You’re a small business owner, and your operation is growing. At this time, you might be wondering whether you should stick with your personal credit card or get a business card. Both card types have advantages and disadvantages and — depending on your business — one could work far better than the other.
6 differences between a business credit card and personal card
Business credit card
Personal credit card
Typically higher credit limits, depending on creditworthiness
Typically lower credit limits, depending on creditworthiness
Accelerated rewards for business categories such as shipping, advertising, office supplies and travel
Fewer options for flat-rate rewards
Accelerated rewards for categories such as groceries, gas, dining and entertainment
More options for flat-rate rewards
Designed to have employees added to the account
Extensive tools to manage spending, including downloadable purchase records, spending summaries and expense controls
Some issuers, such as American Express, let you set spending limits for authorized users
You can ask your issuer to lower your credit limit, but this could lower your credit score
Build your credit score
Helps you build business credit
May help you build personal credit depending on the issuer, but this usually isn’t the case
Helps you build your personal credit score as long as your issuer reports payment activity to credit bureaus
Doesn’t help you build business credit
Interest rates can increase at any time
Issuers not required to mail credit card bill at least 21 days before due date
Late fees not capped; no limitations on overlimit fees
Payments above minimum not required to be applied to highest-APR balances
45-day notice for interest-rate increases
Credit card bill must be mailed at least 21 days before due date
Late fees capped; limitations on overlimit fees
Payments above minimum applied to highest-APR balances
Likely requires a personal guarantee
Personally responsible for debt incurred, along with any cosigners
Advantages of a business credit card
Separate business and personal spending. Keeping your finances separate can make it easier to track your spending and file tax returns. Remember that most issuers will stipulate in your terms that your business card may be used only for business expenses.
Higher credit limits. You’ll often get access to higher credit limits with a business credit card, which can be helpful if you have a high-expense business.
Employee cards and spendingcontrols. With a business card, you can add employees to your account. Your issuer will also likely give you expansive tools to monitor and control spending.
Higher welcome offers. Business cards typically have higher welcome offers — but keep in mind these bonuses often have higher spending requirements.
Rewards for business categories. Business cards often pay business-focused rewards you won’t find with personal cards.
Some consumer protection laws don’t apply to business credit cards
Here’s one reason you might use a personal credit card over a business card: Personal cards have more consumer protections from the Credit CARD Act of 2009. These are a few advantages they have that business cards don’t:
Notifications for interest rate increases. With a personal card, your provider must notify you at least 45 days in advance if it will increase your interest rates. With a business card, it can increase your interest rates at will.
Minimum grace period. If a personal card has a grace period on interest, the period must be at least 21 days. With business cards, the period can change each month.
Caps on late fees. For personal cards, there are caps on late fees. These caps don’t exist for business cards, meaning providers can charge heavy fees if you pay late.
If you want a business card, gauge your ability to pay off your debt. The better prepared you are, the more likely you’ll be able to roll with the punches if your provider changes your card terms.
Why do I need a personal guarantee for a business credit card?
Most business card providers require a signed personal guarantee for approval. This guarantee is a promise between you and the creditor that you’re personally liable for your business debts. It’s similar to a business-loan personal guarantee.
This agreement protects the creditor from any unpaid debts on the card but exposes you to seizure of your personal finances or assets if you find yourself unable to pay back what you borrow.
What credit card type should I get?
You can use your personal credit card for business expenses, but you might find it more beneficial to use a business card. The latter will help you build business credit, and it’ll probably come with a higher credit limit and rewards for business categories.
Consider a business credit card for …
Consider a personal card for …
Building business credit.
Higher credit limits.
Rewards for everyday categories.
Rewards for business categories.
A sole proprietorship with very low expenses.
Can I use my business credit card for personal expenses?
Yes, but we don’t advise it. For starters, a top benefit of a business credit card is organizing your business spending. When it comes time to work out accounting and taxes, you’re a step ahead with business spending on a designated card. You also decrease the risk of your business spending affecting your personal credit score.
On top of that, if potential lenders or credit bureaus find out that you’re using a business credit card for personal purchases, it could potentially signal to them that you’re not able to successfully manage your expenses.
Compare business credit cards
There are many strong credit cards that might work well for your business. Pay attention to the rewards each issuer offers, as well as helpful benefits you might need.
Pick a business credit card — especially a best-in-market business card — if you need a higher credit limit, want to build business credit or want rewards for specific categories. At the same time, you might have very few expenses or not need robust expense-management features. In the latter case, pick one of the many strong personal credit cards.
Frequently asked questions
It could. It all depends on how you use it and if your provider reports your account activity to the credit reporting agencies. You can avoid any issue by paying at least your statement’s minimum on time to keep your business account in good standing.
When you apply for a business credit card, you’ll include basic information about your business like your employee count, annual revenue and years in business. You’ll also probably be asked to personally guarantee your debt.
You’ll often find accelerated points for categories like shipping, gas, travel, office supplies and office utilities.
You’ll typically receive your card within seven to 10 days.
It depends on the card. You can find cards from both categories that allow for customization.
Kevin Joey Chen is a credit cards, banking and investments writer whose work and analysis have appeared on CNN, U.S. News & World Report, Business.com, Lifehacker and CreditCards.com. He's passionate about helping you get your finances in order by expertly navigating cutting-edge financial tools — including credit cards, apps and budgeting software.
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