A business credit card can be a useful tool when it's used carefully by someone with a deliberate plan. It can help smooth cash flow, cover short term costs and keep spending separate from your personal finances. But it can also cause problems if it’s treated like free money.

This guide explains how business credit cards work, what they’re good for and what to think about before getting one.

What is a business credit card?

A business credit card lets your business borrow money up to an agreed limit and repay it later. You use it for purchases in the same way as a personal credit card, but it’s set up for business spending.

The amount you owe doesn’t leave your bank account straight away to pay back what you've borrowed. Instead, you get a statement and choose whether to pay it off in full or spread the cost over time.

How business credit cards are used

Business credit cards are often used for everyday expenses that add up over the month. That might include travel, fuel, software subscriptions or supplier payments.

They’re especially useful when costs land before income comes in. Rather than dipping into reserves, the card covers the gap and you repay it straight away once cash flow catches up.

Some businesses also use them to give team members controlled access to spending.

How they’re different from personal credit cards

A business credit card is designed around business use, not personal spending.

That usually means:

• Higher credit limits
• Spending reports and summaries
• Extra cards for employees
• Clear separation between business and personal money

For limited companies, the card is often in the business name. For sole traders, approval may be based on personal credit history, even though the card is used for business costs.

Costs and interest to understand

Business credit cards come with charges that are easy to overlook.

It’s important to check:

• The interest rate on balances
• Any annual or monthly card fees
• Fees for cash withdrawals or foreign spending
• Charges if you miss a payment

Paying the balance off in full each month avoids interest, but that only works if cash flow allows.

Credit limits and responsibility

Credit cards can feel flexible, but they’re still a form of borrowing. Limits are set by the provider and can change over time. Missed payments or heavy use can affect your credit profile, whether that’s tied to the business or the owner.

Using a card responsibly means knowing what it’s for and sticking to that purpose.

When a business credit card makes sense

A business credit card can work well if:

• You have regular, predictable income
• You want to smooth short term spending
• You pay the balance off consistently
• You want clearer tracking of expenses

If you’re carrying a balance most of the time, it may be worth looking at other finance options instead.

Business credit cards aren’t about stretching your business. When used well, they’re a practical way to manage timing, not a solution to bigger cash flow problems.