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5 Main Differences Between Personal and Business Credit Cards

Credit cards are now one of the main sources of additional funding for many businesses. However, a lot of company owners make the mistake of using their personal credit cards instead of a business one to purchase supplies or pay for some services. Although these cards have similarities, a business or corporate credit card comes with certain benefits that make it a better fit for companies.

    Business credit card limits tend to be higher

    If you often make a lot of expensive purchases for your company, a business credit card may be a better fit than a personal one since they usually have higher credit limits.

    Banks and credit card providers will also increase these limits more often as long as you have a good business credit score. High credit card limits can also make it easier for you to use less of your available credit and improve your standing.

      Business credit cards come with different types of rewards

    As a business owner, a chunk of your income often goes to paying phone and cellular bills, Internet services, and buying office supplies. A lot of banks and providers offer rewards when you use their credit card to pay for these utilities or purchase supplies from certain brands.

    You can use these rewards to pay for the bills or as discounts for buying bulk items.

    Other types of rewards that business credit card providers offer to organizations include:

    • Access to helpful expense management tools
    • Air miles
    • The ability to have numerous co-signers with customized spending limits

    Some offer cash back on purchases as well.

      Business credit cards will help you to establish a business credit history

    A business credit card will enable you to create a separate credit history for your business. This is something that will really be useful, especially if you’re still in the initial stages of business operations.

    Many small businesses usually have their loan applications turned down or get disadvantageous loan terms simply because they lack a credit history for their company.

    These are issues you can avoid by having and using a business credit card instead of your personal one since this will improve your company’s credit score.

      Business credit cards will give you access to other financial products to boost company growth

    If you have been issued a business credit card by a bank or provider that has a wide range of products that serve businesses, you’re off to a good start to having a strong financial relationship with them.

    You will eventually gain access to their business-sized credit lines and solutions that will give your company more purchasing power and support its growth. Some business credit card providers, for instance, offer extended working capital and tools that can help you simplify the management of everyday financial transactions.

      They help you maintain the separation of business and personal expenses

    Lastly, separating business expenses from personal ones is something that all companies should prioritize. This is something that you can do if you use your business credit card for any company-related purchases instead of your personal one. This is because a business credit card by its very nature will keep business expenses separate.

    Separating business from personal expenses is particularly important if you have a corporation or LLC; you need to treat your company as separate from your personal financial situation in order to maintain limitation of personal liability. If you constantly combine your personal expenses and business expenses, in case of any financial or legal problems in the future, you can lose the legal protection you hoped to gain by incorporating or organizing a limited liability company.

    In addition, you also need to keep your business expenses separate for tax purposes. This is because only business-related expenses are deductible for a business tax return.

    A business credit card can provide company owners several benefits that a personal credit card cannot. But to enjoy these perks (and even more), you need to get a business credit card from only the best business bank and other trusted providers.