How a business credit card could support before Christmas

The festive season can be a double-edged sword for UK businesses. On one hand, it’s the busiest time of the year for many – particularly if you’re in retail, hospitality, or ecommerce. On the other, it’s also when cash flow can become very tight. You might have stock to buy, extra staff to pay, and marketing campaigns to run, all while knowing that January and February can be quieter months. It’s a lot to juggle, and the last thing you want is to be caught short when the bills start rolling in.

This is where a business credit card can step in. As well as providing a flexible backup plan for your expenses, a credit card can provide vital breathing room when you need it most. So whether it’s covering upfront costs before the revenue rolls in or earning cashback on those big festive purchases, a business credit card could make the difference between a stressful holiday season and one where you’re in control.

Like any financial tool, success comes down to how you use it. Used the right way, a business credit card can help you manage cash flow, track spending, and even put a little back in your pocket with rewards. But used the wrong way, it could saddle you with mounting debt and stress come the new year.

In this article, we’ll explain how a business credit card can help you navigate the festive season, the advantages and risks to consider, and how to decide if it’s the right option for your business.

Key points:

• A business credit card could help you cover Christmas costs like stock, staffing, and marketing if used responsibly

• It could also allow you to earn rewards like cashback or travel points on your festive spending

• Funding Options by Tide can help when optimisation of working capital isn’t enough, offering access to business finance up to £20 million

Why is the lead up to Christmas such a crucial time for businesses?

For many businesses, the last few months of the year are make-or-break. Retailers can earn a big chunk of their annual sales in this period alone, while restaurants, hotels, and ecommerce stores can operate flat out with customers looking to celebrate.

But all that extra business comes with extra costs. You’re often ordering more stock, hiring temporary staff, and maybe even running promotions to stand out from the competition. And while the money’s coming in, it’s not always coming in fast enough to cover everything upfront.

Then, just as the festive rush is over, things often slow down. Invoices take longer to get paid, and suddenly, you’re playing catch-up. It’s a pattern that repeats year after year, and it’s why so many businesses turn to short-term solutions to bridge the gap. In fact, one in five UK SMEs use credit cards to help manage cash flow pressures.

With the right approach, you could use a business credit card to smooth out the bumps, rather than letting them derail your plans. Planning ahead, understanding the benefits, and avoiding the pitfalls can turn a potentially stressful headache into a manageable part of your seasonal strategy.

If you’re already thinking about how to prepare, you might find our guide on how UK businesses can plan ahead for Christmas useful.

How a business credit card could help over Christmas

If you have big expenses on the horizon but income isn’t keeping up, a business credit card could be a valuable lifeline. It gives you the flexibility to pay for what you need now and worry about the bill later. Many cards offer up to 42 days interest-free, which means you can make your purchases in November or December and pay them off once the revenue starts coming in.

But credit cards can do more than simply delay payments. A lot of business credit cards come with rewards that can actually put money back in your pocket. For example, if you’re spending thousands on inventory or marketing, a card with 1% cashback could earn you hundreds of pounds ready for the new year. Some cards even offer travel points or discounts on business services, which can be a nice bonus if you’re already planning to spend the money anyway.

If you employ a team of people, you could give them their own cards with spending limits, so you don’t have to deal with expense claims or reimbursements. Plus, most business credit cards integrate with accounting software like Xero or QuickBooks, which means you can track the spending in real time – no more digging through receipts or trying to remember what that mysterious transaction was for.

The exact benefits you receive will depend on the card you choose. If you’re not sure where to start, our guide to business credit cards breaks down the options so you can find the right fit for your business.

Using a business credit card responsibly could also help improve your company’s credit score. This can be useful if you ever need to apply for a loan or other finance in the future. Just make sure you’re paying off your balance on time.

The advantages of using a business credit card

A business credit card could make your life easier in all sorts of ways. Here are a few reasons why you might want to consider using one:

• Flexibility when you need it most: Cover upfront costs like stock, staffing, or marketing before the revenue comes in. Many cards offer up to 42 days interest-free, giving you time to pay off purchases after the festive rush.

• Rewards that add up fast: Earn cashback (often 1% or more) on everyday purchases – great for big spends like inventory or ads. Some cards also offer travel points, discounts on software, or vendor-specific perks (e.g. Slack and Dropbox). If you’re spending thousands in Q4, those rewards can offset costs come January.

• Simpler expense tracking: Ditch manual data entry and sync directly with accounting software like Xero or QuickBooks. Issue employee cards with custom spending limits, so you’re not chasing receipts or reimbursements.

• Security and protection: Fraud protection means you’re covered if your card details are stolen or misused. You can set up spending alerts to spot unusual activity straight away. And some cards offer purchase protection, so you’re covered if something goes wrong with a transaction.

• Build your business credit score: Using a business credit card responsibly could help improve your company’s credit history. A strong credit score makes it easier to access other types of finance (like loans or overdrafts) in the future. Unlike personal cards, business cards keep your personal and company finances separate, which simplifies your accounts and tax returns.

• Quick and easy access: Approval can take just a few days – much faster than a loan or overdraft. There’s no need to reapply each time you need funds, since your credit limit is there when you need it. This can be helpful for unexpected expenses or last-minute opportunities (e.g. bulk discounts from suppliers).

