Can I use a personal card for business expenses?

Whether you’re launching a startup or running an established company, credit products are an important source of capital and a great way to make safe transactions.

Although plenty of cards are created specifically for small businesses, card accounts that are for personal expenses can also be used. And they often are. According to Small Business Advice, 65 percent of small businesses regularly use credit cards, but only half of those accounts are in the name of the business.

So why, as an entrepreneur, would you want to opt for a personal card for your venture rather than a business credit card? For some small business owners, personal cards are easier to access and offer lower annual fees as well as the chance to tap into their rewards offerings. A personal card may be the best card for your business, for a number of reasons, at least in the early stages of your business.

When does a personal credit card make sense for business

There are some situations where you may find a personal credit card is your best — or only — option for your small business expenses.

A personal card is the only card you can get

Most business credit cards require applicants to have high credit scores. If you’re new to credit or your credit rating is low but you need a credit card for business purposes, a personal credit card can be a stepping stone. A personal card is easier to get and can help establish your credit and ease your way into qualifying for a business credit card.

There are plenty of secured credit cards and credit cards that you can open in your own name that have forgiving eligibility criteria. The credit lines generally start small, but after you manage the account responsibly the issuer will likely raise the line. After you’ve built or repaired your credit, you can choose a business card if and when you want to move in that direction.

Your business is a temporary or sporadic side hustle

While it’s often possible to open a business credit card without a full-time, money-making business, your venture may be more of a casual endeavor. For example, maybe you walk your neighbors’ dogs after your nine-to-five job ends to earn a little extra cash. Yes, you’re running your own operation that has expenses, but there’s no need to take out an extra credit card for it.

There is nothing wrong with using a personal credit card for a temporary, sporadic side-hustle business. Just be sure the card you choose works in your favor.

If you have a couple of rewards cards already opened, select the one that has the greatest cash-back, miles or points earning potential for the expenses associated with your business. As long as you pay the bill in full by the due date, you’ll come out ahead with the rewards.

Your personal credit is vulnerable anyway

Almost all small business credit card applications require applicants to accept personal liability for the bill. This guarantee assures the issuer that if an account goes delinquent, it can pursue the business owner for damages. Not only will it hurt the person’s credit history and scores, but their assets are at risk of liens and levies if the creditor takes the matter to court.

That’s one reason Jeramy Knauff, founder of Spartan Media, headquartered in Tampa, Florida, decided to use his Citi® Diamond Preferred® Card* and the Amex EveryDay® Credit Card* for his company’s expenses. There wasn’t enough of a difference to make opening business cards compelling.

“I use these two personal cards only for my business,” says Knauff. “We spend an obscene amount on software as well as other tools. The rewards are stacking up and I’ll probably use them for Home Depot or Lowes gift cards to get things for my business. And I didn’t have to open a new card that required a personal guarantee.”

You want to streamline your credit management

The last thing small business owners want is to spend time on unnecessary tasks. A 2022 Capital One Business report found 47 percent of the business owners surveyed reported feeling run down and drained of physical or emotional energy. This may be reason enough to lean into the credit cards you opened for your personal life. That’s what Vanessa Gordon, publisher of East End Taste Magazine in East Hampton, New York, did.

“A business credit card will be just another card to keep track of,” notes Gordon, who keeps track of her costs by printing out the account statements, then identifies which are business and which are personal. “I’m looking at screens more often than I want, so printing and highlighting helps me to compare different spending. I just find it easier to use my personal cards.”

Since her magazine has her globe-trotting, Gordon’s Emirates Skywards Rewards World Elite Mastercard®* and the Citi / AAdvantage® Executive World Elite Mastercard®* come in handy. Each is rich with travel perks, including access to the world’s best airport lounges. The rewards are ideal for her business, too. She charges flights, gas, food, accessories for photo shoots, photographers, videographers and event planners, then pays the balance to zero.

You may get similar perks for a lower annual fee

When searching for a credit card that offers rewards and benefits for your business, check out the annual fee and the benefits. As long as you get more out of the card than it costs, that fee will be fine. However, if a personal credit card has great perks at a lower cost than the business card option, you may want to take that instead.

The Business Platinum Card® from American Express, for instance, has a $695 annual fee. And though it comes with a generous welcome offer of 120,000 Membership Rewards points, you’ll have to spend $15,000 on eligible purchases within the first three months of opening the account to get it. Depending on your needs, the American Express® Gold Card, which has a $250 annual fee, may be a more attractive option. With it you can earn 60,000 points with a much lower minimum spend and longer timeframe: $6,000 on eligible purchases within the first six months of opening the account.

