Which is which; business credit card vs personal credit card? When it comes to small businesses, they consider different things before choosing between the two. This is because both the business credit card and the personal credit card presents lucrative deals to small businesses.
In the following paragraphs, there is a lot of info that may help you to choose between a personal credit card and a business credit card.
There are advantages and disadvantages of using the credit card of your choice. Are you going for a secured business credit card or the cheapest credit card processing. Let’s get more info in the following text.
What Is The Personal Credit Card?
There are different types of credit cards. A bank or any financial service company can issue a credit card. For instance, there are Master cards, Visa cards, and more.
A personal credit card is a bank card for individuals to borrow money. The borrower who is a credit card holder must pay back the borrowed money according to the terms and conditions.
In most cases, credit cards have their interest rate capped. Then a business credit card has interest rates that change anytime. As a credit cardholder, you are responsible for keeping your card safe.
And you must avoid sharing a PIN with other people. Keep your credit card clean in a credit card wallet so that it doesn’t get denied in some credit card machines.
What Is The Business Credit Card?
Unlike a personal credit card, a business card is meant to be used by a business entity. These cards can be issued to any business regardless of size.
Having a business credit card as a business is good for future credit borrowings. This is because in most cases, the business credit card will be backed by the business’ liabilities.
Hence, with such backup, the lender can borrow the business based on liabilities to structure the credit terms and conditions. However, a business credit card has a higher interest rate in comparison to a normal loan.
Credit Card Policy For Small Business
When using a business credit card, you must make sure that you are aware of the terms and conditions. There are things that you can do using a personal credit card but you cannot with a business credit card. Y
ou might find yourself comparing; business credit card vs personal credit card. Therefore, you should be able to differentiate between the two.
Below are some of the terms and conditions that come with a business credit card;
The card must be used for business-related transactions and expenses.
An employee who uses a business credit card to make any transaction must report all the transactions to the company finance department.
The business credit card must not be used by an unauthorized person.
Make sure that you use the business credit card for authorized transactions.
What Are The Benefits Of Using Personal Credit Card For Business?
If you have a business, it is ideal to use the business credit for all the business transactions and expenses. However, a business credit card has its disadvantages.
And you can always use a personal credit card to settle some business transactions if there is a need. It is that business credit card vs personal credit card scenario again. Below are the benefits of using a personal credit card.
You can use your personal credit card to do business transactions but you can do the other way round. After using your personal card to do business transactions, you can claim the money that you used from the business.
A personal credit card has low charges compared to a business credit card. In addition to that, the personal credit card has lower interest rates in comparison to the business credit card. More so, using a personal credit card comes with a lot of incentives. However, the business credit card does not have a lot of incentives.
Using a personal credit card is convenient when you compare it to a business credit card. You can use it anytime and anywhere. But you cannot use a business card without being authorized. And is authorized to use a business credit card involves a lot of things such as applying for it.
How Can I Use Personal Credit Card For Business?
As you use your personal credit card to do business transactions, you should be careful with some issues. You must be able to claim your money successfully without causing any misunderstandings. Below are some of the things that you should note;
Make sure that you file the claim to the company on time. In most cases, company rules differ. Therefore you should beware of the terms and conditions in relation to using a personal credit card for business transactions.
You should record all the necessary details when making business transactions using your personal credit card. Most importantly, you should keep a proper authentic receipt. A receipt can be used as one of the proofs that you made a certain transaction.
Make sure that you don’t affect your personal credit card score limit. For instance, business transactions might be larger. And this may affect your personal credit card score limit in a negative way.
Kind Of Business Credit Cards Offer
The market has various offers when it comes to business credit cards offer. To get a business credit card, it might depend with your company’s needs.
Additionally, your company must be on good terms to meet the requirements of getting a business credit card. If you are in U.S you may consider the Brex Ecard for Ecommerce, American Express Blue Cash Business Card
Can I Get A Business Credit Card Without Personal Guarantee?
Most banks and financial institutions that offer business credit cards require a guarantee. A guarantee is needed to make sure that the business can settle its debts in the future if anything goes wrong.
The personal guarantee is good as a security to the lender. As such, it is difficult to get a business credit card without a personal guarantee. But it is possible to get a business credit card without a personal guarantee.
Giving a company a business credit card without a guarantee can be a red flag. If the company defaults in payments, the lender can also lose. But if there is a personal guarantee, the lender can recover the owed money from the personal guarantee.
As such, to get business credit without the personal guarantee requirements can be tricky. You must at least score a higher credit score to be given such a business card. For instance, if your business meets a certain level of revenue, you might get a business credit card without a personal guarantee.
How Can I Find Unsecured Business Credit Card?
There are financial institutions that offer unsecured business credit cards to companies. An unsecured business credit card means that there is no collateral or security. Therefore, the lender will be risking giving a company an unsecured business credit card. However, to get such a card is possible but difficult.
To get an unsecured business credit card, financial institutions have their requirements. And the business must meet to get the credit card.
For instance, you must meet the minimum credit score to qualify for an unsecured business credit card. A credit score is determined by the company’s credit history.
A higher score may put you in a better position to get an unsecured credit card. For instance, a higher credit score might indicate that you pay your debts on time and you have a good repayment history.
Can You Use A Business Credit Card For Personal Expenses?
As discussed in the above paragraphs, a business credit card comes with a lot of terms and conditions. Some of these terms are for making sure that the employees do not abuse the business credit card.
And some of them are for stopping the employees from using the card for making personal purchases. Therefore, it is not ideal for employees to use a business credit card to make personal purchases.
However, there are some instances where the employees can use the business credit card for personal expenses. For instance, when employees are on a business trip, they can use the business credit card to make accommodation and food payments.
And they must make sure that they keep receipts. And then the receipts can be presented to the finance department for filing.
What Are The Non Profit Business Credit Cards?
A non profit business credit card is a credit card that is ideally for a non profit business. A non profit business is a business that provides public benefit. Some of these businesses are exempted from paying tax.
As such, the non profit businesses target to operate with low costs. Hence, when it comes to choosing a credit card, they make sure that the card does not come with a lot of expenses.
There are several financial institutions that service the non profit business with credit cards. In almost every country, you can get such a financial institution that has the non profit business credit card.
Final Thoughts
Using a business credit comes with its pros and cons. You might end up in a scenario where you are watching business credit card vs personal credit card. But as a business, it is good to practice in a good manner.
Having a business credit card is good for your business. It comes with advantages that may open up your credit lines and let your business have a good credit score.
However, as much as you will be using the business credit card, there are some scenarios where your employees might use their personal credit cards.
Make sure that your business has solid terms and conditions on how to use the personal credit card for business transactions. More so, employees must also follow the business credit card policy when using it.
