Key takeaways

  • When choosing between a business credit card and a personal credit card, consider your method of income as well as your financial needs and spending habits.
  • Business credit cards can simplify bookkeeping and offer higher spending limits, specialized rewards and employee card options.
  • Personal credit cards offer longer 0 percent introductory APR periods and consumer protections.

Are you in search of a credit card for your small business? Having trouble deciding between a business credit card and a personal rewards credit card? Business and personal credit cards are similar, but differences are important to pay attention to when determining which best fits your needs.

Factors like benefits and rewards, spending limits, consumer protection, employee perks and purchase reporting are important to consider when comparing business credit cards and personal credit cards. Here are key differences to keep in mind when applying for personal and business credit cards.

What’s the difference between a personal and a business credit card?

While personal credit cards function similarly to business cards, the significant differences lie in the details.

Personal credit cards Business credit cards
  • Report card activity to the three major credit bureaus
  • Offer boosted rewards in categories like grocery store and drugstore purchases
  • 0% intro APR offers are often longer than business card offers
  • Provide consumer protection that’s guaranteed under the law
  • Spending limits often higher than personal cards
  • Specialized rewards for business-related categories like phone bills, office costs and online advertising
  • Provide itemized end-of-year reports
  • Offer employee cards with customizable spending limits
  • Bigger welcome bonuses than most personal cards
  • Lower spending limits
  • Basic end-of-year reports on spending
  • No employee card options
  • Some issuers report to both credit bureaus and business credit score companies
  • Consumer protection isn’t guaranteed

Are business credit cards only for business owners?

No — technically, you don’t need to have a business up and running to apply for a business credit card. Generally, any person who makes money independently could be considered a business, so you don’t have to have a registered LLC or corporation to be eligible. When completing a business card application, you can list yourself as the sole proprietor with your Social Security number, rather than including an Employer Identification Number (EIN).

If you’re not making money independently but intend to start a business and have business-related purchases to make, you’ll still have a solid shot at qualifying.

The application process for a business credit card is similar to a personal credit card’s with the addition of questions related specifically to your business. For this reason, it’s best to apply only if you have a business or intend on starting one. An exception is corporate employees that regularly expense purchases for work.

However, be intentional about the credit cards you choose to apply for. If you don’t have extensive business needs, consider applying for a personal credit card instead.

How to decide between a business or personal credit card for your small business

Deciding between a business and personal credit card isn’t as difficult as you may think. First, determine what’s important for your small business based on factors that relate to both business and personal cards.

Credit limits

Business credit cards tend to come with higher credit limits than personal credit cards. A higher limit can provide more flexibility in the face of steep operating costs small businesses can require. Yet a personal credit card might be best if you don’t need a particularly high credit limit.

Category spending

Consider the types of purchases you’ll be making on behalf of the business. If you have recurring business purchases, you might benefit from a business credit card. Some business credit cards tailor cash back rewards to categories like office supplies, phone bills or marketing costs that support small businesses. Many even offer statement credits for popular business-related retailers like Staples and Dell.

If your business doesn’t tend to lean in one particular direction regarding spending, a flat-rate rewards card may be the way to go.

0% intro APR periods

Personal credit cards can offer 0 percent intro APR periods that last anywhere from 12 to 21 months for purchases and balance transfers. Business credit cards generally offer relatively shorter 0 percent APR periods, and they typically apply to purchases only, and not balance transfers.

If you aren’t looking to transfer high-interest debt from another card, you may not need a long zero-interest intro period — but it’s something to keep in mind.

Record keeping

It might benefit your small business to track finances with a business credit card. Many business cards provide detailed spending reports at the end of the year that simplify prepping for tax season and itemizing deductions on your return. The end-of-year reports that come with personal credit cards may not be as detailed.

Plenty of business credit cards offer built-in bookkeeping integration for platforms like QuickBooks, making it even easier to access detailed records of your business spending.

Consumer protections

Business cards don’t qualify for the same protections that consumer cards do under the Credit Card Accountability Responsibility and Disclosure Act of 2009 — more commonly called the CARD Act. If you decide to apply for a business credit card, carefully read the card’s terms and conditions to confirm that you’re OK with the level of protection the issuer offers. You’ll find that at least a few issuers offer consumer protections, even if the law doesn’t require them to.

Why choose a business credit card over a personal credit card?

Still not sure what’s right for you and your business? Personal credit cards offer perks and rewards and tend to be easier to qualify for than business credit cards. But business credit cards can provide a host of benefits that personal credit cards don’t, making them worth the hassle of applying for many business owners.

Additional reasons you might choose a business credit card over a personal card for your small business include:

  • You can start building business credit. Just like a poor personal credit score, a poor business credit score can close the doors to future financing opportunities. A business credit card is a helpful tool to get started with building your business credit score and setting your business up for financing success.
  • It’s easier to keep your finances separate. Having a card that’s dedicated to your business can make it easier for you to organize your finances overall. You’ll know that all charges to that card count as business expenses, which makes it easier to set budgets between your personal and professional life, especially if you’re a sole proprietor.
  • You can track employee spending. Most business cards offer free employee cards that you can distribute to trusted staff. These employees can then make purchases on behalf of your company, allowing you to track spending, set spending limits and earn lucrative card rewards faster.

The bottom line

Personal credit cards tend to offer longer introductory 0 percent APR and guaranteed consumer protections under the law, helping you to build personal credit. But if you’re making money independently or intend to start a business, the best small-business credit cards can be a handy way to build a business credit score, organize bookkeeping and take on short-term financing to pay for operating costs. They also tend to offer generous rewards on your business spending.

No matter which of these two card types you choose, smart business owners keep personal and business spending separate, which is especially useful when filing your business and personal tax returns.