In the fast-paced world of business, having the right tools can significantly impact your company’s efficiency and growth. One such indispensable tool for limited companies is a business credit card. Not only does it help streamline expenses, but it also offers various perks, rewards, and financial management features. In this blog, we’ll delve into two of the most popular options: Capital on Tap and American Express, comparing their benefits, drawbacks, and suitability for different business needs.
Why Your Limited Company Needs a Business Credit Card
Before diving into the specifics of Capital on Tap and American Express, let’s explore why having a business credit card is crucial for a limited company:
- Separation of Personal and Business Expenses: Keeping your personal and business expenses separate is essential for accounting and tax purposes. A business credit card helps maintain this separation effortlessly.
- Improved Cash Flow Management: Business credit cards offer short-term financing options, enabling companies to manage their cash flow more effectively by paying for expenses upfront and settling the balance later.
- Build Business Credit: Using a business credit card responsibly can help build your company’s credit score, which is beneficial for future financing needs.
- Rewards and Perks: Many business credit cards offer rewards such as cashback, travel points, and discounts on business-related purchases, which can lead to significant savings.
- Expense Tracking and Management: Most business credit cards come with expense tracking tools that simplify accounting and provide insights into spending patterns.
Capital on Tap Business Credit Card
Overview: Capital on Tap is a business credit card designed specifically for small to medium-sized enterprises (SMEs). It focuses on providing flexible credit limits and straightforward rewards, making it a popular choice among limited companies.
Key Features:
- High Credit Limits: Capital on Tap offers credit limits up to £50,000, catering to businesses with varying capital needs.
- Simple Rewards Program: Earn 1% cashback on all business purchases, which is automatically credited to your account.
- No Annual Fees: There are no annual fees for the basic card, making it an economical choice for budget-conscious businesses.
- Flexible Repayment Options: Choose to pay off your balance in full each month or spread the cost over time with manageable interest rates.
- Integration with Accounting Software: Seamless integration with popular accounting software like Xero and QuickBooks, helping businesses keep their books up to date effortlessly.
- Multiple Cards for Employees: Issue additional cards for your employees at no extra cost, with customisable spending limits and real-time expense tracking.
- Eligibility Requirement: To qualify for a Capital on Tap business credit card, your company must demonstrate a minimum annual turnover of £24,000. Additionally, you need to be an active director or majority shareholder in the company with no outstanding County Court Judgments (CCJs) against you or the business within the past 12 months.
Pros:
- High credit limits suitable for SMEs with substantial capital needs.
- Simple and transparent rewards program.
- No annual fees for the basic card.
- Easy integration with accounting software.
- Flexible repayment options.
- Quick and simple online application process.
Cons:
- The cashback rate, while straightforward, may be lower compared to other premium cards.
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American Express Business Credit Card
Overview: American Express (Amex) is a globally recognised financial services brand known for its premium credit cards and excellent customer service. Amex offers a range of business credit cards tailored to meet different business needs.
Key Features:
- Membership Rewards Program: Earn points on every purchase, which can be redeemed for travel, gift cards, merchandise, or statement credits. The point earning rate varies by card type.
- Travel Perks: Enjoy a variety of travel-related benefits, including airport lounge access, travel insurance, and exclusive discounts on flights and hotels.
- Expense Management Tools: Access to detailed spending reports and expense management tools, helping businesses track and control their expenses.
- Extended Payment Terms: Some Amex business cards offer extended payment terms, allowing businesses to manage their cash flow more effectively.
- Global Acceptance: Amex cards are widely accepted internationally, making them ideal for businesses with overseas operations.
- Dedicated Customer Service: Renowned for its exceptional customer service, Amex provides dedicated support for its business cardholders.
Eligibility Requirement: While American Express does not explicitly state a minimum annual turnover requirement like Capital on Tap, the application process may still involve a thorough review of your company’s financial health. This review could include evaluating your business revenue, credit history, and overall financial stability to determine your eligibility and credit limit. Typically, a strong personal credit score (around 670 or higher) is required, along with registered business information, financial details, and personal income and assets.
Pros:
- Comprehensive rewards program with flexible redemption options.
- Extensive travel benefits and perks.
- Advanced expense management tools.
- Widely accepted globally.
- Excellent customer service.
Cons:
- Annual fees for premium cards can be high.
- Rewards programs can be complex and vary significantly by card type.
- Some merchants may not accept Amex due to higher transaction fees.
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Comparing Capital on Tap and American Express
Eligibility and Application Process:
- Capital on Tap: Requires your business to be a UK-based Limited Company (Ltd) or Limited Liability Partnership (LLP) with a minimum annual turnover of £24,000. The application process is straightforward and quick, taking only about 2 minutes online with instant approval decisions in most cases.
- American Express: Has more stringent eligibility criteria that vary by card type. The application process is more extensive, requiring detailed information on your business operations, financial statements, ownership structure, and personal finances. Approval can take 1-2 weeks as Amex thoroughly reviews your profile.
Rewards and Benefits:
- Capital on Tap: Offers a straightforward 1% cashback on all purchases, along with 10,000 bonus points for spending £5,000 in the first 3 months on the Business Rewards card.
- American Express: Provides a more complex but potentially more rewarding Membership Rewards program, with points redeemable for a variety of benefits. Different cards offer various perks, such as the Business Platinum Card’s travel benefits and the Amazon Business Card’s Amazon-specific rewards.
Fees:
- Capital on Tap: No annual fees for the basic card; the Business Rewards Card has a £99 annual fee. No foreign transaction fees.
- American Express: Fees vary widely depending on the specific card, ranging from £0 for basic cards up to £650 for premium cards like the Business Platinum. Most cards have no monthly fees, but some have foreign transaction fees around 2.99%.
Interest Rates:
- Capital on Tap: Interest rates range from 15.2% to 35.15% APR based on creditworthiness.
- American Express: Most cards are charge cards with no preset spending limit, requiring the balance to be paid off in full each month, hence no interest rates.
Global Acceptance:
- Capital on Tap: Uses Visa, widely accepted globally.
- American Express: Accepted at fewer locations internationally but improving, with high acceptance rates in the UK.
Which Card is Right for Your Limited Company?
Choosing between Capital on Tap and American Express depends on your business’s specific needs and priorities:
- For Simplicity and Cost-Effectiveness: If your business values simplicity, straightforward rewards, and minimal fees, Capital on Tap is an excellent choice. It’s particularly suitable for SMEs focusing on domestic operations. Ensure that your business can meet the £24,000 annual turnover requirement to qualify.
- For Comprehensive Rewards and Global Reach: If your business benefits from extensive travel perks, a versatile rewards program, and has international dealings, American Express is the better option. Despite the higher fees, the rewards and benefits can outweigh the costs for businesses that can maximise these features. While Amex doesn’t explicitly require a minimum turnover, your financial health will be assessed during the application process.
In conclusion, both Capital on Tap and American Express offer compelling business credit cards tailored to different needs. Assessing your company’s spending habits, operational scope, and the value you place on rewards and perks will help you make the best choice for your limited company.
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