Revolving facility

Free for a month, expensive the day after.

A business card is two products in one. Used inside the interest-free window it ordinarily costs nothing beyond the annual fee. Carried past it, it is the most expensive facility on this site.

Last reviewed 8 September 2026

Indicative interest cost

Weekly

Disclaimer

$76/week

$330 /month $3,960 a year while drawn

Facility limit $40,000

$5,000 $500,000

Average drawn balance $18,000

Nothing drawn Fully drawn

Indicative rate 22.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Five lines that separate the two states.

Paid in full, it is close to free credit. The annual fee buys float of up to around fifty-five days on everyday spending, which no other facility provides.
Carried, it is the most expensive facility here. Revolving card rates sit well above a line of credit, and the balance is added to by ordinary trading.
Cash advances are worse again. Interest ordinarily accrues from the day of the transaction, with a fee on top and no interest-free period at all.
Partial payment usually ends the window. On many cards, not clearing the full balance removes the interest-free treatment on new purchases too.
Indicative only. Every figure here is illustrative. Actual rates, fees and terms come from the issuer.

The mechanism

Two prices, decided by one date.

A purchase made on the first day of a statement period is not payable until the due date of that statement, which is commonly around three weeks after the period closes. That produces up to roughly fifty-five days of interest-free credit on a purchase made at the right point in the cycle, and around three weeks on one made at the wrong point.

Clearing the closing balance in full by the due date keeps that treatment. Not clearing it moves the account into its revolving state, where interest is charged on the balance and, on many cards, on new purchases from the date they are made rather than after the next window.

That is why the same card can be the cheapest and the most expensive credit a business holds, decided entirely by whether one payment is made in full. Very few products behave so differently either side of a single date.

Statement period

Around a month

Payment window

Around three weeks

Maximum float

Around fifty-five days

After the due date

Interest on the balance

Worked example

An $18,000 balance, carried for a year.

A business carries an average balance of $18,000 on a card at an indicative 22%, having stopped clearing it in full some months earlier. Interest for the year is roughly $3,960, plus an annual fee.

The same $18,000 drawn on a business line of credit at an indicative 13% would cost about $2,340, and on a secured line at 10% about $1,800. The card is costing between $1,600 and $2,200 a year more than the alternatives for exactly the same money.

The card balance is also harder to see. It is mixed into ordinary spending, it has no drawdown decision attached to it, and the minimum payment is designed to be comfortable, which together mean a carried balance can persist for years without anyone treating it as borrowing.

Illustrative annual interest

Card at 22%: ~$3,960
Unsecured line at 13%: ~$2,340
Secured line at 10%: ~$1,800
Balance carried: $18,000

Illustrative on stated assumptions and rounded. Not a quote or offer of credit.

Against a line of credit

Where each one wins.

These are complements rather than alternatives in most cases, and the row that decides which to use is the first.

Feature	Business card	Line of credit
Cost if cleared monthly	Annual fee only	Line fee plus interest on any balance
Cost if carried	Highest here	Lower
Suits	Everyday spending and float	A funding gap that lasts weeks or months
Cash withdrawal	Expensive from day one	Ordinary drawing
Visibility of borrowing	Blended into spending	A separate balance
Controls available	Per-card limits and categories	A single limit

The healthiest arrangement is ordinarily both, used for different things. The card handles everyday spending and is cleared monthly; the line handles anything that will take longer than a month to repay.

The trap in the fine print

A cash advance is not a purchase, and it is priced completely differently.

Withdrawing cash on a business card, transferring from it, or using it for anything the issuer treats as a cash-equivalent transaction ordinarily attracts a fee and starts interest from the day of the transaction with no interest-free period at all. On many cards those transactions are also repaid last, so payments clear cheaper purchase balances first and the expensive cash balance persists. A business needing cash rather than a purchase is describing a line of credit, and using a card for it is the most expensive available way to solve the problem.

