MEDIA RELEASE
25 September 2023
Premium business credit cards on the way down: Businesses say they will opt for ‘cheaper’ credit cards as cost of doing business rises.
- Study finds just 25% of businesses find value in all premium credit card services
- 34% see no value in credit card concierge services, travel insurance and rewards programs
- Credit card services are losing their value among larger businesses
- The most desired credit card feature is no or low annual fees
Small businesses across Australia have been faced with a myriad of challenges in the last 18 months. Rising interest rates, inflation, skills shortages, competitive labour markets, higher wages and tighter lending criteria have all contributed to a tough environment for businesses to thrive. By the end of December 2022, SMEs had more than $475 billion of outstanding loans[1] and, since then, there have been four cash rate hikes. With demand for borrowing and the use of credit cards for business expenses, new data reveals that only 25 per cent of Australian businesses see value in premium credit card services, raising the question of whether businesses would switch to cheaper, ‘no-frills’ cards over those with all the bells and whistles to keep controllable costs down.
These figures have been revealed in a new survey of an independent panel of 202 business owners and decision-makers of SMEs by business loan comparison site Small Business Loans Australia. The full survey results, including breakdowns across the major states, can be found here: https://smallbusinessloansaustralia.com/premium-credit-cards/
Only 25 per cent of businesses find value in all premium credit card service offerings.
With premium credit card services come premium fees. However, new research reveals that the offerings are of little value to Australian businesses. Only 25 per cent of Australian businesses find value in all of the nine premium card services that the survey presented to respondents. Concierge services, travel insurance and airline reward points were the least valuable for businesses (chosen by 34% who see no value in this service), followed closely by airline lounge passes (30%) and access to free memberships from other organisations, such as hotels (26%). In contrast, the services that provide the most value were promotions with massive points earnings (valuable to 79% of businesses) and the ability to earn points in a non-airline rewards program (valuable to 77% of businesses).
Alon Rajic, Founder and Managing Director of Small Business Loans Australia, says: “Amid the challenging economic climate faced by Australian businesses, the diminished perceived value of premium credit card services like concierge, travel insurance and reward points speaks volumes about the priorities of small-to-medium business owners. The discretionary spend by businesses is being scrutinised more than ever before, and businesses are turning towards loan options that offer quantifiable benefits and cost-effective solutions while the battle with inflation and rising rates continues.”
Credit card services lose their value in bigger businesses.
Across business sizes, the research found that the bigger the business, the more likely it is for credit card services to lose their value. In fact, only 16 per cent of medium-sized businesses believe credit card services to provide value, compared with 28 per cent of small businesses and 32 per cent of micro businesses.
Cost-saving on the mind: no or low annual fees is the most desired premium credit card feature
Small Business Loans Australia asked business respondents which is the single biggest feature they want in a credit card. The data further supports the assumption that SMEs are reviewing their expenditure and tightening their belts, with the biggest sought-after feature being no or low annual fees (chosen by the highest proportion of respondents, at 32%). Businesses that hold premium credit cards may need to consider losing the services attached to the card to opt for a basic low-rate card. The survey reveals that the other 11 of the high-end features that come with premium credit cards are not of greatest priority, with only 13 per cent of businesses wanting reward points and 8 per cent wanting fraud and purchase protection.
Surprisingly, just 8 per cent of businesses value cards with high credit limits and just 7 per cent value the privilege of having multiple supplementary cards, while only 6 per cent value having an extension on payment deadlines. Features such as account reconciliation, no-fee incentives and cash back on selected purchases are valued by only 3 per cent of business owners.
“Businesses that rely on credit cards for big expenses or bills should take the time to review the credit card options available to them. It is possible to still utilise a line of credit to keep your business expenses under control without it costing more and being invaluable”, says Alon.
The full survey results, including breakdowns across the major states, can be found here: https://smallbusinessloansaustralia.com/premium-credit-cards/
ENDS
Advice Disclaimer
This article is intended to provide general information only, and not financial advice. Before acting on any information in this article, you should consider your individual and business circumstances, and seek independent and professional legal, financial, taxation or other advice to help you determine whether these actions are appropriate for your needs.
About Small Business Loans
Small Business Loans Australia (smallbusinessloansaustralia.com) is an Australian comparison website providing Australian small and medium business owners with information on the different types of financing options and loans offered by Australian lenders, and how alternative lenders differ from banks. Small Business Loan Australia works with more than 30 Australian lenders and provides loans from $5000 to $1 million. For more information, visit smallbusinessloansaustralia.com)
Key Facts:
- Study finds just 25% of businesses find value in all premium credit card services
- 34% see no value in credit card concierge services, travel insurance and rewards programs
- Credit card services are losing their value among larger businesses
- The most desired credit card feature is no or low annual fees
Contact details:
Gillian Morgan | 0447 254 662 | gmorgan@theideassuite.com.au
Courtney Trewin | 0420 211 251 | ctrewin@theideassuite.com.au
