What is a Business Credit Card and Do You Need One?

CREDIT CARDS - BUSINESS CREDIT CARDS
You don’t necessarily need a business credit card as a small business owner. But it can help separate expenses and provide opportunities for more rewards and benefits.
Updated Nov. 14, 2023
Business woman reviewing her expenses

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Business credit cards function similarly to consumer credit cards, and allow you to make purchases on credit and earn valuable rewards and benefits.

The main difference is that business credit cards are meant to be used for business expenses, don’t always report activity to consumer credit bureaus, and may have specific business benefits. For example, you may be able to issue employee cards for free and check detailed reports of your spending.

Let’s dig into what a business credit card is and why you may want one for your business.

In this article

Key takeaways

  • We recommend taking advantage of business credit cards for small business owners because of the rewards and benefits they can earn while also separating business and personal expenses.
  • Many business credit cards don’t report activity to consumer credit bureaus, such as Experian, Equifax, and TransUnion. However, most business credit card applications use your Social Security number to check your personal credit score.
  • It’s not illegal to use business credit cards for personal expenses, but it likely goes against credit card company agreements.
  • Business credit cards often have higher credit limits than consumer credit cards.
  • You don’t need a large business to qualify for a business credit card. Just about any type of business will do, including many side hustles and freelance gigs.

Business credit cards: Are they worth it?

Pros Cons
  • Offers opportunities to earn rewards and take advantage of benefits
  • Separates personal and business expenses
  • Provides specific business benefits, such as issuing employee cards
  • May have higher credit limits compared to consumer cards
  • Can build your business credit history
  • Not meant to be used for personal expenses
  • You likely have to provide your Social Security number during the application process
  • Might not build your personal credit history
Our verdict: We think it’s well worth it for small business owners to use business credit cards. Business cards can provide opportunities to earn valuable rewards and take advantage of useful benefits, such as issuing employee cards and importing transactions into business expense software. You typically need a personal assurance in the form of a hard credit check with your SSN to qualify for a business credit card, which is also true when applying for most consumer cards.

What is a business credit card?

A business credit card is a type of credit card that’s specifically designed for business owners. Business credit cards share some similarities with consumer credit cards. For example, whether a person is using a business or consumer card, a lender is giving them as a borrower a line of credit that can be used to make purchases.

Business credit cards come in different categories, including cashback, travel, and low-interest cards. So you can choose between different types of business cards to find the right option for your business goals.

Business credit cards vs. personal credit cards

Business credit cards Personal credit cards
  • Often require a personal credit check during the application process
  • Meant to only be used for business purchases
  • Don’t typically report to consumer credit bureaus
  • Can provide valuable rewards and benefits
  • Often have high credit limits
  • Can have specific business benefits
  • Often require a personal credit check during the application process
  • Can be used for business or personal expenses
  • Typically report to consumer credit bureaus
  • Can provide valuable rewards and benefits
  • Can have high or low credit limits
  • Don’t typically have specific business benefits

Despite having some similarities, there are differences between business credit cards versus personal cards.

Business cards tend to have some specific benefits, such as offering employee cards. And many business cards have higher credit limits than personal cards to help cover business expenses. You’re also only supposed to use business cards for business purposes, whereas you can use consumer credit cards for personal or business expenses.

Is it illegal to use a business credit card for personal use?
Technically, it isn’t illegal. However, it may violate your credit card agreement, which comes with some risks. Learn more about the legality of using business cards for personal use.

You typically need to complete a personal credit check to apply for a business credit card. However, many business cards don’t report your credit card activity to consumer credit bureaus.

This means business cards may not help you build any personal credit history, but you could build business credit, which is different. On the other hand, most personal credit cards report your credit activity to Experian, Equifax, and TransUnion, which could help build your personal credit profile.

How do business credit cards work?

Business credit cards work similarly to personal credit cards. You typically get a set credit limit, and you can make purchases up to your limit.

Keep in mind
A charge card is one type of business card that doesn’t have a preset limit. But charge cards typically have to be paid off in full each month, or you might have to pay fees.

You’re then on the hook for paying off your balance each billing cycle to avoid interest charges, and most credit cards have high interest rates. If you don’t pay the entire balance, you can also make minimum payments, but you’ll probably pay some interest.

However, you may have a business credit card that offers 0% intro APR on purchases for a certain period of time. This allows you to avoid interest charges for this period.

How do you apply for a business credit card?

You can apply for a business credit card the same way you apply for personal credit cards. The easiest way for most people is to use an online application form, but it’s possible to complete an in-branch application with certain credit card companies.

For example, you generally have to include personal information in either application, including your name, date of birth, and Social Security number. It’s also common to include your address and total income as well.

That’s where a business credit card application might look a little different than a consumer credit card application.

A business card application may require business-related information. This includes your business structure, business name, business address, and employer identification number (EIN). There may also be questions about your business’s annual revenue and its operation duration.

It might be worth your time to look over a business credit card application to find out the information you need before you start filling it out, especially if you have a new business.

Learn the best practices for small credit card applications.

