How Many Business Credit Cards Should I Have?

Multiple credit cards may double the rewards you get.

Updated: January 28, 2024
Matt Crabtree

Written By

Matt Crabtree

 

As a small business, you might want more than one credit card so that different workers can use them, to help cover costs, or to build your business's credit score.

You may need more than one credit card for your small business so that different staff may use them, spending can be spread out, and the company's credit history can be built. 

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Any company owner will tell you that the journey to success is fraught with challenges, but the payoff is well worth the effort. There is fierce competition among credit card firms, and each one is making tempting incentives to get our business. 

Why limit yourself to just one piece of plastic? Why not reap the rewards offered by a number of different banks? Multiple staff members could be added to a single card if desired. Ultimately, you shouldn't have more than you can afford to pay off on credit cards, but there is no “ideal” figure.

Important lessons:

  • One credit card is all a small company owner needs to get started; others may be added later.
  • Even though the credit limits on business credit cards are sometimes rather high, having more than one card available is always a good idea in case your company ever has to make a big purchase.
  • Having access to a variety of small-business credit cards allows you to tailor your rewards and perks to your specific needs.

Does a company benefit from having more than one credit card?

So let me put it this way: if keeping track of your finances becomes more cumbersome as a result of having many credit cards, then you should get rid of some of them.

Some fundamentals to keep in mind are as follows:

  • 💡 Every adult in the United Kingdom has a credit card; there are 59 million in circulation. It follows that many carry several cards.
  • 💡 If you have too many credit cards, it might hurt your credit score.
  • 💡 Your credit score might take a blow if you have no credit card history.
  • 💡 The number of credit cards you should carry is a personal decision that should take into account your income, expenses, and repayment capacity.
  • 💡 The services available across several cards: Think on what you need, and remember that you probably won't end up using more than one of each type.
  • 💡 Keeping the same credit card over an extended period of time has been shown to boost credit scores.

If you want to keep your company and personal funds separate, you must have a small business credit card for business use only. It's a logistical headache to try to entangle these two.

Separate small company credit cards might be opened for various types of expenditures. One card may be used for general company expenses like rent and utilities, while another could be used for things like petrol and airfare.

Having a credit card for each of your company's departments will help you keep track of your spending and avoid any confusion.

However, it is possible to have too many cards and have trouble keeping track of them all. It's bad for the company if payments are missed or cards are cancelled due to insufficient spending. Finding the optimal balance between spending too little and too much on too many things is a certain way to drive your company into the ground.

The number of applications I can make for business credit cards.

You can apply for as many business credit cards as you want, but be aware of those that need a hard inquiry, since several applications in a short period of time will lower your company credit score.

When deciding on the optimal number of credit cards for your company, you should prioritise those that provide valuable benefits. Your small company credit card should do more than just “house” your spending; it should actively aid your operations.

In addition to large spending restrictions, an ideal credit card would provide cash back, travel privileges, and a points' redemption system with attractive discounts.

Consider whether or not you want to provide your staff with credit cards, and if so, how many cards they will need. If you're thinking about getting a business credit card, find out how the company handles distributing cards to employees and setting spending restrictions.

Do business credit cards require a guarantee?

In most cases, a personal guarantee is unnecessary for larger corporations. Smaller firms and lone proprietors may have a poor company credit score since they haven't had time to establish a credit history.  

The applicant's personal assets may be at risk if the small company receives a credit card. Your personal credit may be affected if you are behind on payments, regardless of the success or failure of your company. 

Before applying for a business credit card, you should carefully consider whether or not your company has the financial resources to make the monthly repayments. Keep in mind that you could have to foot the bill if the company can't. You should probably start a savings account for situations like these. 

How many cards do businesses normally carry?

Many people now carry multiple credit cards. 

Nearly 59 million credit cards were in use in the United Kingdom as of May 2022, according to data compiled by trade group UK Finance. That's equivalent to almost one adult for every three. Due to the widespread use of credit cards, it is not uncommon for users to own several cards.

More than half of the £54m borrowed was subject to interest, and at the end of the month, more than 34 million of these cards still had sums that had not been paid in full.

It really depends on your individual situation whether you have one credit card or ten. As well as how and where you are spending your cash.

Some individuals have specialised credit cards for certain purchases. Someone who works for themselves could, for the sake of convenience, have all company costs on one credit card and all personal expenses on another.

Can you improve your credit rating by using many business credit cards?

You can establish a positive credit history for your company with almost any small business credit card.

You may improve your business's credit rating if you: 

  • Make purchases using your credit card. 
  • Make on-time monthly payments without fail.
  • Budget carefully and never go over. 
  • Don't spend greater than your earnings.

Your company's credit and reputation might take a hit if you don't pay your bills on time or if you go over your credit limit. 

Always use your credit card responsibly and never charge more than you can afford to repay. Or at least by paying the bare minimum each month towards the principal. Keep in mind that failing to do so might have a negative effect on your credit rating.

To what extent can a business gain from using a credit card?

Many advantages may be gained by using a credit card for your company, to supplement your normal business bank account

1. Economic power, short-term

If you don't have the cash on hand to make necessary company expenditures, a merchant cash advance may assist you out. But use caution; you'll want to be able to pay off your card in full before the end of the month. If you don't pay it off, interest will be added.  

2. Benefits

Rewards are common on small company credit cards, much more so than on personal cards. There are no international transaction costs, cash back rewards, travel insurance, and transferable points among these perks. 

Different cards and service providers provide different perks, so it's important to choose one that works for your company's needs.  

