Finding and using the right business credit card can be a helpful way to pay for daily expenses, earn rewards, and build business credit. If, however, you’re wondering what the difference is between business vs. personal credit cards—you’re not alone.
Although there are a number of similarities between the two types of credit cards, understanding the differences will help you decide whether a business or a personal credit card is better suited for your needs.
So, what are the differences? We’re here to help you find out.
In this guide, we’ll break down a thorough comparison of business credit cards vs. personal credit cards—plus, we’ll offer some of our top picks so you have a place to start with your potential business credit card search.
As we mentioned, business credit cards and personal credit cards are very similar.
First and foremost, these two types of credit cards work in the same way: Issuers extend you a credit line which gives you the ability to make purchases and pay your balance at the end of the month. Both business and personal credit cards accrue interest in the same way—if you don’t pay your balance in full at the end of the month, you’ll accrue interest on the amount you owe.
In addition, when you make purchases on your credit card—depending on the card—you have the potential to earn rewards, cash back, or other perks.
With these similarities in mind, let’s now explore how these two types of cards differ.
Here are seven important differences to understand when it comes to business vs. personal credit cards.
The first, and perhaps most obvious difference between business and personal credit cards, is that business credit cards are specifically designed for business use. Personal credit cards, on the other hand, are designed for consumer use.
Other than the name, you’ll find that business credit cards include certain features, perks, and tools that are designed for business owners and that you’re unlikely to find with personal credit cards.
As an example, you’ll find that many business credit cards include free cards for employees (sometimes with spending limits) which is not a feature you would need if you were an individual looking for a consumer card.
In addition, and as we’ll discuss in greater detail below, business credit cards often have rewards programs designed to allow business owners to earn in places and categories where they spend most.
Moreover, you’ll often find that business credit card issuers include business expense and tracking tools with their accounts—similarly, many issuers, like Chase, for example, offer their business credit cards in conjunction with their business bank accounts.
In certain cases, you might be able to access additional rewards or perks for using a business bank account and a business credit card from the same issuer.
Another essential difference between business credit cards vs. personal credit cards is that the application for a business credit card will ask for business-specific information. Although you can apply for most business credit cards quickly and easily online (just as you would with a personal credit card), you’ll find that these applications will ask for information such as:
Of course, as personal credit cards are designed for individuals, you won’t see these types of fields on a consumer credit card application. However, a business credit card application will ask you for certain personal information as well. To this point, it’s important to note that most business credit cards will require a personal guarantee.
Although this guarantee may be found in the fine print of your agreement, it essentially holds you, the individual, responsible for any debts you create using the card, even though it’s a business credit card.
Therefore, if at any time, your business is unable to pay the balance on the card, you, the individual, will be responsible for making the payments—just as you would as an individual with your personal credit card.
Refer to our guide for more information on business credit card requirements.
Next, one of the more technical differences between business credit cards and personal credit cards is that business credit cards aren’t monitored and controlled as closely as personal credit cards are.
Specifically, consumer protection laws—like the Credit Card Act of 2009—usually don’t apply to your business through a business credit card. This means that your business credit card’s APR could be subject to change without you knowing it. Similarly, you could also incur much higher fees if you pay your bill late.
Although this doesn’t happen often, it could have a big impact on what you pay in full—and this is especially true if you often carry a balance.
In addition, these protections also have the potential to impact the way your balance payments are applied. If you’re paying different interest rates on the same amount on a personal credit card, the issuer legally has to apply the payment to the highest rate first—this will drive what you pay down in interest. The same is not necessarily true with a business credit card.
The issuer could apply your payment to the balance that has the lowest interest balance, leaving the most expensive part of your debt accruing interest charges.
This being said, most business credit card issuers extend the same consumer protection policies to business credit card holders as a courtesy—so it shouldn’t be a top concern.
It is important to note this difference, though, as issuers are not legally bound to those same consumer protection laws. Therefore, you should always read your credit card agreement (business or personal) thoroughly before you sign up.
First, because business credit card applications ask for your business and personal income, you’ll usually find that you can access a higher credit limit with a business credit card vs. a personal credit card. As you might expect, this can be particularly useful for businesses as they often both make more money and spend more money than consumers.
On the other hand, however, you’ll also find that business credit cards are more likely to have higher APRs and fees (as well as shorter 0% intro APR periods) compared to personal credit cards. Although some of these fees correspond to the level of perks you receive with the card, the same isn’t necessarily true for interest rates. In general, business credit cards have higher APRs than personal credit cards.
This being said, however, you only have to worry about a higher APR if you plan on carrying a balance from month to month. Plus, although some business credit cards have high annual fees, there are just as many competitive business credit cards with no annual fees.
As you likely know, your borrowing behavior with your personal credit card affects your personal credit report. One of the biggest differences between business vs. personal credit cards, however, is that business credit cards have the potential to affect both your business credit report and your personal credit report.
