A business credit card, just like a personal credit card, provides access to a revolving line of credit. This means that the business can use a credit facility up to an agreed amount. At the end of the month the balance may be paid in full if there are sufficient cash resources to hand. Otherwise, if there is a temporary lack of liquidity it is possible to make only a small part repayment and pay interest on the balance, provided the credit limit is not exceeded.
A business charge card, however, is not a revolving line of credit. Although payment for incurred expenses is deferred until after the end of the monthly billing cycle, when the payment due date arrives the balance must be paid in full. There is no provision for carrying over a balance and paying interest. Charge cards also have no fixed credit limit, which normally means that greater and more flexible spending power is granted. However, extremely large charges which far exceed the normal spending pattern and repayment capability of the business may be declined unless discussed in advance with the card issuer. If repayment is late or not made at all, large late payment fees or liquidated damages may be incurred.
