Personal credit cards vs. business credit cards

Do you want the opportunity to easily track expenses, earn rewards and manage employee spending? A business or personal credit card may be the solution.

Business and personal credit cards have key differences, like rewards programs, spending limits and implications for your personal and business credit. The credit card you choose for your business may impact your personal and business finances for several years, so it’s worth pausing to think about. To help you decide which option is right for you and better understand the responsibility that comes with credit, we’ve compiled some of the most important information here.

What is the difference between business credit and personal credit

Understanding how credit cards work and the multiple types of credit cards available can help you make an informed decision about which products are right for your business. Here are other significant factors to consider when deciding whether to use a business credit card or personal credit card for your business expenses.

1. Credit limits

When choosing a card for your business, you’ll want one that offers a credit limit high enough to manage the spending you intend. Business credit cards often have higher credit limits—the maximum amount you can charge on a line of credit—than personal credit cards because your business revenue, personal income and your personal credit score are considered when applying. Businesses also typically have higher revenue, which allows them to make higher payments when compared to personal cards.

2. Promotional periods

Business and personal credit cards both may have special introductory or promotional offers, such as 0% APR for a set time period, but personal cards tend to offer them for longer. Personal credit cards may have introductory periods that last for over a year, while most business cards end their promotional period before a year. Personal cards may also apply introductory offers to purchases and balance transfers, while business credit cards typically only apply them to purchases.

Learn more about what APR is.

3. Interest rates

Interest rates for credit cards vary across different credit cards and different card issuers. There’s really no card category that is guaranteed to offer a better interest rate than another. So how does interest work for each card type? The interest rates you qualify for will be determined by your creditworthiness—or how likely you are to repay a debt—for both personal and business credit cards.

4. Integrated reporting

Personal credit cards don’t often offer detailed end-of-year statements, but they’re often standard with business credit cards. Business credit card end-of-year reports usually include itemized information, making it easy to track your spending, categorize business expenses and identify items that may be tax deductible. These reports can often be seamlessly integrated into your customer relationship management (CRM) software and other third-party finance applications.

5. Different lines of credit

Personal credit and business credit are two separate things, but in some situations, they may interact. While a personal credit card won’t build business credit, a business credit card can—and it may impact your personal credit standing, too. 

When you apply for a business card, the issuer may ask for a personal guarantee, where you agree to personally pay any outstanding balances on the business credit account. To verify your creditworthiness, the card issuer may check your personal credit. Your business card’s activity may appear on your personal credit report, such as if you miss payments.

Learn more about business cards and personal guarantees.

6. Credit card benefits and rewards

Personal and business credit cards typically offer rewards programs, such as cash back, points or travel miles. However, the rewards often vary between the two card types, tailored to common purchases for each. For example, personal credit cards may let you earn rewards on purchases of groceries or household items. Business cards may let you earn rewards when you spend on software subscriptions, office supplies or travel. Finding a card with a rewards program that fits your business expenses should help you maximize your credit card rewards

Some business credit cards even offer perks and rewards regardless of the types of purchases you make for your business, allowing for even greater flexibility in how you decide to spend.

7. Authorized user employee cards

Business credit cards may also give you more control over your business’s finances by offering employee cards for authorized users. Much like adding an authorized user to a personal card, you can give your employees access to the business line of credit with their own cards. With employee credit cards, you can usually set spending limits or purchase restrictions for each employee, as well as get alerts for transactions. Employee cards also make it easy to keep up with each employee’s expenses for accounting purposes.

Why are business cards useful?

Business credit cards offer several benefits that are tailored to business needs. Whether you’re still in the startup phase or have been established for years, a business credit card may expand your financial resources and offer enhanced control over your expenses. Business cards also allow you to separate any personal finances from those of the business, giving you the freedom and flexibility to grow and thrive.

Capital One is committed to helping small businesses grow. If you’re ready to explore your business financing options, check out Capital One’s Spark Business Cards and Small Business Loans and Lines of Credit. You can also explore Business Resources to learn key information about business credit, including how to apply for a business credit card.

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