Chip Lupo, Credit Card Writer
@CLoop
No, it’s not OK to max out a business credit card. When you max out your business card, it means the balance you owe equals your credit limit and your credit utilization is 100%, which can have a negative effect on your business and personal credit scores, depending on your credit card issuer’s credit reporting policy. Additionally, you will waste a lot of money on interest charges if you max out your business credit card and carry your balance from month to month.
Why It’s Not OK to Max Out a Business Credit Card
Business Credit Score Damage. Your business credit score can be negatively affected if you max out your credit card. Some business credit card issuers will report your credit limit and monthly balance to the business credit bureaus, which use the information to calculate your credit utilization. If your credit utilization is high, it can make it more difficult to obtain favorable terms on future loans or credit lines.
Personal Credit Score Damage. Using most or all of your business card’s credit limit could also affect your personal credit score, depending on the issuer’s credit reporting policies. While some business cards only report late payments or serious delinquencies to the personal credit bureaus, others also report normal account information such as your balance and credit limit.
High Interest Rates. Credit cards usually come with high interest rates. If you carry a balance from month to month, which is likely with a maxed out card, you'll end up paying a significant amount in interest. You’ll therefore have to divert resources to climbing out of debt rather than focusing on building your business.
Increased Minimum Payment. Maxing out your business credit card will cause your minimum payment to increase. Minimum payment calculations vary by issuer, but you’re generally responsible for a fixed amount or a percentage of your balance, whichever is higher.
Unable to Make Purchases. When you max out your business credit card, there’s no available credit left, meaning you can no longer make purchases with the account until you make a payment. Having available credit can provide a safety net for unexpected expenses.
To learn more, refer to WalletHub’s guide on maxed out credit cards.
People also ask
How can I get the most out of my business credit card?
To get the most out of a business credit card, compare offers and pick the card that will maximize your business’s rewards earnings, after subtracting annual fees. Then, make sure to pay the bill in full every month, unless a 0% APR promotion is available. Taking advantage of flexible authorized user policies and keeping business and personal expenses separate will also help the card work for your business.
That’s not all, though. There are...
read full answer by WalletHub, Financial CompanyHow much of your business credit card should you use?
You should aim to use no more than 30% of your business credit card’s limit, though that may not necessarily be the case for all business credit cards. How much of your card’s limit you should use depends on several factors, including the reporting practices of your specific card issuer.
Key Considerations for Business Credit Utilization
- Credit Utilization Reporting. Some business cards may report your payment history or other information to commercial bureaus, but...
Did we answer your question?
Important Disclosures
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers. For full transparency, here is a list of our current advertisers.
Advertising impacts how and where offers appear on this site (including, for example, the order in which they appear and their prevalence). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.
Advertising enables WalletHub to provide you proprietary tools, services, and content at no charge. Advertising does not impact WalletHub's editorial content including our best picks, reviews, ratings and opinions. Those are completely independent and not provided, commissioned, or endorsed by any company, as our editors follow a strict editorial policy.