Debit and credit cards for your business

Making purchases with plastic cards is a convenient and flexible option for many businesses.

The different types of card available - from debit and credit to charge and purchasing cards - mean small-business owners don't have to carry large amounts of cash or a company chequebook and staff purchases can be effectively managed through the use of company credit cards.

Cards are widely accepted around the world and can help you keep close track of your expenditure. But with such a wide variety of cards on the market it can be hard to decide which is the best for you.

This guide sets out the advantages and disadvantages of using company or corporate credit and debit cards and gives advice on how to choose the right card for your business.

Types of card available

There's a wide range of plastic cards on the market for businesses, all offering different terms and conditions and ways to pay off your balance.

Credit cards allow businesses to make purchases up to a specified limit. They offer an interest-free period for purchases (where the balance is paid in full) before the bill has to be settled. You can repay a minimum amount each month, but you will be charged interest on the balance. If the bill is paid in full by the date specified on the statement, you incur no interest. Business credit cards can be issued to employees, with a spending limit you can approve.

There are hundreds of providers - most cards are Visa or MasterCards issued through a bank or building society.

Charge cards also allow businesses a period of credit - but they must be paid off in full each month. Expect to pay an annual fee, usually at least £35. They can be issued to as many key employees as you choose - some allow you to set spending limits on employees' cards.

Debit cards are issued in conjunction with a business current account and are a cheap substitute for cheques. Payments are deducted almost immediately from your account. As a result, spending is limited by your available funds and only signatories of a business account can use these cards. This offers a greater degree of control - you can only spend what's in your account - but lacks the same degree of flexibility as other cards.