Sharing is caring!

Source: Pixabay.com

Small business credit cards are a great way to earn perks while supporting your growing company. Like personal cards, they offer rewards and accumulate interest in the same way.

However, business credit cards are intended to finance the operational expenses of a company, not an individual’s personal needs.

It is essential to separate your commercial funds from your personal finances.Doing helps maintain an organized accounting of where money flows – to activities enhancing the business or elsewhere. Separating the two also keeps you accountable and in control as your business throttles ahead at full speed!

In this guide, we’ll outline the key differences between personal and business credit cards so you can select the most suitable option for your company.

What Is a Business Credit Card?

A business credit card is a specialized card that provides a flexible line of credit tailored specifically for commercial purposes.

Business credit cards go beyond personal cards with powerful features like detailed expense tracking, accounting software integration, customizable spending controls for employees, and higher credit ceilings to support growing ventures.

With a business card tied to your revenue and balance sheet, you’ve got the spending power to turn those big client opportunities into done deals.

What Is a Personal Credit Card?

A personal credit card, as the name implies, is issued exclusively to an individual under their name. It can be utilized for various personal expenses, like grocery shopping, dining out, and entertainment spending. 

Personal cards provide numerous benefits, such as rewards, purchase protection, and cash-back opportunities. With a personal card, you earn redeemable points and money back on a wide variety of purchases tailored toward individual consumers.

Differences Between Business and Personal Credit Cards

While a business and personal credit card are similar in many ways, there are some key differences that set them apart. We’ll explore these differences in this section.

1. Credit Limits

Small business credit cards often have higher credit limits than personal cards, providing more flexibility for companies’ changing needs.

For example, some businesses spend more on inventory during the holidays, and credit cards can help provide additional financing. The reason for the difference in limits is that business cards consider both personal income and business revenue when determining your credit limits.

Personal cards, on the other hand, only look at a person’s wage or salary. By evaluating money from more than one source, business cards can offer higher spending caps.

2. Rewards Categories

Business credit cards are all about helping companies save money!

Cards may offer discounts on bills, fuel for your fleet, or office essentials. It’s about making your business operations as affordable as possible.

Personal cards, on the other hand, help you get the most from your spending. Earn points for a gift you’ll love, or cash back to use however you want. The rewards are aimed at putting more dollars in your pocket.

3. Spending Controls

Keeping your personal and business finances distinct is crucial. Primarily, it streamlines bookkeeping since you won’t need to disentangle your business and personal outlays.

Business credit cards have top-notch features that make tracking expenses effortless. For example, most provide employee cards with customizable spending limits. 

How does that work?

With a business credit card, you can track how your employees spend, block cash withdrawals, and even restrict spending to specific vendors. Personal cards simply aren’t set up to offer these sorts of team-friendly features.

4. Consumer Protection

Consumer protection laws, like the Credit Card Act of 2009, apply only to personal credit cards, not business ones.

Even though many issuers voluntarily extend some consumer protections to small business customers as a courtesy, it’s important to understand that certain legal protections won’t necessarily apply in all situations involving business credit.

5. Credit Reporting

Whether you use personal or business credit cards, it’s important to understand how each impacts your unique financial profile. Business and personal credit cards tend to report to different bureaus since business and personal credit scores remain independent.

Typically, credit cards used primarily for individual needs will be reported to consumer reporting bureaus like TransUnion and Experian.

On the other hand, cards designed specifically for business spending are more likely to be furnished to commercial credit bureaus that specifically monitor company financial obligations. Data provided to these bureaus forms the basis of commercial credit ratings.

How to Find the Best Business Credit Card

Picking the perfect business credit card for your company doesn’t have to be a drag! While brand recognition is paramount, you’ll want to focus on the features that fuel your success.

1. The Annual Percentage Rate (APR)

Interest rates are important to understand when using credit cards for your business. The annual percentage rate (APR) tells you how much interest you’ll pay each year on your purchases. Business credit cards usually have higher APRs than personal cards.

When choosing a business credit card, pay close attention to the APR. It could end up costing you a lot of time down the road if it’s too high and interest piles up. Shop around and find the best rate to save money in the long run.

2. Fee-Based vs. No-Fee Cards

It’s natural to avoid paying extra costs, especially if you run a small business. This logic also applies to credit cards. Although credit cards with the most lucrative rewards are fee-based, no annual fee business credit cards exist, and these can save you big on annual overheads.

So, if you’re looking to minimize costs, go for no-fee-based cards.

Plus, credit cards with no annual fee usually have low, sometimes 0% introductory interest rates. When selecting the best no-annual-fee business cards, consider the intro APR, rewards rate, sign-up bonus, and welcome offer.

3. The Benefits

Maximizing rewards is a savvy move for small business owners. Credit cards offer sweet perks like cash-back, miles, and discounts you don’t want to miss.

Before applying for any card, do your homework and compare the reward offerings between issuers. You want a program that puts real money or value back in your pocket for the types of things your company already buys.

4. Peer Reviews

When choosing a business credit card, be sure to check reviews from other entrepreneurs, too! Talking to folks in your industry is a great way to find out what cards have worked best for them. Don’t forget to check online reviews as well.

Wrapping Up

Ready to take your business to the next level? Then, a business credit card is the way to go! Not only will you get higher spending power and better perks than a regular personal card, but a business card is laser-focused on helping entrepreneurs like you succeed.

With features tailored specifically for funding your company’s growth, a business credit card will be your trusty sidekick as you take your venture to new heights.