6 Major Differences Between Business and Personal Credit Cards

They mostly function the same way, but vary in their credit reporting policies, credit limits, bonus categories, 0% intro APR periods, bookkeeping benefits and consumer protections.

Claire TsosieJune 11, 2020
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For the most part, small-business credit cards — credit cards designed to cover expenses for small businesses, freelance gigs and side hustles — function just like personal credit cards.

Both types of cards earn rewards and accrue interest in the same way. Annual fees on both types of cards can be tax-deductible if they're used for business expenses. And in both cases, you're generally on the hook for charges made.

But there are some key differences to keep in mind when applying.

The short answer: No.

Small-business cards have certain features that make them more attractive to those with businesses, freelancing projects or side hustles, but there's no law that says you have to use a business credit card for business expenses. It's fine to use a personal credit card instead. And for sole proprietors, such as freelancers or rideshare drivers, a personal credit card might even be a better fit overall.

If you're using a personal card for business expenses, though, it's generally best to get a separate one just for work. Doing this can make it easier to find deductions at tax time. For a limited liability company, S-corporation or C-corporation, it's especially beneficial: Using a separate card for business helps you preserve your personal liability protection, which is important if your business ever faces legal trouble.

1. Credit reporting policies

With a personal credit card, your credit card activity is generally reported monthly to the three major consumer credit bureaus: Experian, Equifax and TransUnion. But with a small-business card, that doesn't always happen.

Some small-business credit card issuers, including Capital One and Discover, report business activity to both consumer and commercial credit bureaus, affecting both your personal and business credit scores.

Others, like Bank of America® and Citi, just report to commercial credit bureaus.

If you're counting on a small-business credit card to boost your personal credit scores, you'll want to make sure you're using one that reports to both consumer and commercial bureaus.

2. Credit limits

Small-business credit cards often come with more spending power than personal credit cards. In part, that's because limits are based on both personal income and business revenue, among other factors like creditworthiness. Revenue that's bigger than your income could result in a higher limit than you'd get on a personal card, where you're reporting only personal income to which you have a reasonable expectation of access.

A higher limit could be especially useful if your business has steep operating costs — for instance, if you spend a lot on inventory each month.

3. Bonus categories

Certain bonus categories, such as travel and restaurant spending, are common on both personal and small-business credit cards.

Some are more specific. Business credit cards are more likely to offer bonus rewards on phone bills, online advertising or office supplies, for instance. And for bonus rewards at grocery stores or drugstores, you might be better off with a personal card. Ultimately, the best deal depends on your business spending.

If your expenses are all over the place, a flat-rate rewards card that offers 1.5% or 2% back on all purchases could be a better option. This option is available for both personal and small-business credit cards.

4. 0% intro APR periods

On personal credit cards, introductory 0% APR periods are plentiful and tend to be quite long — often lasting 12 months or longer. Not so with small-business credit cards.

While a handful of business cards offer introductory 0% APR terms, they tend to be nine or 12 months, and often just apply to purchases, not balance transfers. Those that do offer promotional balance transfer APRs also charge balance transfer fees, making it more costly to move debt from one small-business card to another and pay it off at a lower interest rate. If you're looking for more time or a respite from fees, personal cards give you more options.

5. Bookkeeping benefits

Around tax time, you might want to search through credit card statements for potential deductions. Small-business cards generally make that very easy. At the end of each year, many will give you an itemized report of your spending. Personal credit cards generally don't offer reports that are as detailed.

Small-business credit cards make tracking expenses easier in other ways, too. For example, most small-business cards offer free employee cards with customizable spending limits. On personal cards, such a feature is harder to find.

6. Consumer protections

Consumer protection laws, such as the Credit Card Act of 2009, generally don't apply to small-business credit cards. Even though most issuers extend consumer protections as a courtesy to small businesses, it’s a good thing to keep in mind since certain protections may not be available in every case.

Potentially, on a small-business card, your APR could change overnight, or you could be charged exorbitant late fees for small infractions. If you’re unsure about your issuer’s policy, call and ask.

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