Using your personal credit card for business expenses? 5 reasons to reconsider

Although it may be more convenient to use your personal credit card for business expenses, you should be aware of the drawbacks of doing so. (iStock)

Personal credit cards and business credit cards offer similar benefits, such as cashback rewards and travel rewards. Some credit card companies even offer 0% interest rate periods for both types of credit cards.

If you already have a credit card open in your name, it’s probably more convenient for you to put a business expense on it. Why go through the hassle of applying for a new credit card just for your business?

Although it may be easy to put business expenses on your personal card, you may be giving up certain perks that are unique to corporate credit cards. Plus, you may be missing out on some long-term benefits of using a business card instead.

Even if you don’t own a business, you can get a business credit card for your side hustle. If you’re interested in opening a credit card, visit an online marketplace like Credible to compare credit card interest rates and fees.


Here are five reasons you should consider using a business credit card for business expenses instead of your personal card:

1. It’s easier to keep track of expenses

Some business expenses are tax-deductible. One major benefit of using a business card over a personal card is that it’s easier for you to keep track of your spending Not separating the two can cause more work for you or your accountant when it comes to reporting expenses during tax time.

Also, using two separate accounts can make it harder for you to keep track of business profitability. 

2. You won’t be building business credit

Just like building your personal credit score is good for your financial health, building business credit is good for your business health. Having a positive credit history can help you grow your business and establish relationships with your suppliers. When you use a personal credit card to make business-related purchases, it doesn’t help you build your business credit. 

This can hinder your ability to qualify for building leases or small business loans in the future. Learn how to qualify for a small business credit card. Visit Credible to compare card details, such as annual fees and rewards programs.

3. You'll miss out on earning credit card rewards

Although business credit cards offer similar benefits to traditional credit cards, some business credit cards offer benefits that are unique to business owners. For example, some business credit cards offer you a signup bonus after spending a certain amount of money at office supply stores, as well as money spent on internet and phone services.

In addition, some other business cards offer higher rewards rates on common business costs, like shipping and advertisements. If you have a business with employees, some credit card issuers allow you to add employee cards, which can help you earn rewards faster.

4. Most business credit cards aren’t listed on your credit report

Another advantage of using a business credit card over a traditional credit card is that it won't affect your personal credit score. This might help you avoid the common credit mistake of having a high credit utilization rate.

Also, it means that the business credit you use might not have an impact on whether you qualify for personal loans or credit cards. If you are interested in this benefit, ask the credit card issuer if it reports the card's activity to the consumer credit card bureaus before you apply.

You can monitor and check your personal credit score for free on Credible.


5. You may be putting your business at risk

When you mix personal and business finances, you risk having your personal assets taken if a court awards a judgement against your business. Business owners often establish limited liability corporations to protect their personal assets, but using a personal credit card for business expenses blurs the lines on protections.

Once that happens, a court can hold you personally liable for your business debts.


The bottom line

Although it’s easy to use a personal credit card for business purchases, it’s better to use a business credit card instead. That way, you can keep better track of your expenses, build business credit and avoid being personally liable for business debts. Just be sure to compare annual fees, foreign transaction fees, rewards programs, intro APR and other card details

You can even open a business card without a business. By doing so, you can get a head start on establishing business credit.

Visit Credible's online marketplace to shop for all the financial tools you need, from credit cards to personal loans.


Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column

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