Oscar Murray
Business credit cards Vs Personal credit cards
As a business owner, you might feel like you're missing out on the advantages that come with personal credit cards. Especially when it comes to specialised travel credit cards that have additional features like lower costs, complimentary travel insurance and rewards.
You might also find that the rewards programs associated with personal credit cards fit your spending patterns more closely than the incentive programs of business credit cards. Or maybe it's too difficult to gain approval for the business credit card you've applied for.
Whatever the reason, using a personal credit card to cover business purchases is very common - and there’s nothing wrong with it. However, that’s not to say there aren’t any pitfalls to avoid. Like separating your personal and business expenses for accounting and tax purposes.
Luckily, some business credit cards can be synchronised with accounting software like MYOB or Xero™ for easy bookkeeping, tax and accounts reconciliation, which can make life much easier for you. Plus higher credit limits on your business credit card means you'll be able to make larger business expenses if you need to.
No matter whether you decide to use a personal or specialised business credit card, choosing the best credit card for your overseas trips and purchases is a great way to manage your finances and save money so you can focus on what really matters. Your business.
Pros and Cons: Business Credit Cards
Some business credit cards have specific eligibility criteria, such as minimum turnovers, which can make it difficult to get approval. This is usually the case for newly established businesses that have a limited credit history.
But, if you're an established business with a higher turnover, using a business credit card makes sense.
Saying that, it's not all bad news for start-ups. Some credit cards specifically targets start-ups and small business. The question is, are these cards good for overseas business use?
Well, we need to look at whether the foreign transaction fees and other standard charges offset any extra benefits and rewards from these credit cards in more detail.
Firstly, here are the pros and cons of having a business credit card:
| Pros | Cons |
|---|---|
 Control over spending for additional cardholders |
 High minimum credit requirements |
| Special business rewards for travel & merchandise |
Greater annual fee |
| Expense management report & itemised purchases |
High international transaction fees |
| Tax deductions on spending |
Minimum annual turnover requirements |
| Higher credit limits |
Pros and Cons: Personal Travel Credit Cards
For small businesses, especially start-ups, personal credit cards can be ideal for overseas use. But it's important to understand the difference between personal standard credit cards and travel credit cards.
There are plenty of benefits for having a travel credit card that offer attractive reward schemes. However, any gains you receive from these travel-related benefits can be offset by higher annual fees and interest rates.
We suggest having a look at the pros and cons for personal travel credit cards below so you can see if it's suitable for your needs.
| Pros | Cons |
|---|---|
| Attractive reward schemes available through travel credit cards |
High minimum credit for travel credit cards |
| Low or zero international transaction fees |
High annual fees |
| Complimentary travel and/or medical insurance offered with a lot of cards |
Extra cost for additional card holders |
| Frequent flyer points to help you get discounted or free flights |
High minimum monthly salary requirement |
| Lounge access often available |
Usually have to be a permanent Australian resident |
I've decided to go for a business credit card. Now which one should I use choose?
As a business owner, your cashflow will be front of mind. Particularly if you need to spend on overseas purchases and travel. There are two key considerations. Do you want a low cost credit card? Or is a rewards-based credit card better?
For a start-up, you might not have the cash available in the early days to get real value from reward programs. In this instance, a low-rate credit card will be a more cost-effective option.
On the flip side, many cards offer spending rewards, which can be a valuable incentive if you use the card frequently for overseas travel or purchases. These credit cards offer a range of other perks like fraud cover, travel insurance, access to airport lounge facilities, and ‘concierge’ services. While these credit cards may seem attractive, they are probably more expensive, with higher annual fees, interest rates and foreign transaction fees.
Other Costs
When it comes to choosing your credit card, interest rates are not the only costs you have to consider. Most cards have an application or an annual fee, and some may charge extra fees for additional cards or late payments.
For a low cost "no frills" credit card you can get introductory interest free days or lower annual fees, but you need to check whether this is offset by higher interest rates on purchases or foreign transaction fees.
However, if you decide you do want a rewards-based credit card, make sure you’re carrying a credit card that won’t erase all your reward earnings with a needless foreign transaction fee.
Either way, all your expenses may be tax deductible as a business expense.
Key Fees and Charges
All up, there are 8 main fees and charges involved with credit cards:
- Purchase Interest Rate
- Annual Fee
- Balance Transfer Interest Rate
- Cash Advance Interest rate and cash advance fee
- Late payment fee
- International Transaction fee
- Emergency fee: Lost or stolen and needs replacement
- Additional cardholder fees
Final Tips for Your Decision
You should only apply for a business credit card if you are confident you can pay back your loan. You need to be able to meet your minimum repayments, otherwise you'll be hit by hefty interest rates.
Most lenders offer a range of business credit cards aimed at different types of business, and some of these cards have specific eligibility criteria, such as minimum turnover. Make sure you understand your requirements before you apply for a business credit card, so you're not wasting time sending in all the relevant documents, only to get rejected from your application.
Whether you’re just starting out in business or are well-established in your field, here are five business and five personal credit cards we think you should consider using for your overseas travel or purchases. We have taken into account total fees, pros and cons, rewards and interest rates to come up with this list.
| Business Credit Cards | Personal Credit Cards |
| 1. Bankwest Business Low Rate MasterCard | 1. 28 Degrees Card |
| 2. American Express Business Explorer Card | 2. Citibank Simplicity Card |
| 3. American Express Gold Business Card | 3. ANZ Rewards Travel Adventures Card |
| 4. NAB Low Rate Business Card | 4. American Express Explorer Card |
| 5. ANZ Business Black Card | 5. Virgin Velocity High Flyer Card |
Whatever your reason for applying for a business or personal credit card, there is plenty of information online so we suggest doing your own research first before applying to make sure you get the right card for you.