Where a card earns its place

Four things it genuinely does better.

Float on everyday spending

Up to around fifty-five days of interest-free credit on ordinary costs, at no charge beyond the annual fee. No other facility on this site provides that.

Control over staff spending

Individual cards with individual limits, and category restrictions on many products. That is a management tool as much as a credit one and it has no equivalent on a line.

Records that reconcile

Transaction detail that flows into accounting software with the merchant, the amount and the date attached, which is considerably better than reimbursing receipts.

Payments a line cannot make

Online subscriptions, overseas suppliers and anything requiring a card number. A line of credit cannot pay for those directly.

The trade

What it gives and what it costs.

What it gives

Genuinely free short-term credit when the balance is cleared each month
Spending controls and per-user limits that no other facility offers
Transaction records that reconcile cleanly into the accounts
The ability to pay merchants that only accept cards
Immediate availability, with no drawdown process at all

What it costs

The highest rate on this site once a balance revolves
Cash advances charged from day one with a fee on top
Borrowing that is invisible because it is blended into spending
A minimum payment designed to be comfortable rather than to clear the balance
On many cards, loss of the interest-free window on new purchases once a balance is carried

Using it well

Three rules that keep a card cheap.

01
Clear the full balance, every month
Not the minimum and not most of it. On many cards a partial payment removes the interest-free treatment on new purchases as well, so the difference between clearing $9,800 of a $10,000 balance and clearing all of it is far larger than $200 of interest.
02
Move anything longer-lived off the card
A cost that will take more than a month to repay belongs on a line of credit. Transferring a carried card balance onto a cheaper facility is ordinarily the single largest interest saving available to a small business, and it is a one-afternoon exercise.
03
Never use it for cash
Cash advances have no interest-free period, carry a fee and are ordinarily repaid last. A business that needs cash has a funding question rather than a payment one, and the card is the wrong instrument for it.

When it goes wrong

Three patterns worth recognising early.

The balance stops clearing

One difficult month becomes a carried balance, and the minimum payment is comfortable enough that it never becomes urgent.

What happens:The most expensive borrowing the business has, running indefinitely without ever being decided on.

Cards are used as capacity

Several cards across several directors provide a combined limit nobody manages as a single exposure.

What happens:Borrowing spread across accounts, invisible in aggregate, and expensive in every one of them.

A personal card funds the business

A director’s own card covers business costs during a tight period and is repaid slowly or not at all.

What happens:Business borrowing on consumer terms with personal consequences, and a blurred line that makes the accounts harder to read.

All three are visible in one number: the closing balance that is actually cleared each month. Where that has stopped being the full amount, the card has changed from a payment tool into the most expensive facility the business holds.

The honest position

A card is not a credit facility, and it is used as one constantly.

This site covers business cards because they revolve, and the reason they belong here is that they are commonly not thought of as borrowing at all. Card spending sits in the accounts as expenses, the statement arrives as a bill, and the credit component is invisible until the balance stops clearing.

Treated as a payment tool with a monthly settlement, it is excellent and there is no reason to change anything. Treated as capacity, it is the worst-priced instrument available and the hardest to see.

The practical test takes a minute. Looking back over twelve statements and counting how many closed at zero tells a business which of those two things its card has become, and the answer is frequently a surprise.

Setting it up well

The administrative decisions that matter more than the rewards.

A direct debit for the full closing balance, set up when the card is opened, removes the single largest risk this product carries. It converts clearing the balance from a monthly decision into a default, and the businesses that carry balances are almost never the ones that set that up.

Individual cards for individual people, each with its own limit, is the second. A single shared card produces a statement nobody can reconcile and spending nobody owns, and the marginal cost of additional cards on most business products is small or nil.

Rewards and points are the part that gets the attention and they are worth very little against either of the above. A card that earns a percentage back and carries a balance for two months a year is a considerably worse product than one that earns nothing and never does.

