Business Credit Cards vs Business Loans

Introduction

Both business credit cards and loans can provide valuable financing for your business, but they serve different purposes. Understanding the pros and cons of each option will help you make the right choice for your needs.

Detailed Comparison

Interest Rates

Credit Cards

• Higher rates (15-25% p.a.)
• Interest-free periods available
• Immediate interest on cash advances

Business Loans

• Lower rates (5-15% p.a.)
• Fixed or variable options
• Predictable interest costs

Flexibility

Credit Cards

• Revolving credit facility
• Use as needed
• Multiple purchases

Business Loans

• Fixed amount
• Structured repayments
• Less flexible usage

Costs

Credit Cards

• Annual fees
• Higher interest rates
• Additional card fees

Business Loans

• Establishment fees
• Lower interest rates
• No ongoing fees

Best Uses

Credit Cards Best For:

• Regular business expenses
• Travel expenses
• Small purchases
• Short-term cash flow
• Earning rewards points

Business Loans Best For:

• Large equipment purchases
• Business expansion
• Property acquisition
• Long-term investments
• Debt consolidation