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Business Credit Card

Discussion in 'Finance & Banking' started by jrc77, 18th Oct, 2009.

  1. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    I'm starting up a new small business and want to get a business credit card so that it easy to keep the expenses seperated from personal expenses. It is actually a trust with a corporate trustee. I always pay off credit cards every month - I mainly use them for the convenience, not because I need the credit. I am considering two options:

    1. Get a business credit card -

    Advantages
    The card isn't in my name - which will help with future loan approvals under my name (will be looking at buying new PPOR next year).
    Start building a credit history for the business?

    Disadvantages
    Might be difficult as I have only just registered the ABN. Not sure if banks will want the company to be operating for a while first (spoke to Westpac yesterday and they wanted six months of history at least).
    Limited rewards schemes on cards - not that I am intending to put huge amounts of expenses through the card.

    2. Get a second personal credit card which I only use for Business Expenses - and then pay off from the trust.

    Advantages
    Getting the card will be easy.
    Better rewards scheme.

    Disadvantages
    Another credit card in my name - which might make it harder to get a loan next year for our new PPOR.

    Does anyone have any other advantages or disadvantages I have missed? I will be registered for GST, so I don't know if there are any complications because of this?

    Any comments would be appreciated ...

    Regards,

    Jason
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    There's a couple of options:

    1. see if your bank offers a business VISA debit card

    2. have a look at Amex charge cards (not credit cards) ... I was able to get one for my Pty Ltd without too much drama - it's actually a "personal" card that has my business name on it. I am personally responsible for it (if the company goes bankrupt, I still have to pay the card off). It's a charge card so it shouldn't impact on your servicability at all (must be paid of in full at the end of the month). You'll need to go direct to Amex for this, banks only offer co-branded Amex credit cards, not charge cards.

    Pros: relatively easy to get; no servicability problems

    Cons: quite expensive; not accepted everywhere

    One of the loans I had for a property held in my trust insisted that I keep a $7,500 Gold VISA card or Mastercard with them to get the "professional package" discounts - so I used that for my trust for a while. It was a personal card that I set up to be paid off directly from the trust bank account and I only ever used it for trust expenses.

    As you correctly pointed out, a personal card like this might impact on your servicability for future loans. I have since sold that property, so I was able to close that credit card account and haven't replaced it. I would consider another Amex card, but most of the expenses I have in the trust (council rates, land tax, RevenueSA ESL, insurance, etc) all need to be paid by VISA, so it's not worth the expense of another Amex card.

    I just pay all the trust expenses on my personal cards and submit an expense claim to the trust quarterly.
     
  3. SavingsAccount

    SavingsAccount New Member

    Joined:
    6th Dec, 2009
    Posts:
    1
    Location:
    Bondi