7 different types of credit cards for businesses
When you’re only starting out your business, it may seem like obtaining a corporate credit card is a faraway priority that you don’t need to concern yourself with yet.
But sooner rather than later, you’ll find that you have plenty of business expenses to tend to month after month. Managing all your spending will get difficult without a corporate card.
Before you choose a corporate credit card and commit to it, however, it’s a good idea to acquaint yourself with the types of credit card in India. Knowing the types of credit cards available to you will help you in choosing the right one to help manage your expenses.
When you search for the different types of credit cards, the first that’ll come to mind is likely unsecured credit cards.
As the name suggests, these cards involved getting unsecured credit from your card provider. The credit that you get for your unsecured credit card is determined by your financial records.
By just submitting your bank statements and other documents that the card provider requests, you can get a business credit card without any personal guarantees.
However, unsecured credit cards rely on a good credit score. If your business has been operating for over a year and you have good financials, you can avail of unsecured credit cards.
While credit cards are commonly unsecured loans without any personal guarantees or collateral, there are instances where you may not have adequate financial documentation to get an unsecured credit card.
In that case, your card provider may ask for a deposit or some other form of collateral.
In a way, the collateral will function as an added layer of security held against your credit limit. This is useful for businesses that need corporate credit cards but have not been established long enough to have the necessary documentation.
With secured credit cards, they can bypass some records and still get a card, albeit at the cost of a security deposit.
Out of the many different types of credit cards, travel credit cards likely have the most rewards in their particular niche.
From discounts and lounge privileges to frequent flyer programs, these cards are great for those who travel a lot and want to make the most of it.
Travel credit cards can be used for both personal and business travel, though it’s not advised to use a personal travel credit card for business travel.
For businesses that facilitate a lot of travel, it’s best to equip employees on business trips with corporate credit cards—ideally one with travel perks and rewards nonetheless.
Also, do check out our article on business travel and expense automation to know the challenges faced by organizations in managing T&E expenses and how automation can help solve the problems.
Rewards and cashback credit cards are types of credit cards that emphasize giving you rewards or cashback upon usage.
When you use a rewards or cashback credit card, you’ll earn a small percentage of your purchase back in the form of points or cashback. The rewards you get from these types of credit card in India are typically going to be higher.
Some providers also boast zero annual fees. However, as rewards are the main focus of these cards, you likely won’t get comprehensive spend controls, which could be detrimental to business usage.
Most rewards and cashback cards are personal credit cards. Therefore, they are best suited for personal use.
One thing that may draw people to charge cards compared to other types of credit cards is that charge cards don’t have a set limit.
This means that you can use charge cards for unlimited business expenses, which could be useful when you’re making many big purchases in a particular month.
But flexibility has its drawbacks, too. When you use a charge card, you’ll have to clear your entire credit bill at the end of your billing period.
So, if you’ve spent a large amount of money, you need to be prepared to pay it off entirely. Plus, it could be risky to equip all your employees with charge cards.
Unlike other types of credit cards, prepaid cards aren’t technically credit cards. To use one, you’ll have to top up and load your prepaid card first. The card expenses you make on it also can’t exceed the existing balance.
While they aren’t credit cards by technicalities, prepaid cards are included in the different types of credit cards because of their many use cases as a form of corporate cards.
When equipping employees with prepaid cards, there’s less risk since they won’t be able to overspend. However, you’ll have to ensure you have money on hand before the expenses happen, which could be a blow to your cash flow.
Balance transfer credit cards may seem complicated at first glance but at their core, they serve as a way for individuals with high outstanding debts to transfer some of their old card balances to a new card.
Most balance transfer credit card providers offer 0 percent APR for a new user’s first year, which means that users can save up on interest when paying back their debt.
Transferring your balance to a new card can be handy when paying high-interest rates on your current debts feels impossible. But even then, you’ll still have to make sure that you’re making timely business payments.
Ultimately, while searching through the different types of credit cards, you want to choose the best corporate cards for your business expenses—whether that is physical, virtual, or ideally, both.
With Volopay, card expenses will be much easier, faster, and safer. Get access to powerful features that will enable your payments to be hassle-free. Equip your employees with premium physical corporate cards for business travel and entertainment. Reimbursements can be a thing of the past now.
To make expense management even easier, you can also manage your online payments and subscriptions using an unlimited number of virtual cards with Volopay. Each vendor or subscription can have its own specific card.
All Volopay cards come with added layers of security, from data protection to secured payments to transparent expense reporting. You have access to a dashboard that will be linked with all your Volopay corporate cards, which will allow you to view all your transactions for better visibility.
The best part is that your dashboard also comes with in-built spend controls, meaning that you don’t have to worry about overspending or card misuse. Paired with an easy application process and the possibility of a high credit limit, Volopay cards are one of the best types of credit card in India for your business.