What is a business credit card? This question is about Credit Cards

A business credit card is a credit card that only business owners or authorized representatives of businesses can apply for. Business credit cards are meant be used for business purposes, not personal expenses. And while it’s not illegal to put personal expenses on a business card, it does make bookkeeping and tax preparation much more complicated. During the approval process for a business credit card, issuers will look at the credit history of the business and the money it makes. Business credit card issuers will also consider the personal credit and income of the person applying, because that person will almost always need to provide a personal guarantee. That means the applicant will need to personally commit to paying back the debt on the card if the business cannot. There are a lot more features of business credit cards to know about before applying, too. They differ from personal cards in various ways, like lacking certain legal protections, being generally more expensive and offering higher credit limits. What Defines a Business Credit Card: Only a business owner or representative of a business can apply for a business credit card. A business credit card should only be used for business. Putting personal expenses on the card isn’t illegal, but it is a bad idea. The CARD Act does not apply to business cards, so they have fewer protections than personal cards. People who apply for a business credit card must give a personal guarantee in most cases. Business credit cards offer “employee cards” to let employees share the account, often for free. Credit cards for business usually have higher credit limits than personal credit cards (since a business often has more money). Business credit cards are typically more expensive than personal credit cards. You may get rewards on purchases the business makes with a business credit card. Business cards may report to the big three consumer credit bureaus, but may also only report to business bureaus. It’s possible to build business credit by using a business credit card. You can get a business credit card whether you have hundreds of employees or you’re a sole proprietor. There are tons of options, and you can see some of the best business credit card offers on WalletHub to start your search.

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What is a business credit card?

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This question is about Credit Cards

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Adam McCann, Financial Writer

@adam_mccann • 03/26/20 This answer was first published on 03/26/20. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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A business credit card is a credit card that only business owners or authorized representatives of businesses can apply for. Business credit cards are meant be used for business purposes, not personal expenses. And while it’s not illegal to put personal expenses on a business card, it does make bookkeeping and tax preparation much more complicated.

During the approval process for a business credit card, issuers will look at the credit history of the business and the money it makes. Business credit card issuers will also consider the personal credit and income of the person applying, because that person will almost always need to provide a personal guarantee. That means the applicant will need to personally commit to paying back the debt on the card if the business cannot.

There are a lot more features of business credit cards to know about before applying, too. They differ from personal cards in various ways, like lacking certain legal protections, being generally more expensive and offering higher credit limits.

What Defines a Business Credit Card:

Only a business owner or representative of a business can apply for a business credit card.
A business credit card should only be used for business. Putting personal expenses on the card isn’t illegal, but it is a bad idea.
The CARD Act does not apply to business cards, so they have fewer protections than personal cards.
People who apply for a business credit card must give a personal guarantee in most cases.
Business credit cards offer “employee cards” to let employees share the account, often for free.
Credit cards for business usually have higher credit limits than personal credit cards (since a business often has more money).
Business credit cards are typically more expensive than personal credit cards.
You may get rewards on purchases the business makes with a business credit card.
Business cards may report to the big three consumer credit bureaus, but may also only report to business bureaus.
It’s possible to build business credit by using a business credit card.

You can get a business credit card whether you have hundreds of employees or you’re a sole proprietor. There are tons of options, and you can see some of the best business credit card offers on WalletHub to start your search.

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What are the pros and cons of business credit cards?

The pros of business credit cards are the rewards, initial bonuses, the expense-tracking tools and the free cards for employees.

However, when it comes to the cons of business credit cards, I feel that a credit card is not useful to new business owners. I find that a business, when it is first starting, should be interested in accumulating profits, instead of accumulating debt. In addition, should the business fail, the business owner is still liable for the debt, even if the business is closed. ... read full answer

Realistically, it would behoove a business owner to research other options for funding, such as government grants, as well as business assistance. However, if an emergency does come about with the business, I would suggest a business loan from a bank as a much better route than a credit card.

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Is it illegal to use a business credit card for personal use?

No, it is not illegal to use a business credit card for personal use. However, there are reasons you may not want to. After all, business credit cards are designed with business owners in mind, so the cards’ rewards and benefits are geared more toward business needs than consumer needs. Using a business credit card for personal expenses can also make things a little harder when it’s time to file your taxes. You cannot deduct any of the personal expenses charged to a business credit card as business purchases. If you do have too many deductions, it’s likely the IRS will get involved, and that can make things very painful.... read full answer

The rewards with business credit cards are also different from what a consumer might need. For instance, many business credit cards reward you most for expenses like office supplies and telecommunication services. Business credit cards often come with other features that aren’t as important for consumers, too. For instance, many business credit cards have very detailed expense tracking and spending reports.

Another reason to avoid using a business credit card for personal use is that business credit cards aren’t covered under the CARD Act. The Credit CARD Act of 2009 introduced a number of regulations to protect consumers from abusive practices by credit card issuers. However, business credit cards were excluded from the CARD Act. This means business credit card users don’t have to be given notice before their interest rates get increased, among other things. While many business credit card issuers have voluntarily extended the CARD Act protections, it’s not a requirement.

If you’re interested in a business credit card for personal use because of the rewards, you may be able to find a consumer credit card with rewards to fulfill your needs. There are lots of really good options available right now, including offers with big rewards bonuses and high credit limits.

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