Aways compare and contrast offers before applying. The best card for your business could very well be the one developed for personal use.

You may be able to avoid financing fees for a longer time

Both business credit cards and personal credit cards can come with an amazing feature: the ability to charge expenses and carry a balance over for a fixed time period without interest being added. When you’re charging large sums, that can save you a huge amount in financing fees. Many of the best 0 percent APR intro deals are available on personal accounts, making them appealing to small business owners trying to save money.

That’s what Kim Hawkins did. Hawkins is president of EventsWholesale.com, a discount event and wedding planning supply company based in Watkinsville, Georgia. Her company recently started manufacturing, in house, commercial grade plastic columns and colonnades — an especially expensive endeavor. To get what she needed, she decided to open a Chase Freedom Unlimited®, which gave her 0 percent intro APR for 15 months on purchases from the date she opened the account. The variable APR on this offer is 20.49 percent to 29.24 percent after the intro APR period ends.

“This Visa allowed us to purchase almost $100,000 worth of columns on the card and pay everything off the following year, after we started bringing in more revenue, with zero interest,” says Hawkins. “On top of that, we received a cash back bonus, and points that we can use towards travel for future conferences and trade shows!”

You may get stronger legal protections

Yet another reason a business owner may choose a personal card over a business card: legal protection. The Credit Card Act of 2009, a powerful consumer protection law, doesn’t apply to most small business credit cards. This law assures cardholders that the issuer can’t raise the account’s APR without cause or fair warning.

Some business credit cards do offer the same or similar consumer protections as those that are guaranteed for personal cards. But not all do. If you can’t get a business credit card that voluntarily offers that protection, you could consider a personal account instead because it is legally obligated to do so.

When is a personal credit card not the best choice for business spending

On the other hand, you will find that there are situations in which you will be better off going with a business credit card than a personal card.

You want to add employees to your credit card

Business credit cards usually allow you to add employees to your credit card account. That way, they are issued a card and  authorized to spend for the business, and you can keep track of their spending. You won’t want to add your employees to your personal card and be held responsible for their spending.

Making the most of your personal credit profile

If you can qualify for a business credit card, it could help you better optimize your personal credit. Most card issuers don’t report your business activity to credit reporting bureaus unless there’s something negative to report. This means you could have a higher utilization ratio on a business card, for instance, without that impacting your personal credit score.

Getting rewards geared to business spending

Rewards on business credit cards are more geared to business spending, such as office supplies. You may be missing out on these categories of rewards and business-oriented credits if your business spends a lot of money in such business-oriented categories. Moreover, business credit cards tend to offer higher credit limits too.

Keeping track of business expenses

As your business grows, it can get difficult to separate your personal spending from your business spending. You will need to keep diligent records to track business expenses and for tax purposes, and that could get time consuming. Having a dedicated business credit card could make keeping track of your business expenses easier.

How to manage a personal card for business expenses

Just as it is not illegal to use a business card for personal costs, there is no law that says you can’t use a personal credit card for your business. Once you have a personal card, be sure to use it appropriately for your business. The rules are simple:

• Pay on time and keep revolving debt low. These are the two most important credit scoring factors.
• Maximize rewards. From a welcome bonus to earned points, miles and cash, you can profit from a credit card with rewards. Just pay the bill in full by the due date or, if you have a 0% APR card, before the regular rate goes into effect.
• Separate and track your business expenses. If you’ll be using your card for both business and personal expenses, review your statements every month. You’ll need to know how much your business is spending so you can project for the future and plan for taxes.

Don’t hesitate to use a personal credit card for your business, especially when it’s all you can get right now. It’s not a good idea to limit your business potential because you can’t immediately qualify for a business credit card.

The bottom line

If you can’t qualify for a business credit card, you could turn to your personal credit card to fund your business. There are some situations when it does make better sense to use your personal card for business expenses. It’s not the optimal situation though, especially as your business grows and it becomes more difficult to separate your business and personal expenses. As your credit improves, you could have the option of getting a business credit card.

*The information about the Citi® Diamond Preferred® Card, Amex EveryDay® Credit Card, Emirates Skywards Rewards World Elite Mastercard® and Citi / AAdvantage® Executive World Elite Mastercard® has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.