How to get a business credit card in Australia?

There are several types of business credit cards, each of them has a lot of parameters. How to really get the card and to choose the one which will fit your business best? We will try to explain it in this article.

Summary

  1. Step one. What is a business credit card? 
  2. Step two. What are the types of business credit cards? 
  3. Step three. What credit cards fit your business? 
  4. Step four. How to compare business credit cards?
  5. Step five. How to apply for a business credit card? 
  6. Step six. Features of obtaining and use of a business credit card 
  7. Findings

A question of obtaining of business credit cards arises before each business: small and large companies, entrepreneurs and even startups. They are a good manner to simplify for the staff the use of funds for business purposes and to have a quick access to a loan facility. In the same time applying for a business credit card is not an easy task. The banks are not eager to provide the cards for all companies and use tricks to attract new clients. There are several types of business credit cards, each of them has a lot of parameters. How to really get the card and to choose the one which will fit your business best? We will try to explain it in this article.

Step one. What is a business credit card? 

Business credit cards are similar to personal ones or overdrafts and represent unsecured loan limits provided to a card by a bank or another financial organization to companies and entrepreneurs, which have ABN. The cards are issued in the name of the organization and can be granted in plural to its personnel, enabling them to make business expenses with the card. 

The main benefit of a business credit card is the convenience of the quick access to loan funds whenever your staff needs them. Also in such a way a firm or an entrepreneur can share business expenses from individual ones. Some cards provide their owners with additional benefits and perks, for example, discounts on air tickets from partner companies. 

But, on the other hand this type of a loan, probably, is the most pricy one. So, according to our investigation the interest rates can reach 22% or may be even higher. The percentage expenditures as a rule are calculated on a daily basis and are added to the banking fee, which can be got to known on your monthly statement. On the other hand, many business credit cards in Australia have a grace period from 40 to 55 days. So, you will not pay interest costs, if you redeem the liabilities during this time. 

Also some additional tariffs like annual fees or withdrawal commissions will be charged. You should remember that a minimum amount is to be paid each month. Also business credit cards can have some restrictions like only defined purchases permitted or without ATM withdrawals. 

If one summarizes, the benefits and limitations of business credit cards are: 

  • pluses: 
  1. Oversimplified accounting process
  2. Instant access to funds
  3. Expenditures management
  4. Tax deductions for one-time and periodic card commissions
  5. Cash flow control
  6. Safety functions
  7. Individual loan limits
  8. Responsibility selection
  9. Additional cards can be issued (as a rule till 99 cards)
  10. Building of a credit history
  11. Additional services and software for business
  12. Reward programs and other perks
  13. Selection of a card issuer
  14. Often a grace period is set 
  • minuses: 
  1. Cause inclination to overspending
  2. High banking commissions and interest rates
  3. Legal troubles can appear if you choose private liability option for a business credit card
  4. Only business expenses can be made
  5. Additional restrictions for a card can be set
  6. Demand a perfect credit history 

There are two types of liabilities for business credit cards: private and business. According to private liability the card owner is responsible for account management, for example, must ensure monthly repayment of the minimum amount and will be fined if this payment is missed. Also, in such a case in order to get a business credit card less company documents can be required but additional personal data, like information about the card holder’s revenue, expenditures and assets can be added. Opposite, according to business liability the company is chargeable the account management. 

Step two. What are the types of business credit cards? 

The choice of credit cards for business in Australia is lower than for individuals, but in spite of this banks propose several types of cards for applying for: 

Interest free and low rate business credit cards 

In accordance with Bankchart.com.au investigation these cards have the lowest rate, which fluctuating from 9,99 to 13,99 percentages annual, or a medium rate can be charged, but interest free days may be offered. At the same time low rate cards usually do not propose any privileges and bonuses like cash back, discounts on goods and services, insurance cover, etc. Thus, this type of cards fits for startups, small companies and entrepreneurs. 

Low fee business credit cards 

Like low rate ones, small fee cards also suit new and small firms because of lower expenditures.  According to our research the annual fee varies from 0 to 75 AUD while on other cards it can reach 300 AUD yearly. Low fee business credit cards also commonly do not have rewards and perks. 

Rewards and travel business credit cards 

These cards provide a large variety of different privileges, including discounts on commodities and services (air miles tickets due to Qantas and Velocity points programs, petrol, dining, hotels and others), cash back, extended insurance cover, free lounge zones at airports, etc. 

