Separating Your Business and Personal Credit Card

Personal and commercial credit cards offer numerous benefits. They can make charging purchases and accruing rewards easier. Although they appear similar at first glance, business cards and personal cards differ in several ways. And understanding their differences goes a long way. These suggestions can aid in your understanding of the distinctions between the two if you’re considering applying for a company credit card. 

What does business and personal card mean?


A business credit card is meant to be used for business purposes rather than for personal use. Businesses of all sizes can obtain business credit cards. These can assist in developing a credit profile to plan overall borrowing arrangements. 


On the other hand, consumers use personal cards for everyday needs. These may include dining out, petrol, entertainment, vacation, and shopping; personal credit cards include perks like cash back rewards and accruing points or miles for spending. Let us have a closer look at the difference between the two.


  1. Consumer protections aren’t similar 


Only personal credit cards, but not business-related equivalents, are covered by the Credit Card Act of 2009. This indicates that your card issuer is free to raise the APR on your card without giving you a prior warning. You could also be required to pay substantial fines for seemingly insignificant offenses like late and returned payments.


Most business credit card issuers give business credit cards. Moreover, different consumer safeguards as are in place for personal credit cards. Nonetheless, it’s advisable to examine the credit card agreement, and you will get this on the provider’s website.


  1. Rates and limits are not the same


Business credit card applications typically ask for your home and enterprise income. You may anticipate that a company credit card will have a bigger credit limit than a personal card. Credit card issuers also consider that corporations typically spend more than individual consumers.

If you compare personal and business credit card APRs, you’ll notice that the former tends to have higher APRs than the latter. Additionally, since corporate credit cards are exempt from the Credit Card Act of 2009, credit agencies can alter APRs whenever they see fit. 


  1. Is the application process the same?


Many credit card issuers require your personal information during the application process. Your name, telephone number, and Identification Number is typically required when applying for business credit cards. However, you are frequently also asked for details unique to your company. A company credit card application often requests the following additional information: 


  • Age of business
  • Number of employees
  • Annual revenue and monthly expenditure
  • The name of your business


  1. Bookkeeping benefits 


Business credit cards typically come with features that can help you better manage your company’s finances, such as connectivity with your payroll system and yearly end itemized expenditure reports, in contrast to most personal credit cards.


Since you don’t have to comb through the bills from your card to identify all your business costs, this can make things easier come tax season. You may even tag expenses or add a photo of the receipt to each item with certain business cards. 


  1. Rewards


Cash back benefits, points or miles, and additional rewards for spending in particular categories are all personal and commercial credit card features. Personal credit cards are likely to yield extra points or miles for purchases like clothes or groceries. 

On the other hand, business cards typically give additional rewards for business-related purchases like phone contracts, online marketing, or office supplies. 

Moreover, business credit cards can have higher annual percentage rates (APRs). This could result in you accruing more interest on whatever balance you carry monthly. The interest rate won’t apply if you ultimately pay off your card each month. 


Bottom line

Understanding the variations between business and personal cards helps in selecting the best card for your needs. Whether you go for a personal or business credit card, understand the terms and separate business and personal spending. 


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