Why is this the case?
Well, first and foremost, your spending with your business credit card affects your business credit score. In fact, using a business credit card responsibly is a great way to build business credit, as your credit card issuer will report your history to the business credit bureaus—Dun & Bradstreet, Experian, etc.
Some credit card issuers, like Capital One, for example, will also report your business credit card activity to the personal credit bureaus as well. In this case, your spending will affect both types of credit.
Although this can be beneficial if you’re spending responsibly—as you’ll be able to improve your personal and business credit scores—it can be problematic if you have issues with your credit card. If you have spending problems and your credit history is reported to both the consumer and business credit bureaus, both your business and personal credit scores will be negatively impacted.
Therefore, before you opt for a business credit card, it’s important to understand how the card issuer reports spending history.
Learn more about the differences between business credit vs. personal credit.
As we mentioned above, one of the largest benefits of business credit cards vs. personal credit cards is the business-specific rewards programs that are associated with many different business credit cards.
With business credit cards, you’ll find rewards programs that not only offer cash back or rewards points, but those that allow you to earn for spending in business-related categories, such as:
Therefore, instead of earning rewards in consumer categories—restaurants, groceries, shopping, etc.—business credit card reward programs give you the potential to earn more for where you spend most.
In addition, many business credit card issuers offer competitive travel rewards cards—with perks designed to benefit those who travel for business frequently.
Use our guide to learn more about the best business credit card rewards.
Finally, on top of the standard rewards programs that you’ll find with many business credit cards, you’ll find that compared to personal credit cards, business credit cards have the potential to offer a variety of other perks.
For instance, some business credit cards include perks such as:
Plus, if you opt for a travel business credit card, or a co-branded business credit card (like the Southwest business credit card) you’ll find even more benefits related to that specific type of card.
Moreover, as we mentioned briefly above, most business credit card accounts also include access to tools that help you manage your business expenses and spending—cash flow tools, detailed insights and reports, account alerts, fraud protection, and more.
Although you might find some of these tools (or similar ones) with a personal credit card, the ones you receive with a business credit card are specifically designed for business financial management.
With all of the differences between business vs. personal credit cards in mind, you might be wondering about the possibility of using a personal credit card for your business.
When it comes down to it, the answer is yes—you can use a personal credit card for business. However, for a number of reasons, it’s much more advantageous to use a business credit card for your business over a personal credit card.
In addition to some of the benefits we’ve outlined above—business-specific rewards and perks, the ability to build business credit, etc.—using a business credit card for your business saves you the possible bookkeeping, tax, and legal problems that can be associated with mixing your personal and business finances.
In fact, at the end of the day, using a business credit card is a great way for new business owners to separate their finances, as well as begin to establish business credit.
Therefore, although smaller business owners, especially sole proprietors and freelancers, may be tempted to use a personal credit card vs. a business credit card, it’s worth at least exploring your business credit card options—especially with all of the competitive, no-annual-fee business credit cards on the market.
So, after comparing business vs. personal credit cards, you may decide that a business credit card is the right option for you. So, where do you start your search?
Although there are a variety of options out there, you might begin by looking at the cards in these categories:
Although business credit cards often have shorter 0% intro APR periods compared to personal credit cards, there are still a handful of options to choose from if you’re looking for a period that allows you to carry a balance without accruing interest.
In particular, you might consider the American Express Blue Business Cash or Blue Business Plus, both of which have a 12-month 0% intro APR period on purchases. Of course, after the intro period expires on these cards, you’ll receive an APR that will vary based on the market and your creditworthiness.
This being said, however, both of these Amex business credit cards also give you the ability to earn a variety of rewards—and neither requires an annual fee.
Compare the best 0% intro APR business credit cards.
If one of your top concerns between business vs. personal credit cards is paying a high annual fee, you’ll want to look into cards like the Chase Ink Business Cash, Chase Ink Unlimited, and Capital One Spark Cash Select.
All three of these cards have no annual fee—plus, they each give you the ability to earn rewards, whether cash back or bonus points. Additionally, both of these Chase cards offer a 12-month 0% intro APR period, similar to the Amex cards discussed above.
With the Capital One Spark Cash select, on the other hand, you’ll have access to a shorter 0% intro APR period, only nine months, but you’ll also have no foreign transaction fees, no balance transfer fees, and a $0 fraud liability guarantee.
Compare the best no-annual-fee business credit cards.
Ultimately, when choosing between a business credit card vs. personal credit card, it’s important to understand the differences we’ve reviewed here. After all, fully understanding these differences will help you choose what’s best for your business and find the right credit card for your unique needs.
Although there may be a few circumstances in which using a personal credit card for business expenses is okay—in general, you should separate your business and personal finances by keeping all purchases for your company on a business credit card.
Plus, by doing so, you’re improving your business credit score along the way—which will undoubtedly benefit your business in the long run.