Using a Personal Credit Card for Business

You may use a personal credit card for business expenses because you can’t qualify for a business credit card or because the rewards on personal credit cards better match your company’s spending. No matter your reason for choosing a personal credit card for business, you should avoid pitfalls like mixing your personal and business expenses.

Business expenses generally are tax-deductible. Avoid commingling expenses on a single credit card to make tax time easier and help in case of an IRS audit. What’s more, business credit cards often have higher limits and better payment terms. If you can qualify, we’ve created a resource for business owners to shop and compare the best small business credit cards easily.

Risks & Rewards of Using Personal Cards for Business

Using a personal credit card for business offers its own unique set of risks and benefits. How you qualify differs between personal and business credit cards. While using credit, earning rewards and incurring interest works the same, using a personal credit card will impact your credit differently. You may also earn rewards on different categories of spending with a personal credit card.

Qualifying & Rewards

You’ll need to prove you own a business to qualify for a business credit card or at least show you’re earning income outside of your regular employment. Personal credit cards have no such requirement. Plus, when you use a personal credit card, you may earn the best rewards on the types of spending not typically associated with business expenses like groceries or entertainment.

Building Credit

Using a personal credit card for business expenses could help you build your personal credit as issuers report your payment activity to consumer credit bureaus. Business credit card issuers report to business credit bureaus and some also report to consumer bureaus. You should avoid a personal credit card for business if you want to build your business credit or routinely spend near your credit limit. Using too much of your available credit could lower your personal credit score.

Commingling Funds

If you choose a personal credit card for business, make sure to dedicate the card for business expenses. If you mix your business and personal spending on one card, it could make it harder to identify business expenses for tax purposes. Avoid commingling expenses with a business credit card and a business checking account.

When a Personal Credit Card for Business Is Right

A personal credit card for business expenses is right if you own a startup business and can’t yet qualify for a business credit card. Small business credit cards may offer shorter 0% introductory periods, higher annual percentage rates (APRs), and ongoing rewards that don’t match your firm’s spending.

You should choose a personal credit card when you want:

• Longer introductory APRs: Find 0% introductory APR periods of up to 21 months; business credit cards typically offer intro periods on purchases and balance transfers no longer than 15 months
• Lower ongoing APRs: Qualify for a low ongoing APR of as little as 9%; the lowest ongoing APRs on business cards are near 13%
• Rewards tailored to your spending: Earn ongoing rewards of up to 5% on spending categories like groceries and entertainment; business cards tend to reward traditional business spending categories like office supplies

When a Business Credit Card Is Right

A business credit card is right if you need a credit card with high credit limits or you want to establish or improve your business credit. You also may choose a business card if your personal credit card isn’t rewarding you for the things your company buys most.

You should choose a business credit card when you want:

• A higher credit limit: Qualify for a limit of $10,000 or more with a business credit card or a card that offers no pre-set spending limit
• Flexibility to carry a balance: Rotate a balance for free with some small business credit cards; personal credit cards may do this only as part of an introductory offer
• Rewards tailored to your spending: Earn ongoing rewards of up to 5% on spending categories like office supplies and telecommunications services; personal credit cards tend to offer top ongoing rewards in categories that business credit cards don’t offer like gas purchases

Personal Credit Card for Business vs Business Credit Card at a Glance

What a Personal Credit Card for Business Costs

Annual fees on personal credit cards range from $0 to $550, but there are more no-annual-fee personal cards on the market than there are business cards. More personal cards offer 0% APR introductory periods, as well, with the longest intro period topping out at 21 months, three months longer than the longest business card intro period. Most credit cards will offer ongoing APRs as low as 13% to 15%, but a few issuers may offer even lower interest rates.

What a Personal Credit Card for Business Offers

Introductory rewards on personal credit cards range from $0 to more than $1,000. When a card offers a sign-up bonus, you’ll generally have to spend $500 to $3,000 or more over several months to qualify for the reward. For ongoing rewards, you’ll earn either a fixed rate ― up to 2% cash back on all purchases ― or tiered rates with 5% or more cash back in bonus category spending like travel, entertainment, and dining.

Where to Get a Personal Credit Card for Business

You can get a personal credit card for business expenses from most major providers, including Discover, Chase, Capital One, Citi, and American Express. You can compare personal cards looking for rewards and benefits that suit your business’ needs and then fill out an application.

