Study finds 34% of UK SMEs rely on personal credit cards for business cashflow
Capital on Tap surveyed over 250 UK business owners and 1,000 British consumers to understand how people are using credit and how credit habits differ between business owners and consumers.
- 46% of business owners don’t have a business credit card, with 54% of consumers actively avoiding them
- Small business owners spend over £1,900 per month on employee-related expenses alone
- Brits spend nearly £400 per month on credit cards towards holidays and travel
- Over three-quarters of Brits aged 18-24 have maxed out their credit card
- High interest rates or fees are the biggest blocker to credit card usage
For many businesses and consumers, using credit cards is a practical and helpful way to manage everyday cashflow, build credit scores, and spread costs. A new survey conducted by Capital on Tap of 250 UK business owners and 1,000 British consumers revealed that 36% of business owners have never owned a business credit card, and 54% of consumers said they actively avoid using credit cards.
The survey also revealed the reasons behind these stats, as well as showing how attitudes towards credit cards vary by business industry and across generations.
Small business owners spend an average of £1,903 per month on employee-related expenses alone
For business owners, cash flow management is the main purpose of a credit card, with 80% highlighting this as their reason for use. But how much are small business owners spending on their credit cards?
Category of spending | Average monthly spend on credit card |
Employee-related expenses (e.g., payroll, perks) | £1,903 |
Raw materials | £1,708 |
Professional services (legal, accounting, consulting) | £1,429 |
Marketing/advertising costs | £1,368 |
Equipment or machinery | £1,361 |
Inventory purchases | £1,309 |
Shipping and packaging supplies | £1,306 |
Client and staff entertainment | £1,282 |
Travel and accommodation | £1,263 |
Payment processing fees | £1,246 |
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.
Brits spend an average of £389.20 per month on credit cards towards holidays and travel
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.
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 |
The second biggest spending area is rent and utilities (£318.20), followed by insurance (£244.70).
Over three quarters of Brits aged 18-24 have maxed out their credit card
The survey highlights how age plays an important role in attitudes toward credit cards and debt. 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 appear to be more cautious, with just 31% of 65 or over maxing out their card and only 6% missing a credit card payment.
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% |
High interest rates or fees are the biggest barriers to credit card usage
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.
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% |
For consumers, worrying about 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, explains that the idea that credit cards mean taking on debt is one of the biggest credit myths: “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.”
You can read the research in full here: https://www.capitalontap.com/en/blog/posts/the-uks-attitude-towards-credit/