Business credit card vs debit card: which should your company use?

The short answer

Use both, for different jobs. The debit card that comes with your business current account is the right tool for bills you want paid straight from the account and for anything where you would rather not involve credit at all. A business credit card, repaid in full each month by direct debit, is usually the better tool for day-to-day card spend: software, travel, supplies, advertising. It delays the cash leaving the account, can earn rewards, and on some cards avoids foreign transaction fees that most high-street debit cards charge.

The credit card only wins if you pay it off in full. Carry a balance and the interest will outweigh any rewards within weeks. If you cannot be confident of clearing the bill every month, stick with the debit card until you can.

I run a small UK agency and use Capital on Tap’s free credit card for day-to-day spend. Figures for other providers below are research from their own pages, checked on 15 September 2026.

Side by side

Cash flow and the float

When you pay by debit card, the money leaves the business account straight away (or within a day or two once the transaction settles). When you pay by credit card, it leaves when you pay the statement. Spending early in a statement cycle gives you the longest gap; spending just before the statement closes gives you the shortest. Across a month of spend, that works out as a few weeks of float on average.

Issuers describe the maximum differently. The British Airways Amex Accelerating Business, for example, says: “Up to 56 days interest-free on purchases if paid in full.” On Capital on Tap, no interest on purchases if you pay the statement balance in full by the due date. The exact number of days depends on the card’s statement date and payment date, so check your own.

For a small company, that float is worth having. It smooths the gap between paying suppliers and being paid by clients, and it keeps cash in the business account for longer, where it can sit in savings or cover a direct debit that lands before a client pays. It only works as a cash-flow tool if the statement is cleared in full every month.

Section 75 and chargebacks

On a personal credit card, Section 75 of the Consumer Credit Act makes the card issuer jointly liable with the retailer for purchases in the qualifying range. It is one of the best-known reasons to pay by credit card. Business cards are different. Section 75 applies to regulated credit agreements, and most business credit cards are not regulated that way. Capital on Tap’s FAQ says so directly: Section 75 does not apply to its business credit cards, because they are not regulated under the Act. Other issuers’ business cards are generally in the same position; if Section 75 matters to you for a particular purchase, ask the issuer before relying on it.

Chargeback is a different mechanism. It is run by the card schemes, such as Visa and Mastercard, and lets your card provider try to reverse a transaction when goods do not arrive, a merchant goes bust or a payment is taken in error. It is a scheme process rather than a legal right, it has time limits, and the outcome is not guaranteed. It is generally available on both debit and credit cards, so it is not a reason on its own to choose one over the other. Capital on Tap is a Visa card and handles disputes through the Visa chargeback process. One exception worth knowing: Bill Pay payments have no chargeback rights, because they are bank transfers rather than card payments.

Foreign transaction fees

This is where the choice of card can make the biggest difference to the bill. NatWest, Lloyds, HSBC and Barclays business debit cards all charge 2.75%, so paying a dollar invoice or a US software subscription on a typical high-street business debit card adds 2.75%. On £1,000 a month of non-sterling spend, 2.75% is about £27.50 a month, or £330 a year.

Some app-based business accounts do better on their debit cards. Monzo Business lists 0% on card spend. Starling Business lists 0%, Mastercard rate. Revolut Business charges on a sliding scale: interbank rate within a monthly allowance (Basic £1,000, Grow £15,000, Scale £60,000), then 0.6%; +1% outside market hours. Among credit cards, the range runs from 0% non-sterling transaction fee on Capital on Tap to 2.99% on American Express cards. Our list of business credit cards with no foreign transaction fee covers the options, and the FX fee calculator shows what your own spend costs on each card.

If you bank with Revolut, the Capital on Tap vs Revolut Business comparison looks at the pairing in detail.

Rewards

Business debit cards rarely earn anything. The rewards listed on card spend are: Monzo Business, none; Starling Business, none; Revolut Business, none on card spend. Rewards are paid for by card fees charged to merchants, and those are higher on credit cards, which is why cashback and points are mostly a credit card feature.

Capital on Tap pays 1 point per £1 (1% cashback) on card spend, with no annual fee. On £3,000 a month of card spend, 1% cashback is £30 a month, or £360 a year, for spending the business was going to do anyway. That is real money for a small company, provided none of it is given back in interest.

Building business credit

A debit card draws on money you already have, so it does not create a borrowing record. A credit card is a credit account: use it and repay it on time and you build a track record that future lenders can see. For a young company that may later want a loan, an overdraft or a higher card limit, that history has value. Missed payments work the other way. Our guide to building a business credit score explains what the agencies look at and how long it takes.

The risk of interest

The debit card’s great virtue is that it cannot run up interest, unless you dip into an arranged overdraft. A credit card can. Pay less than the full statement balance and interest accrues on what remains. Capital on Tap advertises rates as low as 13.86% APR (variable) and does not publish a representative APR; your rate depends on your personal and business credit history and the Bank of England base rate. The minimum payment is the greater of 10% of the balance or £100, and paying only that is the expensive way to use any card.

The simple defence is to set the repayment to full balance and let it run by direct debit. Capital on Tap lets you choose minimum, fixed amount or full balance, and offers Smart Repay: automatic Direct Debit or Open Banking repayments, including daily. Our guide to avoiding business credit card interest covers the rest.

Employee cards and controls

Most business current accounts can issue extra debit cards, though some charge for them or restrict them by plan. The catch is that every debit card draws on the same account, so a lost card or an overspend hits the company’s cash directly.

A credit card programme separates staff spending from the bank balance. Capital on Tap offers unlimited free employee cards with per-card limits, with limits per billing period or per transaction, plus instant virtual cards for subscriptions. Transactions sync to Sage, Xero, QuickBooks, FreeAgent and more. In my agency we use the card controls for staff and online spend, and the accounting sync takes care of much of the reconciliation. If you bank with Tide, note the distinction: Tide's own cards are debit cards on its business current account; it does not issue a credit card. The Capital on Tap vs Tide page explains how the two fit together.

Applying

A debit card comes with the business current account. There is no separate credit application and no personal guarantee for the card itself.

A credit card is a credit product. Expect a credit search, a look at the company’s turnover and filings, and, for most small limited companies, a personal guarantee from a director. Capital on Tap is for a Ltd, LLP or PLC, runs a soft search on your personal credit file when you apply, and requires a personal guarantee required. Limits go up to £250,000, though starting limits can be modest; mine was lower than I expected. If you are tempted to use a personal credit card instead, read business vs personal credit card first: it creates director’s loan and bookkeeping problems a business card avoids.

The setup we recommend

For most UK limited companies, the practical answer is a two-card setup:

• Business debit card on your current account, for direct debits, bills you want to leave the account immediately, and cash if you need it.
• Business credit card, repaid in full every month by direct debit, for day-to-day spend, staff cards, subscriptions and anything in a foreign currency.

You get the float and rewards of the credit card, the simplicity of the debit card, and you never pay interest. Choose a credit card that does not require you to move your bank account, so you can keep the current account you already have. Capital on Tap fits that role: £0 annual fee, 0% non-sterling transaction fee, 1% cashback and free employee cards, alongside whichever bank you use. It is not available to sole traders; sole traders will find alternatives in our comparison of every UK business card. If you are also deciding between a credit card and an Amex-style charge card, see business credit card vs charge card.