Beginner Guide to Business
Credit Cards
Business credit cards are one of the best ways to separate your business expenses from your personal ones, as they offer more rewards and other perks than standard corporate credit cards. However, selecting the right card can be a challenge because there are so many options available today. This comprehensive guide covers the most important aspects of business credit cards in New Zealand, helping you make an informed decision on which card will fit your needs best!
What is a business credit card?
Business credit cards are essentially company credit cards used to buy products and services for companies. Small businesses, startups and corporates often get them because they need quick access to capital, don’t want to use their personal credit cards or a bank loan, and they’re a safer option than taking cash out of an ATM.
There are several things to consider when applying for business credit cards in New Zealand: what size your business is, what sort of card you should apply for (rewards or cash back? Platinum or basic?), how much you can spend on your card each month, and how much security deposit you’ll have to pay. If you want to learn more about business credit cards in New Zealand, keep reading! We’ve broken down our guide into easy-to-read sections.
How does a business credit card work ?
This kind of credit card is designed for businesses. Business credit cards allow you to make payments for business-related expenses on your company’s credit account, which means they can be incredibly useful in reducing administrative overheads. In fact, cards like these were developed with small and medium enterprises (SMEs) specifically in mind. But how do business credit cards work? Do you have to pay an annual fee? Is it possible to apply for a business credit card even if you are a small business? What should I look out for?: There are many different types of business credit cards available, so it’s important to know what you should look out for when choosing one. For example, some business credit cards will offer additional rewards or perks that might not necessarily apply to all SMEs.
Who can use them?
Business credit cards are typically available to companies that have been incorporated for a period of time (depending on each provider, but usually between 6 and 12 months). In order to be eligible for business credit cards, you’ll need to show proof of your business by providing relevant documentation (typically statements and proof of payment for any business expenses). If you’re looking for a company credit card, some providers will ask whether you’re looking for personal or business use.
Types of business credit card
There are three different types of business credit cards in NZ, each with a specific purpose. Corporate cards can be used for any company expense, but with an APR of over 20% and a transaction limit of $10,000 per month, they’re more suitable for larger firms. Small-business credit cards fall somewhere between corporate and personal cards: you can pay any expenses under $10,000 with them and use them like a corporate card over that amount.
Finally, there are rewards credit cards designed specifically for small businesses; these offer cash back or frequent flyer points on purchases made through your company. The best ones also come with perks such as travel insurance and extended warranties on items purchased through your company. These usually have lower APRs than corporate cards—around 15%, which is still high, but better than 20%.
It’s important to remember that some banks will only give you one type of card—corporate, small business or rewards—so it pays to shop around. If you’re starting out, go for a small-business card; if you’ve been trading for a while and have big turnover, go for a corporate card.
What are the fees involved?
As a business owner, one of the most important aspects of using credit cards is to understand the fees involved. The biggest way banks make money from business credit cards is through interchange fees charged when you buy or sell something with your card. For every transaction there’s an additional fee tacked on by your bank, and it can be anywhere from 1% to 3%. Since small businesses tend to have a high amount of transactions relative to their purchases, these fees can add up quickly.
To help reduce costs, look for a low-fee card that doesn’t charge foreign exchange fees and has no annual fee. Annual fees are common among small business credit cards since they help offset some of the costs associated with providing rewards like cash back or frequent flyer points. If you don’t use these perks, however, paying for them each year might not be worth it for your business—and could even cost more than just paying for things as they come out of pocket.
How are they different from personal credit cards?
There are some key differences between business credit cards and personal credit cards. Most notably, business credit cards will allow you to be reimbursed for purchases made on your card. This can come in handy if you’re buying something on behalf of your company or an expense that won’t directly benefit you personally.
You can also earn rewards points by using a business credit card, which could result in huge savings over time if you use it frequently. Another difference is that business credit cards generally have higher interest rates than personal credit cards; however, they may offer additional benefits such as purchase protection.
How do I apply for one?: If you already own a business, then applying for a business credit card should be relatively straightforward.
When should you get one?
Business credit cards have a lot of benefits that make them worth getting, but you’ll only want to apply for one if you’re serious about making purchases on behalf of your business. If you’re not sure whether a card is right for you, here are some factors to consider How often do you travel? Do you often eat out or buy things online?
Are there any expenses related to your job that would be cheaper with a card? You might also want to compare business credit cards before applying for one. Some offer better perks than others, so it’s good to know what else is out there before signing up.
The best NZ business credit card options
The Mastercard Business Gold Card is one of two credit cards on offer from Kiwibank. While it doesn’t offer any special rewards for its holders, it does make up for that by having very low fees and great purchasing power.
The ANZ Business Platinum card is a high-fee card, but those who spend more than $10,000 annually can earn 1% cash back. For those looking to get their business off to a flying start, there are plenty of low-rate options available that provide competitive advantages over bank offers. Overall,
if you’re looking to take advantage of a business credit card in NZ then we recommend using an independent comparison website like Finder’s Compare Business Credit Cards page to do your research first before making any decisions.
Final thoughts
Before we get into which cards are best, let’s first cover how you should use credit cards when it comes to business expenses. The correct answer is: sensibly. Business credit cards can be useful if used correctly—but only for certain businesses. If you run a cash-heavy business or spend a lot of money on fixed assets, then there are plenty of benefits to making credit card purchases for your business.
However, it’s important to remember that these kinds of expenses require paying off debt over time and usually carry an interest rate that is much higher than most other kinds of borrowing, like personal lines of credit or home equity loans.
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