Like personal credit cards, corporate cards are also issued by a financial institution. Compared to traditional loans, business credit card interest rates are slightly higher, as they offer a type of unsecured loan and hence, are riskier. However, some lenders do offer secured business credit cards that can come in handy, especially for businesses with little or no credit history.
RazorpayX Corporate Card was launched in 2020 exclusively for consistent users of Razorpay and RazorpayX, where we tried to address the needs for growing businesses. It was developed in association with SBM India, one of the biggest banks in the APAC region. But, there are a lot of questions about what a Corporate Card really is. This blog aims to answer those questions by describing different kinds of Corporate Cards.
Types of business credit cards
Revolve credit cards
It is a type of credit card that can be used repeatedly up to a specific limit. The basic requirement is that the account should remain open and minimum repayments should be made timely. You don’t have to pay the full amount from every bill. The remaining dues are carried forward with applicable interest without any penalty.
The credit amount, the balance, and the minimum payment amount keep increasing or decreasing based on purchases made or payments done. The typical duration for the repayment of the outstanding balance is one month. Additional interest can also be levied till the balance amount is repaid completely.
This is not exactly a credit card as one needs to load cash before using it. After loading cash, one can use this card until the balance becomes zero again. The great advantage of prepaid corporate cards is that they can be used at all places that accept credit cards.
It is a great way to easily pay for all the recurring and international expenses for a business and keep a track of team expenditure. However, keep in mind that not all prepaid cards are the same. Gift cards, also called prepaid cards, once redeemed, can not be reused.
These cards have stark differences when compared to revolving credit cards. One needs to settle all the outstanding balances at the end of each month. Again, there is no surcharge in case of timely payment. However, one might need to pay substantial fees if the payment is not cleared after the set period.
There is also an annual fee attached with the charge card. To get approval for a charge card, businesses must have a good to excellent credit score. Since there is a huge spending limit that comes with charge cards, businesses can leverage it for large purchases. Charge cards also typically have a very generous rewarding mechanism for the cardholders.
Difference between charge cards and revolving credit cards
|Charge cards||Revolve cards|
|Full amount is to be paid at the end of every month||Provisions for a minimum monthly payment|
|High annual charges||Low or no annual charges|
|No interest but a high penalty; and the full amount is needed to be paid at once||Higher rate of interest but no penalty in case of failure in the full repayment|
|Available for most businesses||Hard to get for a business|
There are various types of credit cards that are suitable for different kinds of business needs. To pick the most suitable one for your business, you should assess each of them on various parameters like benefits, flexibility, rate of interest, credit portfolio, and more. Carefully consider these criteria in advance while picking a business credit card so that it supports the growth of your business instead of hurting your creditworthiness.
The right corporate card for your business
RazorpayX Corporate Card is constantly evolving and trying to address the needs of businesses by providing a wide range of features from different kinds of cards. You can increase your spending by treating it as a prepaid card, but then you also get a revolving credit line, unlike other corporate cards. Exclusively available for top Razorpay users as of now.
The RazorpayX Corporate Cards are developed in association with SBM India, one of the biggest banks in the APAC region.