The reconciliation argument

What card records are actually worth.

A card transaction arrives in the accounting system with a merchant, an amount and a date attached, and increasingly with a receipt captured against it. Compared with reimbursing staff expenses from paper receipts, that is a large reduction in administrative effort and in the errors that come with it.

It also produces a record that is available when it is needed. A question about a purchase eighteen months ago is answerable from the card feed in seconds, where the same question about a reimbursed expense involves finding out who paid for it and whether the receipt survived.

That is a genuine argument for using a card widely across the business rather than sparingly, provided the balance clears. The credit is incidental to the record-keeping, and the record-keeping is commonly worth more than it is credited with.

The cost of carrying

What a carried card balance costs.

A revolving card balance behaves like any other drawn balance, at a considerably higher rate. Running the same figure at a line of credit rate shows what moving it would save. Indicative only, and not a quote or offer of credit.

Indicative interest cost

Weekly

Disclaimer

$76/week

$330 /month $3,960 a year while drawn

Facility limit $40,000

$5,000 $500,000

Average drawn balance $18,000

Nothing drawn Fully drawn

Indicative rate 22.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

Commerce Commission
The regulator whose guidance covers credit disclosure and conduct.
Credit Contracts and Consumer Finance Act 2003
Relevant where a card is used wholly or predominantly for personal purposes, including by a sole trader.
Reserve Bank of New Zealand, statistics
Context for New Zealand credit card and business lending rates.
Inland Revenue, business expenses
Context for how card-funded business expenses are recorded, which is a matter for the accountant.
Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.

FAQ

Business credit card in New Zealand, questions answered

Is a business credit card a line of credit?

Mechanically it revolves like one, and it is priced very differently. Cleared monthly it costs an annual fee; carried, it charges a rate well above every other facility on this site.

How long is the interest-free period?

It depends on where in the statement cycle a purchase falls, and on many cards it reaches around fifty-five days at the most favourable point and around three weeks at the least. It applies only where the closing balance is cleared in full.

What happens if only part of the balance is paid?

Interest is charged on the remainder, and on many cards the interest-free treatment on new purchases is lost as well until the balance is cleared in full again. That makes a small shortfall considerably more expensive than it looks.

Why are cash advances different?

They ordinarily attract a fee and start accruing interest from the transaction date with no interest-free period, and on many cards they are repaid last. A business needing cash should be drawing on a line of credit instead.

Is a card cheaper than a line of credit?

Cleared every month, considerably cheaper, because the credit is free. Carried, considerably more expensive. The two are complements used for different things rather than alternatives.

Should a carried balance be moved?

Ordinarily yes, onto whatever cheaper facility is available. Moving a carried card balance to a line of credit is frequently the largest single interest saving available to a small business and takes an afternoon.

Do business cards affect a credit assessment?

Lenders see the facility and how it is conducted, and a card consistently cleared reads well. Several cards across several directors carrying balances reads as capacity being used rather than managed.

What are the controls worth?

Genuinely useful. Per-card limits, category restrictions and transaction detail that reconciles into accounting software are management tools no line of credit offers, and they are part of why a card earns its place.

Is a personal card acceptable for business spending?

It blurs the accounts and puts business borrowing on consumer terms with personal consequences. Where it happens during a tight period it is worth resolving quickly rather than allowing to become normal, and the accountant should know about it.

What is the minimum payment for?

It keeps the account current and it is not designed to clear the balance. Paying the minimum on a revolving balance extends the borrowing for a very long time at the highest rate the business is paying anywhere.

How do I tell whether the card has become a credit facility?

Look at twelve statements and count how many closed at zero. Where the answer is most of them it is a payment tool; where it is few of them it is the most expensive borrowing the business has.

Is this page financial advice?

No. It describes how a product works in general terms. This site is not a lender, a broker or a registered financial adviser, and how a card should be used in a particular business depends on facts a website cannot see.