Top Personal Credit Cards for Business

Discover it Cash Back

Discover it Cash Back is best for owners looking for a combination of great benefits. You’ll receive 0% introductory APR for 14 months on purchases and balance transfers, a low ongoing APR and unique introductory rewards. Discover will match all of the cash back you earn during the first year, meaning you’ll earn at least 2% cash back on all spending.

American Express Blue Cash Preferred®

American Express Blue Cash Preferred® is best for businesses that have a large budget for groceries and gas spending. You’ll earn 6% cash back at United States supermarkets on up to $6,000 in spending, then 1% afterward. This card also pays 3% cash back at U.S. gas stations.

U.S. Bank Cash+ Visa Signature Card

The U.S. Bank Cash+ Visa Signature Card is best for owners seeking more flexibility in choosing their bonus rewards categories. You can choose from a list of 12 categories the two that will earn 5% cash back on up to $2,000 in spending each quarter.

Pros & Cons of Using a Personal Credit Card for Business

There’s nothing wrong with using a personal credit card for business expenses — as long as you keep your personal and business expenses separate. However, that doesn’t mean a personal credit card for business is right for all small business owners. Personal credit cards offer better cardholder protections than business cards, but your access to employee cards may be limited.

Pros of Using a Personal Credit Card for Business

The positives of using a personal credit card for business are:

• Better cardholder protections: The federal Credit Card Accountability, Responsibility and Disclosure Act of 2009 bans most retroactive interest rate hikes on existing balances and requires issuers to apply payments to cardholders’ highest interest rate balances first; this law does not protect small business card owners
• Different rewards bonus categories: Personal credit cards offer their highest bonus rewards on travel, dining, groceries, gas, and entertainment expenditures
• Better introductory offers: Citi Simplicity offers 21 months of 0% interest on balance transfers; Chase Slate charges no balance transfer fee on transfers made within 60 days of account opening
• Lower ongoing APRs: The average APR on business credit cards is slightly lower than on personal credit cards; however, the best personal credit card APRs are lower than on business cards — below 10% for cardholders with a credit score of 750 and higher
• Potentially lower annual fee: Although you can easily find both personal and business credit card issuers that offer more no-annual-fee options, there are more choices among personal credit cards
• Ability to build your personal credit: All personal credit cards report to the consumer credit bureaus; if you pay your bills on time and keep your credit utilization low, you can improve your personal credit

Cons of Using a Personal Credit Card for Business

The negatives of using a personal credit card for business are:

• Too easy to mix personal & business expenses: Unless you’re disciplined, you may be inclined to put personal spending along with your business spending on a personal credit card; this could make it harder for you to justify business expenses when preparing your taxes or in case of an audit; it’s easy to avoid commingling expenses with a business credit card and a business checking account
• Spending controls are limited: Business credit cards often let you sync your expenditures with your accounting software and control the types and amount of spending on authorized user cards. Personal cards may not offer these functions
• Access to employee cards may be limited: Some business credit card issuers allow up to 75 or more employee cards on a master account; personal cards may set tighter restrictions on the number of authorized user cards issued
• May impact your personal credit: If you fail to pay on time or default, your personal credit will be damaged because personal card issuers report to consumer credit bureaus; most business card issuers will not report activity to consumer credit bureaus
• Won’t help you build business credit: Most business credit card issuers report card activity to business credit bureaus; personal cards do not; responsible use of a business card will allow you to build credit and make yourself eligible for small business loans

There are many pros and cons to using personal credit cards for business expenses. Choosing the right card depends on whether you prefer the protection and features of a personal credit card over the spending controls and features offered by business cards.

6 Tips for Using a Personal Credit Card for Business

When using a personal credit card for business expenses, there are a few key things to keep in mind to ensure you’re helping to keep both your credit and your business strong. First, make sure you pay on time and mind how much credit you’re using. However, you also need to make sure the card offers the right rewards for you and you’re taking advantage of its benefits.

Follow these six tips for using a personal card for business effectively.

1. Don’t Mix Personal & Business Expenses

At the very least, mixing personal and business expenses will make for a bookkeeping nightmare. However, it also could make it more difficult for you to deduct legitimate business expenses from your taxes and make any government audits more unpleasant.