But such bonuses are “not free”, banks charges higher servicing commissions for these ones, so the annual fee varies from 40 to 300 AUD. Thus, these cards fit for medium and large companies with high credit cards expenses, which are enough to get bonuses on spent transactions to compensate larger banking tariffs. 

VIP business credit cards 

The cards are similar to rewards ones and provide their owner additional possibilities and discounts, like concierge, free flights, purchase protection, rebates on hotels and car rent, etc. VIP cards have a premium class, like MC World Elite, Visa Signature, Visa Black, Visa and MC Platinum, Visa and MC Gold and usually are issued for management staff of a company. The price of servicing is the highest - the annual fee can range from 150 to 300 AUD. 

Division by the credit cards brands 

Business credit cards in Australia can be provided by the world largest issuers, like Visa and MasterCard, and by also strong players, as American Express and Diners Club. All of them provide their card owner with worldwide access, safety, rewards from partners and other privileges. So, your choice usually should be based not on the card brand, but the credit cards parameters offered by the applied bank or financial organization. 

Credit and charge cards 

Business credit cards provide you a constant access to a credit limit. Only a minimum monthly repayment can be obligatory, a grace period can exist. In turn charge cards require paying all the liabilities each month, what makes them not so comfortable as business ones. 

Step three. What credit cards fit your business? 

To select a business credit card that fits your business needs most, the responsible manager should answer such questions: 

  1. What will be the card monthly expenditures?
  2. What credit cards are demanded? Does the management require higher class cards?
  3. How many cards are needed?
  4. What are the interest rates and bank commissions? Are there any hidden fees? Are any advertising introductory conditions applied?
  5. What amount of the available credit limit is provided? Has the proposed card a grace period?
  6. What are the other price and non-price parameters of the offer?
  7. What kind of responsibility is better to choose: private or business?
  8. Does the applied card provide any rewards and perks? Does your company use these goods and services on which bonuses are offered?
  9. What insurance cover is provided with the card?
  10. Is the book-keeping software compatible with the credit card accounting?
  11. Does your business need other services provided by the bank? 

It is very important to track all card transactions in order to avoid abuse by the staff or the bank - this can be made with your accounting software. Besides, you should issue credit cards only for employees you trust and who can always be contacted. 

Your choice also can depend on the card issue purpose. If the main need of the firm is credit financing, then a low rate and fee credit card without rewards programs will be a good choice for entrepreneurs and small companies. But such cards usually have no privileges and additional services. 

If you are a large company with international connections, then a business credit card with reasonable rates and commissions, a grace period or interest-free days , additional rewards and discounts (especially on air tickets), no exchange commissions and with extended insurance cover – will fit you best. 

Step four. How to compare business credit cards?

Interest rate is one of the most important parameters of business credit cards. There are several kinds of percentage rates, charged by the banks depending on how the card is used:

  • Purchases rate – according to our investigation varies from 9,99% to 20,74% annually in Australia and is charged in the case if the transaction was made with EFTPOS or Internet
  • Cash withdrawal percentage rate – can range from 10,65% to 21,74% yearly and is used in the case of money withdraw from ATMs or in banks offices
  • Balance transfer rate is applied in the event of transferring money from a new credit card to the previous one to zero its balance
  • Promotional interest rate – is temporal and low and is used by banks to increase sales

Besides interest rates Australian banks charge many fees and commissions, which can increase your expenses greatly, like:

  • servicing commissions – can range from 0 to 300 AUD per annum. Usually the tariffs are charged on a yearly basis, rarely – each month. The banks usually do not establish one-time fees, but seldom this tariff can occur
  • additional cards commissions – some banks do not charge fees for supplementary cards, but sometimes such services are paid 10 to 150 AUD yearly tariff
  • late payments fee – if you miss the maturity date payment, your bank will charge penalty commission, commonly varying from 9 to 20 AUD. Establish automatic repayments and this problem situation will not occur
  • over limit fee - if a cardholder goes over the credit limit, a 9-15 AUD penalty will be charged
  • currency exchange tariff – is charged if you make a purchase in a currency other than AUD with your card. The commission often is around 3%
  • cash withdrawal fee - this tariff occurs when a cardholder withdraws money from ATM or at banks offices. The highest commission is for operations at other banks ATM. Some business credit cards do not have withdrawal facilities

Except the mentioned above price parameters of business credit cards, the responsible manager should consider a lot of other features of the offered cards to find the one, which suits your company most, like: 

