Compare business credit cards with no annual fee

How do no annual fee business cards work?

Some business owners may find it easier to be approved for a no-fee business credit card than for a standard card. Most of the features are the same as any other business credit card. Your eligibility and credit limit are based on your business credit score, and your business is liable for debts incurred. (Bear in mind that transactions made with a business credit card don’t qualify for purchase protection in the same way as with a personal card.)

Two of the main purposes of having a business credit card are managing your cash flow and earning rewards, bonuses and perks. Business credit cards with no annual fee also tend to come with fewer perks; but they can still give you the flexibility to spend money when you need to, even if you’re waiting for that outstanding invoice to be paid.

Here’s how: provided you clear your balance in full each month, almost all credit cards offer up to 55 or 56 days interest-free each billing cycle.

Say you buy some new equipment for your office at the start of the month, then at the end of the month receive your statement and bill. If you pay off the full balance within the timeframe specified on the statement (typically up to 30 days), you’ll have benefited from almost two months of interest-free credit on that purchase. You’ll usually pay less than you would with a business overdraft, too.

However, if you only make the minimum payment or otherwise pay off less than the full balance, you’ll be charged interest at the card’s standard rate.

What features do I need to consider?

Here are the main features to consider when comparing no-fee business credit cards.

• Interest rate. This determines how much interest you’ll pay each month on outstanding balances. If you’re planning to pay off your balance in full each month, you’ll pay no interest, so the interest rate will be less of a concern.
• Eligibility. Different cards will have different criteria, such as the number of years you’ve been trading, your turnover or the number of staff you have.
• Additional cardholders. With most business credit cards, you’ll be able to supply additional cards to employees, but check the relevant terms and conditions: some card providers will charge a fee for this, while others have useful features, such as the ability to set different credit limits for different cards.
• Other fees. There might not be a fee just for having the card, but will you be charged for non-sterling transactions or cash advances?
• Perks and bonuses. It’s relatively unusual to find business credit cards with rewards and no annual fee; so if you find a fee-free card that offers something you’d genuinely benefit from, it’s worth giving it serious consideration.
• Reporting tools. Some business credit cards come with apps and interfaces to help you track where your money’s going.

Is it ever worth paying an annual fee?

Many fee-charging business credit cards allow you to access bonuses that can save you more money than you spend on the fee, or at least make paying the fee seem worth it.

These perks can include the following:

• Cashback. A percentage of your spending is added back to your card as credit.
• Reward points. Some cards earn you points every time you spend, which can be redeemed with selected retailers.
• Air miles. This is a reward points system that allows you to claim discounts or free flights with certain airlines. This could be particularly lucrative if you do a lot of business travelling.
• Airport lounge access. Cardholders can relax in luxury in specific VIP airport lounges while they wait for their flights, at no extra cost to them.
• Complimentary insurance. Many business credit cards include, for example, complimentary travel insurance. Check whether it provides the cover you need before relying on it when you travel.
• Expense tracking systems. Some cards make it easy to track your expenses by providing detailed analytical software.

If you’re planning to use your business credit card frequently, it might make sense to pay a fee to access one or more of these perks. On the other hand, if you’re only planning to use your card for emergencies, or when extra credit is required, a no-fee option will almost certainly be more suitable.

Ultimately, you need to calculate whether the value of the rewards on offer will outweigh the cost of the annual fee.

Also consider whether and when you’ll actually have to pay the fee. If you get a business credit card from American Express, for example, you may find that the annual fee is waived in the first year; and you’re not obliged to keep the card for any given length of time. In fact, when you phone up to cancel a card, it’s not unheard of for the issuer to offer to waive the annual fee if it means retaining your custom.

Frequently asked questions

• How do I apply for a business credit card?

  Most business credit card providers allow you to make applications online or over the phone. You’ll need to provide identification, proof of ownership and financial details for you and your business.

• How do I find the best business credit card?

  It all depends on what your business needs and is eligible for. Are you looking for 0% intro APR on purchases, a balance transfer, or are you mostly interested in earning rewards? Our list of credit cards (above) highlights some of the best business credit cards with no annual fee; compare more business credit cards to get a broader idea of your options.

• Can I apply for a business credit card with a poor business credit score?

  You’ll be credit checked whenever you apply for a business credit card and your business credit score will play a major role in your perceived eligibility. You’ll need a reasonable business credit score (at the very least) to be approved for the best credit cards. However, there are some cards designed for applicants with a poor credit history.Our guide explains more.