Can I Use a Personal Credit Card for Business Expenses?

You can use a personal credit card to pay for business expenses; you aren’t breaking any rules by doing so. But actual business credit cards offer useful features — like higher credit limits, free employee cards and the establishment of business credit — that make them a better fit for most entrepreneurs.

A consumer card may make more sense if you’re working on improving your personal credit or want to transfer an existing balance at a lower interest rate. Business credit cards that support those goals are rare.

Whichever card you choose for your business, use it only for business spending. Don’t put personal expenses on it. Separating your business and personal finances helps keep your books clean, and if your business is an LLC, it may help protect your assets if you’re ever sued.

» MORE: 6 differences between business and personal credit cards

Advantages of using business credit cards

Business credit cards are designed for business owners, so it follows that they offer features designed for entrepreneurs. These include:

• Free employee cards with spending controls. Some consumer cards require you to pay a fee for additional cards and authorized users. Most business cards, on the other hand, offer large numbers of employee cards for free. The account holder can even monitor the use of each card and set restrictions on when and how the card is used. 

• Higher credit limits. Credit limits will always vary from one borrower to another. But in general, business credit cards offer greater spending power. That can come in handy if you find yourself in a pinch and need to pay a few invoices while waiting for more cash to come in. 

• Rewards specific to business spending. Some cash-back business credit cards tailor their bonus categories to business needs, like internet and cell phone bills, office supply stores, business consulting services and even online advertising. Consumer credit cards are more likely to offer bonus rewards on categories like groceries and streaming subscriptions. Both types of cards have options with high rewards rates on gas and dining, though. 

Credit score impact of business vs. personal cards

Business credit cards affect your personal credit score differently than personal cards do in a few key ways.

Business cards report less activity to consumer credit bureaus. Personal credit card issuers can’t differentiate between purchases for you and purchases for your business. It all gets sent to credit bureaus as debt you’re responsible for.

That means that if you use a personal credit card for business expenses, it’ll show up on your credit report. And if those purchases chew up your available credit, you may find yourself throwing off your credit utilization ratio — which could cause your credit score to drop. In turn, that could limit your financial options in other parts of your life.

Most business cards, on the other hand, only report negative activities (like nonpayment of your bill) to consumer credit bureaus.

Instead, business credit cards help build your business credit history. When a financial institution is considering lending you money, they look at your personal credit score to get a sense of how you’ve managed credit in the past. Your business has business credit scores designed to do the same thing.

When you use a business credit card, the card activity that doesn’t show up on your personal credit report — like making on-time payments — will most likely show up on your business credit report instead. Eventually, your business develops its own credit history.

If you think you might need a business loan someday, it may be a good idea to use a business credit card to start building that history now.

» MORE: How to build business credit

When to consider using a personal credit card for your business

There are a few things business credit cards don’t do very well. If you’re in one of these situations, a personal card may be a better fit:

• Your personal credit history is lacking. There are only a handful of secured business credit cards. So if you have bad credit (typically considered a FICO score below 630) or fair credit (a FICO score between 630 and 689), you won’t have many business credit card options. It may be wise to open a personal credit card designed to build your credit. Then, if your credit improves, you can apply for a business card in the future.

• You want to transfer balances. Balance transfer business credit cards are pretty limited, too. If you want to transfer business credit card debt onto a card with more favorable terms and pay it off over time, a personal balance transfer credit card with a 0% APR intro period may be your best bet. 

• You won’t charge very much. If your business expenses are relatively low — if it’s a side hustle, for instance — the advantages that business cards offer may not be worth much to you. And you’ll probably have a better shot at earning a credit card welcome bonus on a personal card, since those tend to require less spending.