Difference Between Business and Personal Credit Cards


If you own a business, then you’ll likely have to own a credit card, because it is one way to ensure you keep track of all your business expenses. These cards also allow you to earn rewards and points on your daily business purchases. Furthermore, if you are in your start-up process and you want to finance your business, credit cards come in handy, especially if you are not able to qualify for a small business loan.

As a business owner, never make the mistake of putting all your expenses onto a personal  credit card. Whereas personal and business credit cards function in similar ways, especially in regards to how you use them, there are individual differences that set them apart. This article briefly breaks down some of these differences and also gives you reasons why a business credit card should be in the back pocket of every business owner.


Your Personal and Business Credit Will Be Affected

As a business owner, having a business credit card will go a long way in ensuring that you build your business credit score, which of course is very crucial in helping you to qualify for other financing forms in the future. Before jumping into just any card, though, first understand how it affects both your personal and business credit.

While the use of your personal credit card will only affect your credit score, how you use your business card will significantly impact both your business and personal credit score. This is because most business credit cards need a personal guarantee. This will give your business the security of knowing that if something happens, you are solely responsible for paying off your business credit card debt.


It is because of this inevitable intertwining of your personal and business finances that business credit card companies will have to first look at your personal credit score as part of your application. Regardless of whether you have dozens of employees or you are just a sole proprietor, for as long as you are making business purchases, a business credit card is a must-have.

Furthermore, a business credit card can help you to build your business credit; that is like rewarding you for purchases you have been making anyways.

You Get a Higher Credit Limit on Business Credit Cards

You stand a chance of getting a much higher credit limit with a business credit card, as opposed to the limit on a personal card. This is because, in almost all industries, businesses have more expenses than an individual would ever have. Furthermore, they also have more capital coming in compared to individuals; this explains the reason why they have more spending power.

The higher limit is vital for your business for obvious reasons. First, you can make huge purchases as a business owner, and what’s more is that putting these purchases on your credit card is an excellent move in ensuring you secure yourself some short-term financing.

The other reason you’ll benefit from the business card is that having a high credit limit means having the opportunity to build your business credit score. Your credit utilization rate is one crucial factor that will determine your business credit score. That is, the average percentage of your available credit that you have so far used up.

Lastly, what you should consider as a good credit utilization is anything below 30 percent. For instance, if you have a credit limit of say $10,000, you will have to owe up to $30,000 at a time. Keep in mind that the higher your credit limit, the easier it will be for you to spend seamlessly under your desired credit rate. This, of course, will help you to build your business credit score.