2. Make Sure the Card Offers the Right Rewards

Your personal card should offer top rewards on the types of products and services your business purchases most frequently. Look for a personal credit card if your business spends heavily on groceries, dining, or gasoline.

3. Keep Your Credit Utilization Low

Credit utilization — how much credit you use vs how much credit an issuer makes available to you — is an important factor in your credit score. Your personal utilization may not be affected by business credit card spending, but it is by your personal credit card spending. Aim for a utilization ratio below 30%.

4. Always Pay Your Bill on Time

Payment history is another important factor in your credit score. Whether the card you use is for business or personal expenses, make sure to pay at least the minimum payment on or before the monthly due date.

5. Take Advantage of Personal Credit Card Perks

Personal credit cards like business credit cards may offer benefits that can increase the value of your card, including price protection, extended warranties, and free airport lounge access. Make sure to take advantage of these free benefits to return more value to your business.

6. Do a Yearly Checkup

Your business needs change over time. Your credit card needs may also change. It’s smart to conduct an annual review to make sure your personal credit card is still providing the right ongoing APR, rewards, and benefits to suit your business.

Alternatives to Using a Personal Credit Card for Business

If you discover your personal credit card for business no longer provides the best financing options, rewards, and benefits for your business, it’s time to look at other alternatives. The best alternatives include cash back business credit cards, business credit cards for travel and 0% APR business cards.

Cash Back Business Credit Cards

Cash back business credit cards are best for owners who want to earn rewards on purchases they make most frequently for their businesses. The best cash back business cards offer up to 5% back on common company expenses like office supplies and telecommunications services. A cash back card makes it’s easy to put the savings directly back into the business when you redeem for a statement credit or a deposit into your bank account.

Business Credit Cards for Travel

Business credit cards for travel are best for owners who fly or stay in hotels frequently for work. The best travel rewards credit cards offer up to five times the points on airfare or hotel stays. A business travel credit card helps owners reduce the cost of travel when they redeem points or miles for additional flights or hotel stays. Travel rewards cards also offer benefits personal credit cards may not offer like free airport lounge access and free checked bags.

0% APR Business Credit Cards

0% APR business credit cards are best for owners who are seeking to fund large purchases for free or to free up capital to build their companies. The best 0% APR business credit cards offer long introductory interest-free periods of up to 15 months for purchases and balance transfers. Many of these cards also offer ongoing rewards tailored for small business expenses.

Frequently Asked Questions (FAQs) About Using a Personal Credit Card for Business

If you still have questions about using a personal credit card for business, here are some of the most frequently asked questions. If you don’t see an answer to your question, visit the FitSmallBusiness forum and post a question there.

Can a Business Apply for a Personal Credit Card?

A business owner can apply for a personal credit card. Owners may want a personal card because it offers ongoing rewards that fit their spending or because they’re attracted to the introductory rewards or APR. If you apply for a personal credit card for business expenses, make sure to keep your personal and business expenses separate.

Do Business Credit Cards Affect Personal Credit?

A business credit card can affect your personal credit in two ways. When you apply for a business credit card, issuers generally check your personal credit at application, which could cause your personal credit score to dip slightly. After application, most issuers will not report your business card activity to consumer credit bureaus. Going forward, your personal credit will not be impacted by your business credit card.

Can I Stack Personal Credit Cards to Fund My Business?

You can stack personal credit cards to fund your business if you may not qualify for traditional financing options. Stacking involves applying for multiple credit cards to fund your business. You’ll need to have a credit score of at least 680 to qualify, and you may want to space out applications to avoid multiple hard pulls on your personal credit during a short period of time, which could reduce your credit score.

The Bottom Line

A personal credit card for business expenses can be a helpful tool if your company can’t yet qualify for a small business credit card or if the card offers a mix of rewards, interest rates, and benefits that match your company’s needs. Make sure to keep your business and personal expenses separate.

If you find you can’t keep your expenses separate, you should consider applying for a small business credit card. Chase Ink Business Cash℠ is a good choice for first-time cardholders because it charges no annual fee, offers a $500 introductory bonus and ongoing rewards of up to 5% cash back.

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