How does a business credit card affect your personal credit?

Most business credit card applications require a personal credit check. This means receiving a hard pull or hard inquiry into one or more of your personal credit reports, which may have a small negative impact on your credit score.

Many credit card issuers don’t report business credit card activity to consumer credit bureaus. That is unless there’s an issue with your payment history, such as having late payments or not making payments. In these and other cases where your business credit card account isn’t in good standing, your personal credit score may take a hit.

Learn which business credit cards report to personal credit.

Who should get a business credit card?

We recommend business credit cards to anyone with an eligible business. Eligible businesses can be operating a company, running a restaurant, selling items online, doing freelance photography, or writing as a side hustle.

You likely shouldn’t get a business credit card (and might not be able to) if you don’t have a qualifying business. It also might not make sense to go for a business card if you’re currently rebuilding your personal credit score.

Many business credit cards require a good credit score, among other factors. A good credit score is at least 670 on the FICO scoring model.

Can you use personal credit cards for business?

When you compare credit cards, you may notice that having a decent credit score and some other factors may help you benefit from excellent personal credit card choices with valuable rewards and benefits.

But we see business credit cards as another opportunity to earn rewards and take advantage of valuable benefits. You can use personal and business credit cards at the same time, potentially providing a wide range of benefits and different ways to earn rewards.

A business credit card might offer rewards for specific business-related purchases, such as advertising or office supply expenses. But a personal credit card could provide more rewards for grocery or gas purchases. So it might make sense to use both types of cards to maximize your earning potential.

We also think business credit cards provide a simple and effective way to help organize your business finances and transactions. You can separate your personal and business expenses and integrate your purchases with business bookkeeping software. And being able to issue employee cards can spread out the responsibilities of your business needs.

Benefits and perks of business credit cards

  • Offer opportunities for more rewards: Many business credit cards are connected to rewards programs, providing cashback rewards or travel rewards for eligible purchases. You may also be able to take advantage of a welcome or sign-up bonus as a new cardholder.
  • Separate business expenses: You can easily separate your personal and business expenses for tax purposes.
  • Can work with any business size: You don’t need to be running a large corporation to qualify for a business credit card. A one-person operation, such as a sole proprietor, can be more than enough if your type of business qualifies.
  • Come in many card types: From no-annual-fee business credit cards to travel business credit cards, there are plenty of business cards to choose from.
  • Offer business benefits: Some business cards provide specific business-related benefits. This may include earning bonus rewards on common business expenses, being able to issue employee cards for free, or having credits to use for different types of business services.
  • May have higher credit limits: You might receive a higher credit limit with a business credit card.
  • Builds business credit history: Many business credit cards report activity to business credit bureaus, which can help build your business credit. Having better business credit may help you qualify for business loans or other types of credit to help run and expand your business.

Drawbacks of business credit cards

  • Aren’t for personal use: It’s typically against credit card agreements to use business credit cards for personal expenses.
  • Offer specific benefits: Specific business benefits might not be helpful for every business owner. For example, you might not have any employees and have no use for free employee cards.
  • Don’t always build your personal credit history: Not every card issuer reports business card activity to consumer credit bureaus. This could be helpful if you’d rather not have your business credit activity reflected on your personal credit score. But it’s not helpful if you’re trying to build your personal credit history.
  • Aren’t protected by the CARD Act: The Credit CARD Act of 2009 provides certain protections for consumers with personal credit cards. In general, these protections aren’t extended to business credit cards.

Business credit cards FAQ

Can you use an EIN to get a credit card?

Yes, you can get a business credit card with EIN, but there aren’t too many options where you don’t also need to use your Social Security number as well. This is because credit card companies such as Chase, American Express, and Capital One still want a personal guarantee for responsible use of the credit they extend to you.

Can a small business have a credit card?

Yes, you and your employees can have credit cards to use for your small business. It’s common for the business owner to get a business credit card that has the option to issue employee cards. Then you can give cards to as many of your employees as needed. You can typically set spending limits and track purchases on employee cards.

Are business credit cards good to have?

It can be good to have a business credit card for your small business to separate your personal and business expenses, help with cash flow, and take advantage of specific business benefits. These benefits may include issuing employee cards and importing transactions into bookkeeping tools, such as Quickbooks or Concur.

Business credit cards: Bottom line

Business credit cards are designed to help small business owners track their business expenses and take advantage of specific benefits. This can include the opportunity to issue employee cards for free, as well as integrate business spending with bookkeeping software for an easier time come tax season.

Keep in mind that many business credit cards don’t report activity to consumer credit bureaus, but you might still need a good personal credit score to qualify for a business card. For our top recommendations, check out our list of the best business credit cards.

Up to 5% Cash Back

4.8

Ink Business Cash® Credit Card

Current Offer

Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening

Annual Fee

$0

Rewards Rate

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Benefits and Drawbacks
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Author Details

Ben Walker, CEPF Ben Walker, CEPF, is a Senior Credit Cards Writer at FinanceBuzz. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post, Debt.com, Yahoo! Finance, and Fox Business.

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