Whether you’re running a small start-up with just a couple of employees or a larger business with several branches, it’s vital to understand the importance of business finance. From paying suppliers and employees to covering daily running costs, paying for corporate trips and more, your financial obligations need to be managed with care and consideration to avoid any confusion. As some might note, the fast pace of the “corporate rat race” is one of the reasons why business vs personal credit card topic is more relevant than ever.
And as your business grows, you’ll only have more people to pay and supplies to order, so the significance of this issue will only get bigger and broader over time. That’s why millions of businesses make use of business credit cards, rather than personal credit cards, for their business expenses.
But there are still many people out there unsure whether they should carry on using a personal credit card or make the switch to a business card. This article will take a look at the business vs personal credit card issue; what business credit cards are, how they differ from personal credit cards, and what you might be interested in getting one.
A business credit card, as the term implies, is a credit card used purely for your business use rather than personal use. These cards are used to cover the costs of your company expenses, paying employee salaries, ordering supplies, etc. They’re available for businesses of all shapes and sizes and offer a lot of useful advantages (more on that later).
Just like a personal credit card, a business credit card gives the user access to a line of credit with a set limit. They can then use this card to make purchases, withdraw money, pay bills, and more. Just like the personal credit cards used by millions every day, business credit cards also come with interest charges that are applied on unpaid balances at the end of each billing cycle.
You can obtain business credit cards through all major banks. It’s wise to compare the different providers and options as there are a lot of different card types out there. They all have their own terms, conditions, and features, as well as sometimes coming with unique business bonuses and benefits for the user to enjoy.
When it comes to credit cards for business vs. personal credit cards, there are some essential things to know. From their names, it’s clear to see that a business credit card should be used for business expenses. In contrast, a personal credit card is the kind you carry around each day to pay for things like groceries, bills, and other goods and services for yourself and your family.
Business cards are specifically designed for business use, whereas personal credit cards are made to be used by everyone in day to day life. You can judge this based on the way the cards function, how the application process goes, the kinds of benefits and rewards you get for owning and using the card, and the fees and interest rates too.
One type of card is better suited for business than the other. However, many people still hesitate when it comes to getting a business credit card. They aren’t sure of the exact differences and unique aspects of these cards compared to their personal counterparts.
Let’s take a look at some of the key differences in terms of business vs personal credit card usage:
Many small business owners and start-ups find themselves asking “Do I need a business credit card?” and the short answer is yes. Trying to use a personal credit card for business orders, purchases, and payments can quickly become overwhelming. The best business cards help to simplify the entire concept of company finances, as well as offering the following significant benefits:
Business credit cards are not flawless. They have some drawbacks, including the higher than average interest rates and fees when compared to a personal credit card. There’s also the matter of potential security issues that can arise if cards are handed out around employees without proper regulation, along with the fact that if a business owner can’t keep up with the payments, they’re the ones who will have to pay the price in the long term.
However, in spite of these drawbacks, business credit cards are generally regarded as an essential part of running a modern business. They offer a lot of advantages, and it makes far more sense to have a separate line of credit for your business than your personal expenditure. When it comes to business vs. personal credit cards, it’s clear to see that the business cards are the clear winners.
Mixing personal and business expenses can get complicated very quickly. We would recommend obtaining a business credit card if you want to have better control and more organized business finances. Just be sure to compare offers and take precautionary steps to ensure that the card is used correctly.