases with a business credit card can be more cost-effective than a business loan or overdraft facility.
  2. Separate finances: Having a business credit card means your work expenses can be separated from your own credit card. This makes it easier to make expense claims and manage your personal cash flow. 
  3. Boost business credit: Having one or more business credit cards feeds into your business's credit profile, with timely repayments reported to credit agencies. A history of paying off a business credit card will give you a credit profile and make obtaining business credit easier than without such history.
  4. Oversight over cash flow: Business credit cards let you monitor company expenses as they are incurred, allowing you to budget accordingly. 
  5. Protection from fraud: Many credit cards offer fraud protection meaning your company isn’t liable to pay for fraudulent charges. 
  6. Reward and travel benefits: Many credit cards offer travel rewards, cash back and free overseas insurance. 

Compare Business Credit Cards

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Applying for a Business Credit Card

If you plan to apply for a business credit card, there are a number of things to be aware of as some of these can affect how your business uses the card. 
  1. Credit checks and low credit limits – if your business is new, it will be harder to be approved. If you are, the limit may be as low as $1,000 until you prove your ability to repay balances on time.  
  2. Monthly, quarterly or annual fees – each bank charges their own fee, and the lowest fee credit card may not offer the best interest rate.
  3. MasterCard and Visa are more widely accepted than American Express – this is important if you want to avoid being rejected by suppliers and online payment merchants. 

5 Things to Know About Business Credit Cards

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