Can I use a consumer credit card for business expenses?

Quick insights

• Whether you use a personal or business credit card for your business, there are several reasons to have a card designated solely for business purchases.
• Business credit cards are designed to support business spending and may provide value to many business owners.
• You'll find a wider range of rewards with personal or consumer credit cards.

Running a small business is never easy, and it's important to find the right credit card to ensure you have what you need, when you need it. You may be wondering about using a personal credit card for business. It's possible, but for many business owners, a business credit card may be the better choice.

Here's what you need to know about the right credit card to use for your business needs.

The difference between a consumer credit card and a business credit card

While consumer and business credit cards share some similarities—both may offer rewards and accrue interest—there are some significant differences.

Business credit cards usually offer terms, rewards, features and benefits tailored to the needs of the average business owner. Consumer cards, however, may be designed to work for a range of consumer spending habits.

If you're interested in how to get a business card, the process is similar to applying for a consumer card. You'll just need to provide additional information about your business, such as its annual revenue, years in business and number of employees.

Using a consumer credit card for business expenses

While you can use a consumer credit card for business expenses, it may not be a good choice. It's possible you're missing out on the many benefits of small business credit cards, from employee credit cards to higher credit limits.

If, however, the benefits of these cards don't work for your business's needs, then you may appreciate the wider range of rewards offered by consumer cards.

With a personal credit card, you may benefit from the Credit Card Act of 2009. The act protects consumers against excessive fees and unexpected interest rate increases. This regulation doesn't apply to business credit cards.

Should I use a business or personal credit card for my company's expenses?

For many business owners, a business credit card may be the best option. That's because these cards usually meet a lot of their business's needs.

• Features: Typically come with features that make it easier for you to track and control your business's spending, such as employee cards with adjustable spending limits.
• Credit limit: Often you'll find higher limits on business cards compared to consumer cards.
• Building business credit: Having a well-established business credit score may help you secure ideal terms on any future loans or funding you need to expand your business.
• Rewards: You may get rewarded for common business-related purchases, such as electronics or office supplies.
• Welcome bonuses offers: Just like rewards categories, you may find these cards have welcome bonuses offers that complement your business's spending habits.

Another factor to consider is that many issuers of business cards usually won't report to consumer credit bureaus. That may help you in a few ways. The card likely won't be factored into your credit utilization, debt-to-income ratio or any applications for new personal credit cards.

But if you've personally guaranteed the card, any adverse events like charge-offs or late payments typically will show up on your personal credit report.  

The benefits of separating business and personal expenses on different cards

Regardless of the type of credit card you use for business, it may be advisable to use it exclusively for business purchases. There are several reasons to have a dedicated card for work expenses.

• Bookkeeping errors: It's harder to track your business expenses when you've got personal and business purchases on the same card.
• Weakened legal protections: Corporations or LLCs are granted certain legal protections that may shield your personal assets if there's a judgment against your business. Mixing personal and business expenses on a card could potentially erode this protection.

If your business needs a convenient way to cover expenses, compare these credit cards to find one that best meets your business needs.

In summary

With business-friendly terms, rewards and more, a business credit card may be the right choice for you. Whichever type of card your business uses, it could be in your best interest to keep business and personal purchases separate.