Almost half of small business owners don’t have a business credit card

New research by Capital on Tap has found that 46% of business owners don’t have a business credit card, with 54% of consumers actively avoiding them

The data also showed that 36% of business owners have never owned a business credit card, and 54% of consumers said they actively avoid using credit cards.

For business owners, cash flow management is the main purpose of a credit card, with 80% highlighting this as their reason for use.  Employee-related expenses such as payroll and employee perks rank as the biggest expenditure for small businesses, with an average of £1,902.90 spent each month on these costs. This is followed by raw materials (£1,707.50) and professional services (£1,429.40). Interestingly, businesses that have operated for over a decade invest more in professional services, spending an average of £2,076.70 per month in this area.

The survey also explores how different industries engage in credit cards, with the building and construction industry topping the list: nearly two-thirds (65%) of owners in this sector state they use a credit card. At another end of the scale, just 23% of personal care business owners currently use business credit cards.

The survey also explored how the general population uses credit cards and their spending habits. Brits rely on their credit cards the most for holidays and travel, spending nearly £4,670.40 a year on this.  The second biggest spending area is rent and utilities (£318.20), followed by insurance (£244.70).  Of all respondents, 53% have maxed out their credit card at some point, a figure that increases to 78% among 18-24 year olds.

However, the older generation appears to be more cautious, with just 31% of 65 or over maxing out their card and only 6% missing a credit card payment.

Despite the survey highlighting the advantages of credit cards, with 63% of business owners stating that perks and rewards are their main attraction towards credit, there is still a shared sense of uncertainty among both business owners and consumers. Specifically, 34% of business owners and 31% of consumers report that high interest rates and fees are a concern.

For consumers, overspending is the biggest barrier to owning a credit card, with 36% stating this as their main concern. This is followed by concerns about debt (33%).

While nearly a third of consumers (31%) prefer to pay upfront using methods like cash, bank transfers, or savings, this is less of a concern for business owners, as only 21% cite it as a reason for hesitating to use credit cards.

Alex Miles, Chief Operating Officer at Capital on Tap said “The key is to spend within your means. If you’re new to using credit, consider setting a lower credit limit to help manage spending. It’s also wise to integrate your card into your monthly budget and set up a direct debit to automatically repay your balance on time. That way, you stay in control without the stress.”

Barriers to credit card use	% of business owners who say this is a barrier	% of consumers who say this is a barrier
High interest rates or fees	34%	31%
Worried about overspending	27%	36%
Concern about accruing or accumulating debt	27%	33%
Prefer paying upfront using cash, bank transfers, or savings	21%	31%

 

Category of spending	Average monthly spend on credit card
Holidays/travel	£389.20
Rent or utilities	£318.20
Insurance	£244.70
Education or training (e.g. online courses, school fees)	£239.20
Home improvement or furniture	£237.10
Groceries	£233.40
Charitable donations	£196.80
Pet care (e.g. vet bills, food, insurance)	£181.60
Health and fitness (e.g. gym membership, medical expenses)	£178.90
Online shopping (e.g. clothing, electronics)	£157.80

 

Age group	% who have missed credit card payments in the past	% who have maxed out their credit card at some point
18-24	36%	78%
25-34	34%	69%
35-44	28%	68%
45-54	20%	55%
55-64	20%	40%
65 or over	6%	31%