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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.
Business credit card | Personal credit card | |
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Credit limit | Typically higher credit limits, depending on creditworthiness | Typically lower credit limits, depending on creditworthiness |
Rewards |
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Spending controls |
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Build your credit score |
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Consumer protections |
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Personal guarantee | Likely requires a personal guarantee | Personally responsible for debt incurred, along with any cosigners |
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:
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.
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.
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 … |
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Building business credit. | Consumer protections. |
Higher credit limits. | Rewards for everyday categories. |
Rewards for business categories. | A sole proprietorship with very low expenses. |
Expense-management features. |
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.
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.
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