  • Credit card limit – is the maximum amount of the loan facility, the sum must cover a potential monthly lack of finances
  • Minimum monthly payment – often ranges from 2% to 3% of the card liabilities
  • Interest-free days – are a grace period during which no interest rates are charged if the cardholder redeems the card liabilities
  • Supplementary rewards and perks – additional services can be provided by your bank or its partners, like free discounts on goods and services (for example, air tickets), delivery and express shipment, extended warranty and price protection, free travel insurance and airport lounge access, etc.
  • Online banking – 24/7 business credit card account access usually is offered, and can have versions not only for a laptop, but also for a mobile. Also special management systems can provide you convenient and automated solutions for such purposes, like budget and cash flow calculation, expenses control, interaction with accounting programs and others
  • Cash back option – in fact the bank pays for discounts on goods and services purchased with the cards with such a feature, but on the other hand such cards commonly are more expensive
  • Introductory offers – banks can propose advertising conditions for new clients, like reduced rate and no annual fee, what is rather attractive. But you should remember that these tricks are temporal and after the promotional period the rates and commissions can increase greatly 

Step five. How to apply for a business credit card? 

In order to get a business credit card your staff and company must fit such criteria:

  • for personal:

Age – the potential cardholders must be aged 18 years and older

Residency – your personnel must be a national or a constant resident of Australia

Credit score – the staff needs to have a good credit history without bad debts

Annual income – its level per employee can range from 24 000 AUD to 80 000 AUD and higher depending on the card class

  • for business:

Australian Business Number – your company must have an active ABN

Current account – your firm must have one or to open it

Activity - your firm’s experience as a rule should be more than 1 year

Legal judgments – the business must have no sentences of unpaid liabilities

The bank will ask the responsible manager to fill in the forms and to provide such documents and data:

  • contact information of your staff and business
  • constituent documents of the firm
  • identification documents like passports or drivers’ licenses of the employees for which the cards will be issued
  • tax statements and other financial documents about your company revenues, capital, assets and liabilities, receivables and others
  • information about shareholders of your company and other beneficiary, executive personnel (president, executive and supervisory boards, revision committee, etc.)
  • others

The quickest way is to apply for business credit cards online. And if you are able to provide and to attach to the form electronic copies of documents for the mentioned above data – the bank decision can be made during several minutes. In the case of an affirmative solution, the business credit cards usually can be received during 5-10 business days. 

Step six. Features of obtaining and use of a business credit card 

In order to get a business credit card you need to have a good credit score. It is important to check it regularly, for example, on a yearly basis to know the state of your affairs. With a good score banks are not only more likely to open you a business credit card, but also to do it with a lower interest rate and a higher credit limit.

If your credit rating still needs to be better, you may apply to your bank for secured term loans or credit lines. In such a case you are more likely not only to receive financing, but also to improve the credit score if all the repayments are made till the maturity dates. Also receiving a business credit card with the smallest limit (for example, till 15 000 AUD) can be a decision.

For startups it will be more difficult to open such a card because of a lack of financial information and business experience. On the other hand some banking products are developed exactly for such types of firms. As it is likely that your startup will not gain any revenue during some period of time – low fee or free interest days business credit cards will be the best choice for you.

Working with business credit cards it is very important to control the card expenditures because of a human factor. It can be made with your accounting and other programs. Do not forget to find all the information and to appraise benefits of rewards business credit cards in order not to overspend because of their higher price.

If your employee lost his card it is very important to turn to the bank as soon as it is possible and to block it. Below are the phone numbers of some Australian banks to be phoned in such a case: 

  • Australia and New Zealand (ANZ) - 1800 033 844
  • Bank of Melbourne - 1800 772 266
  • Bank of Western Australia - 13 70 00
  • Bendigo and Adelaide Bank - 1300 236 344
  • Commonwealth Bank of Australia – 13 2221
  • Heritage Bank - 770-478-8881
  • National Australia Bank - 1800 033 103
  • George Bank - 13 33 30
  • Suncorp Bank - 1800 775 020
  • Westpac Bank - 1300 651 089 

Findings

A business credit card is a good way to separate business expenditures from personal and to enable the personnel to make business transactions and to have a quick access to bank loan funds. On the other hand do not overdo the loan function because such credits are the most expensive - the interest rates can reach 22% annually. Always try to redeem the liabilities during the grace period. Make out business credit cards only for employees to whom you have confidence and check their card expenditures carefully. Get all possible information about rewards of the proposed business credit card before applying for because not used by your firm privileges are not free.


Banking reviews to your e-mail!



Other guides