Business credit card vs. personal: 9 key differences
- Business vs. personal credit cards: At a glance
- 9 key differences between business credit cards vs. personal credit cards
- What do business and personal credit cards have in common?
- How liability and reporting differ
- Factors to consider when choosing between a business vs. personal credit card
- Pros and cons of each card type
- Simplify business spending with Ramp
Both business and personal credit cards allow you to borrow money, but there are important distinctions between them. Personal cards are tied to your individual financial history, while business cards reflect your company’s financial activity.
Business credit cards also typically have higher limits and may not affect your personal credit score unless you've put up a personal guarantee. We'll cover these differences and more below as we compare business credit cards vs. personal credit cards.
Business vs. personal credit cards: At a glance
Business credit cards | Personal credit cards | |
|---|---|---|
Credit limit | Typically higher to support larger business expenses | Limited by individual income and personal credit profile |
Rewards | Tailored to business categories such as office supplies, advertising, and travel | Focused on consumer categories such as dining, groceries, and entertainment |
Liability | May require a personal guarantee; some corporate cards separate liability | Always tied to personal liability and credit |
Eligibility | Based on business revenue, time in business, business credit history, and sometimes personal credit | Based on personal credit history, income, and employment |
Credit reporting | Reports to business credit bureaus (Dun & Bradstreet, Experian, Equifax); some issuers also report to consumer bureaus | Reports to consumer credit bureaus (Experian, Equifax, TransUnion) |
Consumer protections | Not covered by the CARD Act; APRs and terms can change without notice | Covered by the CARD Act, which restricts sudden rate hikes and fees |
Tools and controls | Often include accounting integrations, expense tracking tools, and employee card controls | Generally limited to individual spending; no advanced tools |
9 key differences between business credit cards vs. personal credit cards
Business and personal credit cards may work similarly, but they differ in key areas such as credit limits, eligibility, reporting, rewards, and protections:
1. Business credit cards offer higher limits
Small business credit cards usually offer higher credit limits than personal credit cards, giving your business a higher line of credit to draw on for business spending. Even if your company doesn’t spend much from month to month, a high-limit business credit card can come in handy for unexpected expenses or bulk inventory purchases.
Some personal and business credit cards have spending limits on rewards rates. For example, you might earn 3% cashback on the first $10,000 spent in a category annually, then 1% after that. Business cards generally have higher spending caps to accommodate larger expenditures.
2. Eligibility criteria vary
Your eligibility for personal cards relies on your individual credit history, including past credit card usage, loan repayments, credit inquiries, income, and employment history. A strong credit profile significantly increases your chances of approval and may qualify you for better interest rates and credit limits.
For business credit cards, key factors that determine your creditworthiness include your revenue and cash on hand, which are strong indicators of your ability to repay debt. Other criteria include your company’s time in business and business credit score. Sometimes, your personal credit factors in as well.
3. Business credit cards typically offer better welcome bonuses
Many business credit cards offer better welcome bonuses than personal credit cards. This makes them an appealing alternative to personal cards, or a good second choice if you already use a main credit card and want to capitalize on the extra rewards.
Check the fine print to ensure you can spend enough to redeem the benefit. Typically, providers require a certain amount of spending within the first 3–6 months of opening.
4. Personal cards tend to have longer 0% intro APR benefits
While many personal and business credit cards offer points-based welcome bonuses, a 0% introductory APR is another key feature. This means you won't pay interest on purchases or balance transfers within a specific period.
Personal cards often boast lengthy 0% intro APR periods, sometimes exceeding 15 months. Business cards, meanwhile, typically have shorter 0% intro APR periods, and these often only apply to purchases. Balance transfer options with a 0% APR are less common among business cards.
That said, some business credit cards offer interest-free periods that extend past the 30-day mark, giving you some breathing room before you need to start making payments.
How to build business credit without using personal credit
Building business credit independently requires establishing a separate business entity, opening a dedicated bank account, and building relationships with vendors by consistently paying invoices on time. This demonstrates financial responsibility and allows your business to establish its own credit history.
5. Business and personal credit cards report to different credit bureaus
Personal credit cards typically report your activity to the major consumer credit bureaus: TransUnion, Experian, and Equifax. Changes to your credit usage, payment history, and credit limit will affect your personal credit score.
Business credit cards, on the other hand, report to business credit bureaus such as Dun & Bradstreet, Experian, or Equifax. Building a business credit score with Dun & Bradstreet requires registering for a D-U-N-S number.
Your personal credit ties to your Social Security number (SSN). When applying for a business credit card, you'll usually use the company's Employer Identification Number (EIN). However, if your business doesn't have an EIN, you might use your SSN for business credit.
Understand credit reporting policies
Business credit cards have varying reporting policies. Some may report to consumer credit bureaus, particularly if you're a sole proprietor. They may also report in cases of delinquency. A business bankruptcy can negatively impact your personal credit score.
