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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.
The answer is that as your business grows, a business credit card will usually become more necessary to fulfil some specific needs. But there are a few downsides to be aware of.
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6 differences between a business credit card and a personal card
- Credit limit. A business credit card will probably have a higher credit limit than you’d get with a personal card. When expenses are high, you might prefer not to strain your personal credit line.
- Spending controls. Many business cards are designed to have employees added to your account. For that reason, your provider will probably give you extensive tools to manage spending, including downloadable purchase records, spending summaries, expense controls and more.
- Build business credit. Usually, you won’t build business credit through a personal credit card. Business credit could be helpful down the line, as it can help you obtain loans, insurance and other products.
- Different benefits. You’ll find more business-oriented benefits with a business card. One typical example is free employee cards, which makes it easier to distribute spending privileges and control expenses.
- Purchase protection. A noticeable downside of business credit cards is that, unlike personal credit cards, they aren’t covered by Section 75, so you won’t get protection on your purchases.
- Cost. This very much depends on the card, but in general, business credit cards tend to feature higher annual fees and interest rates than personal credit cards.
Can I use my personal credit card for business expenses?
Yes, it is possible to use a regular credit card for business expenses. However, as your business expenditure grows, it may be more beneficial to get a business credit card to keep your personal and business finances separate and build up a business credit score. You’re also likely to get a higher credit limit and additional cards for your employees for their expenses.
Can I use my business credit card for personal expenses?
Yes, but we don’t advise it. A top benefit of a business credit card is organising 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.
Putting your personal expenses on your business credit card can also impact your business cash flow. Even if your business is small and it can sometimes feel like your personal and business finances are closely intertwined, you should always keep them separate. It will allow you to plan and budget more accurately and safeguard your personal finances if something goes wrong with your business.
Finally, you most definitely can’t do it if you are an employee who’s been assigned a company credit card. You could lose your job and face legal consequences, among other things.
Pros and cons of business credit cards compared to personal credit cards
Pros
- A higher credit limit may be available.
- Use it regularly to improve your business credit score, which can then give you access to better rates on future cards or business loans.
- You can get additional cards for the rest of your team if you need to.
- It allows you to neatly organise your business finances and keep them separated from your personal ones.
- You might be able to connect it directly to your accounting software.
- You can get rewards and benefits that are targeted to your business.
Cons
- You may still be personally responsible for the debt on a business credit card if you sign a personal guarantee.
- There’s no purchase protection.
- You have less credit card deals to choose from.
- A business credit card can be more expensive.
The bottom line
Ideally, you want to be using a business credit card for your business expenses and a personal credit card for your personal use. The advantages of a business credit card include a higher credit limit, the opportunity to build up a business credit score and better tools to manage your business finances (such as additional cards and accounting software integration).
However, you also need to be aware of the catches. With a business credit card you won’t get protection on your purchases. There aren’t as many business credit cards to choose from and in many cases they feature higher fees or interest rates.
All in all, using a personal credit card can be okay while your business is small and you don’t have to provide your employees with additional cards. However, as your business grows, getting a business credit card will probably become a much more practical and money-savvy solution.
How satisfied are credit card holders with their card issuer?
A greater proportion of personal credit cardholders say they're very satisfied with the service from their card issuers. At the other end of the scale the proportion of dissatisfied customers is broadly similar whether you look at business or personal cardholders.
| Response | Personal credit card holders (%) | Business credit card holders (%) |
|---|---|---|
| Very satisfied | 46.36% | 37.75% |
| Reasonably satisfied | 36.69% | 45.25% |
| Neither satisfied nor dissatisfied | 12.32% | 12.50% |
| Moderately dissatisfied | 3.36% | 3.25% |
| Highly dissatisfied | 1.26% | 1.25% |
Source: Finder survey by OnePoll of 1,150 Brits
Frequently asked questions
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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