The risks of using a business credit card (and how to avoid them)

Business credit cards offer plenty of perks, but they come with risks if they’re not managed carefully. Here’s what to look out for and how to stay in control:

• High interest rates if you don’t pay in full: The average APR is around 20%, so carrying a balance can quickly become expensive. To avoid this, set up a direct debit to pay off your balance in full each month. If that’s not possible, at least pay more than the minimum to keep costs down.

• Temptation to overspend: It can be easy to treat your credit limit like ‘free money,’ especially when cash flow’s tight. But try to stick to a pre-approved budget for card spending, and review statements regularly to stay on track.

• Fraud and unauthorised spending: Multiple cards in circulation (e.g. for employees) can increase the risk of misuse. Use cards with spending limits and alerts, and freeze any lost or stolen cards instantly.

• Impact on your credit score: Late or missed payments can damage your business credit score, making future finance harder to get.

• Fees and hidden costs: Some cards charge annual fees, foreign transaction fees, or cash advance fees. Read the fine print before you apply, and choose a card with transparent terms.

• Not the best fit for large or long-term expenses: Credit cards are great for short-term costs, but not ideal for big-ticket items like equipment or renovations. For larger expenses, consider alternatives like a business loan or asset finance.

Alternatives to business credit cards

A business credit card isn’t the only way to manage your festive cash flow. Depending on your situation, you might want to consider one of these alternatives:

An overdraft can be useful if you need a short-term buffer, but the fees can add up if you’re using it for longer than a few weeks. A merchant cash advance is another option if you take a lot of card payments, but the costs can be high, so it’s worth comparing the numbers.

If you’ve got a big one-off expense, like new equipment or a refit, a business loan might be a more suitable choice. The interest rates are usually lower, and you’ll have a fixed repayment plan, which makes budgeting easier. And if you’re waiting on customer payments, invoice finance lets you unlock the cash tied up in your invoices without taking on debt.

The right option depends on your business and what you need the money for. If you’re not sure, speaking with a financial advisor can help you compare the options and find the right fit.

Practical tips for using a business credit card this Christmas

If you’ve decided a business credit card is the way to go, here’s how to make the most of it:

• Plan your spending: Before using your card, sit down and work out what you actually need to spend. That might include stock, staff wages, marketing, and any festive extras like a team party or customer gifts. Having a clear budget will help you avoid overspending and make sure you’re only using the card for things that will bring value to your business.

• Maximise your rewards: If your card offers cashback or points, make sure you’re using it for the expenses that earn the most. For example, if you’re buying a lot of stock, put it all on a card that gives you cashback. And if you’re travelling for business, a card with travel rewards could save you money on flights or hotels.

• Set up alerts: Most business credit cards let you set up text or email alerts for spending, payments, and suspicious activity. This is a great way to stay on top of things without having to log in every day.

• Pay on time: Set up a direct debit to pay off your balance in full each month, so you never miss a payment. If that’s not possible, at least make sure you’re paying the minimum amount to avoid late fees.

• Keep your receipts: Even though your card statements will show what you’ve spent, you’ll still need receipts for your accounts. Most cards let you upload receipts directly to your accounting software, which saves a lot of hassle when it’s time to do your taxes.

• Review your statements: It’s easy to overlook this when you’re busy, but checking your statements regularly helps you spot any errors or fraudulent transactions early. It also gives you a clear picture of where your money’s going, so you can adjust your budget if needed.

• Use employee cards wisely: If you’re giving cards to your team, make sure they understand the rules. Set individual spending limits and ask them to keep receipts for everything they buy. That way, there won’t be any surprises when the bill arrives.

Finally, don’t forget about January. It’s easy to get caught up in the festive rush, but remember that the bills will still be there when the decorations come down. Make sure you’ve got a plan for paying off your balance, whether that’s from your Christmas revenue or another source of income.

Find business finance with Funding Options by Tide

Whether you’re looking for a standard business loan, a short-term business loan, or something a little more specialist, like auction finance for property developers, we’re one of the leading names in business finance in the UK, having helped facilitate over £1 billion in finance to more than 20,000 customers.

Checking if you’re eligible is free, only takes a few minutes, and while a full application would impact your personal or business credit score, checking eligibility won’t. Just submit your details via the link below to find out if you could be eligible to borrow up to £20 million.

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FAQs

How quickly can I get approved for a business credit card?

You can often get a decision within a few days, especially if you apply online. Some providers even offer instant approval if you meet their criteria. Just make sure you’ve got your business details and financial information to hand when you apply.

Can I use a business credit card to build my company’s credit score?

Yes, as long as you’re using it responsibly. That means paying your bills on time, keeping your balance low, and avoiding late payments. Over time, this can help improve your business credit score, which can make it easier to get finance in the future.

How do I choose between cashback and travel rewards?

It depends on how you spend. If you’re buying a lot of stock or equipment, cashback could be the better option. But if you often travel for business, a card with travel rewards could save you money on flights and hotels.

What’s the best way to track expenses across multiple team members?

Most business credit cards let you issue individual cards with custom spending limits. You can also set up alerts and integrate your card with accounting software to keep everything in one place.

What if I can’t repay the balance in full by January?

If you’re struggling to pay off your balance, contact your card provider as soon as possible. They might be able to offer a payment plan or suggest alternative finance options. The worst thing you can do is ignore the problem as this will make it more likely to get worse.

Are there business credit cards with no annual fees?

Yes, there are plenty of fee-free options out there. Just make sure you’re comparing the interest rates and rewards as well, so you’re getting the best deal overall. You can find a range of options in our business credit cards guide.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.