6. Business credit cards may offer more specialized rewards programs
Business and personal credit cards often offer rewards in similar spending categories, including dining, entertainment, airfare, and hotel expenses. But the best business credit cards usually offer targeted rewards on business-related purchases, such as office supplies and advertising.
Some personal and business cards limit the rewards you earn with monthly, quarterly, or annual spending caps. However, business cards often have higher caps to accommodate higher business spending, allowing you to earn more rewards if you spend more.
7. Personal credit cards have more consumer protections
The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 stipulates that credit card companies can’t raise interest rates without warning. It's important to note that this law protects personal credit cards, but not business credit cards.
As such, business credit card interest rates can increase at any time. Always check the specific conditions of your card rather than assuming they're similar to or the same as your personal card's terms and conditions. Remember, some business credit cards, such as charge cards, have no interest rates because they require full monthly balance payments.
8. Payment terms may be different
Some business credit card issuers require payment of the entire balance each month. That can impact your financial performance if you’re using the credit card to purchase inventory that’ll take several months to turn over.
9. Business cards may include financial management tools
Business credit cards often include features designed to streamline business finances, including built-in expense management features and integrations with accounting tools.
For instance, the Ramp Business Credit Card includes expense management software that offers real-time visibility into spending, automated expense reporting, spend controls, accounts payable automation, and tools to manage vendor relationships.
Discover Ramp's corporate card for modern finance
What do business and personal credit cards have in common?
Despite their differences, business and personal credit cards have several key similarities. Understanding these features can help you see where the two products overlap.
They both extend credit
Both business and personal cards let you borrow up to a set limit and pay off your balance over time. As long as you make at least the minimum monthly payment, you’ll have access to a revolving line of credit.
They can affect your credit score
Your credit behavior can influence your score, whether you use a personal or business card. Personal cards report activity to consumer credit bureaus, while many business cards require a personal guarantee and may also appear on your personal credit report if you miss payments.
They have similar billing cycles
Both types of cards typically operate on a monthly billing cycle. You’ll receive a statement with your charges, payment due date, and minimum payment amount, regardless of whether you’ve tied the card to you personally or to your business.
How liability and reporting differ
With personal credit cards, you’re always personally liable for the balance. The business is typically responsible for repayment with business credit cards, but most issuers require a personal guarantee.
Business credit cards can affect your personal credit score. If a card requires a personal guarantee or if payments are delinquent, your provider may report negative activity to consumer credit bureaus. Personal credit cards almost always report activity to the three major consumer bureaus, while business cards primarily report to business credit bureaus.
These differences highlight why understanding business credit vs. personal credit matters. Personal cards build your individual history, while business cards help establish a separate credit profile for your company. Maintaining on-time payments with both types is essential for protecting and strengthening your creditworthiness personally and for your business.
Factors to consider when choosing between a business vs. personal credit card
Choosing between a business and personal credit card depends on your spending habits, your comfort with liability, and your future goals. Here’s how to think it through:
Assess spending habits
If most of your expenses are business-related, or if you need to keep business and personal spending separate for tax or accounting purposes, a business card is usually the better choice. It helps you streamline recordkeeping and makes reporting easier. If your purchases are primarily personal, a personal card will likely meet your needs more effectively.
Evaluate liability concerns
Liability is another important factor. Business cards often require a personal guarantee, which means you could be responsible for the debt if your business can’t pay. If you’re comfortable with that, the card can be a valuable tool for your company. But if protecting your personal credit is a top priority, a personal card may feel safer.
Consider long-term goals
Think about where you want to be in the future. A business card can help you build a separate credit history for your company, secure higher credit limits as your business grows, and issue employee cards with spending controls. If your focus is on building personal credit or you don’t need advanced business features, a personal card may still be the better fit.
Pros and cons of each card type
Both business and personal credit cards have strengths and trade-offs. Here’s how they compare at a glance:
Business credit cards | Personal credit cards | |
|---|---|---|
Pros |
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Cons |
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Simplify business spending with Ramp
If you’re looking for a business credit card that does more than just separate your personal and business finances, consider the Ramp Business Credit Card.
With no personal credit checks or guarantees, we protect your personal finances while helping your business build its own credit profile. You’ll also get higher spending limits, unlimited physical and virtual cards for your employees, and custom controls to keep spending in-policy.
We also streamline how you manage expenses. Automated tracking, real-time insights, and easy integrations with the tools you already use mean you spend less time chasing receipts and more time focusing on your business.
Ready to get started? Try an interactive demo.
FAQs
Business credit cards offer several advantages, including higher credit limits, specialized rewards programs tailored to business expenses, and valuable features such as employee cards with spending controls. These cards can streamline expense management, improve cash flow, and help build a strong business credit history.
Building strong business credit typically takes 6–12 months. However, establishing a solid credit foundation can take up to 3 years. Consistent on-time payments and responsible credit usage are crucial factors in accelerating this process.
While there’s no law prohibiting it, it’s generally not advisable to use a business credit card for personal expenses. Mixing business and personal spending can lead to a variety of potential issues, including tax implications, violations of card agreements, and accounting problems.
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