While sending staff overseas or while taking frequent business trips yourself, perks like travel insurance for free might be invaluable. Nonetheless, if you do all of your business in the United Kingdom, another perk could be more appropriate; the rules of your card can include an annual charge, so be sure to read them carefully. 

3. Benefits beyond those of a standard credit card

With a small business credit card, you may expect a bigger credit limit and better benefits. You may get extra cards from several service providers so that your staff can all have one. Having your company and personal funds operating independently is an additional perk. 

When it comes time to file your end-of-year taxes, this information will be crucial. Take out a credit card for your company and use the monthly bills to track your spending.

4. Opportunity to raise credit rating

Improving your company's credit score can open the door to business loans with more favourable terms and other types of finance. In order to establish a credit rating, it is necessary to use credit; thus, using a company credit card may be a good option. Be careful, however; mishandling your card might have negative consequences.  

Can you recommend any good business credit cards to me?

Many business owners get by just fine without carrying any cards at all, but you never know when you may need one.

Different varieties of credit cards exist because they are used for various purposes. In most cases, you won't need more than a single instance of each kind.

Credit cards with no interest rate spending

With a 0% purchase credit card, you may shop everywhere Visa is accepted. You may defer interest payments on accounts for anything from three months to two years. 

This essentially makes borrowing money interest-free for a limited time, but beware: any outstanding balances on the card after the introductory 0% APR period will be subject to very high interest rates (usually between 17% and 30%).

A 0% purchase card might turn out to be rather expensive if you aren't attentive about paying off your debt. The temptation to spend the “free” money during the 0% period makes it unwise to carry more than one of these in your wallet.

No APR debt transfers

Interest-free debt consolidation for anywhere from three months to three years is available when you transfer your current credit card balance (or overdraft bills) to one of these cards. However, there are often transfer costs of 3 percent or so of the total amount.

Card-based balance transfers

As with 0% purchase cards, if you don't pay off your debt before the initial period ends, you'll be hit with a high interest rate. Be careful to pay your balance in full each month to maintain your offer on many credit cards.

When deciding how many transfer cards to have, you should weigh the potential savings from avoiding interest on loans against the cost of making the transfer.

You should also be honest with yourself about your budgeting and repaying abilities. If you have an excellent track record of making all payments on time and paying off debt before the introductory period ends, you may want to consider applying for more than one.

If you have trouble making your payments on time and are unable to pay off your balances during the 0% APR period, you may want to reduce the number of balance transfer credit cards you use or look into a debt consolidation loan.

Rewards credit cards

Credit cards with perks like airline miles or cash back are available to consumers who can pay off their bills in full each month. Having a few rewards or cash-back cards isn't a terrible idea if you can afford to pay off the debt on many cards every month, but you should consider the advantages you want to earn for your spending.

Keep in mind that some of the cards with the highest rewards are premium cards that carry a rather high annual percentage rate or a large annual fee, so only add these cards to your wallet if you really want and believe you will utilise the perks they provide.

Credit cards with reasonable interest rates

If you only plan on using one credit card for all of your borrowing needs and you want to spread out your payments over a few years, a card with a low APR will come in handy. Borrowing at an APR between 6% and 12% is inexpensive, and there is little risk of your rate unexpectedly increasing.

This is a card you might maintain for a while to demonstrate stability in your financial life to potential lenders.

For credit building 

Cards for establishing or rebuilding credit are available for those with low credit ratings or no credit history at all. For this reason, the annual percentage rate (APR) on these cards is often rather high (about 30% to 50%), therefore you need to be cautious about paying back your balances or your debts might quickly get out of control.

You shouldn't have any credit-building cards if at all possible, and if you do, you should limit yourself to just one until your credit score improves.

How can I get a company credit card?

1. Choose the kind of card you want 

Some credit card rewards programmes, as we discussed previously, may be quite useful to a company. Make a decision on the incentive you want before you begin your investigation. Do you already have a personal loan? This might impact things. 

2. Research

Try looking online; review and comparison sites are great resources. Brokers and direct contact with lenders are further resources. It's possibly smart to amalgamate these research approaches since certain bargains are only accessible via lenders or brokers.

3. Make use of a checker system

You can save time and protect your credit by using an eligibility checker instead of filling out several applications. You can use them to get an idea of your chances of acceptance before even filling out an application. Make sure the data you provide is correct.

4. Apply formally

You'll be asked for some personal information as well as the address, name, and phone number of your company. Lenders often have additional questions about a company's size, location, trade-ins, and workforce numbers. Keeping this data close at hand is highly recommended.

It's important to have a company credit card that fits your needs as a small business owner. In fact, you may desire more than one card to maximise your financial security and take advantage of the many benefits associated with using such specialised goods. 

Review the features of several suitable business credit cards and apply for those that can help you reach your objectives.

Using multiple business cards: The Verdict

Multiple applications in a short period of time might lower your credit score since each one leaves a record of your personal information.  

A higher credit utilisation ratio may result from carrying a balance on more than one small business credit card. 

If you have a £1,000 credit limit on one card and put £800 on that card every month, your utilisation rate is eighty per cent

With two cards, that both separately contain a £1,000 limit, and monthly charges of £800, your credit utilisation percentage would be forty per cent.

Which is far reduced and could even improve your company's credit rating. However, it may be challenging to manage many company credit cards with different amounts going out at different periods of the month, which could cause failed repayments. 

Lenders might conclude that you are desperately in need of credit if you go for a lot of credit or open many cards quickly. Therefore, the first rule of credit is to only take out the number that is needed.

Related Guides:

Should I be using multiple business credit cards: FAQs

If you run a company, do you need more than one credit card?

Why not have more than one card?

Why is it beneficial?

If my credit score is low, how many credit cards may I have?

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