Difference between Business Credit Card and Personal Credit Card
Credit cards are undoubtedly a convenience that many people routinely make use of, but the vast number of them makes it a bit difficult to determine which one is the best for your needs. Making things even more confusing are the issuance of business credit cards and personal credit cards, each of which has specific uses and benefits. In order to make it easier for you to figure out which one you should go for, we have out together this informative comparison article.
Definition
Business credit cards are credit cards primarily intended for business expenses. These credit cards are more accurately referred to as "charge" cards, since users are expected to pay the balance in full after each billing period. If the user is unable to achieve or maintain a neutral balance by the end of the year, he or she may be subject to complicated tax filings and even sanctions from the card issuer. In some cases, users may even incur a poor credit standing.
A personal credit card is a plastic card issued as a system of payment for personal use. Such cards allow users to make purchases of goods and/or services, in return for a legally-binding promise to pay for them at a future date. Personal credit cards may also be used for cash advances.
Purpose
Business credit cards are intended specifically for business purchases, which include office equipment, stationery, utility bills, and even meal expenses for business luncheons or dinners. Generally speaking, business credit cards are used for anything that has to do with office expenses.
Personal credit cards can be used for any and all purchases that have to do with personal or family needs. The most common of these is grocery shopping, as well as shopping for clothing, cosmetics and even toiletries. Personal credit cards can also be used in hotels and restaurants.
Responsible Use
Failing to use your business credit cards properly may open you up to the risk of a poor credit standing. Just as with personal credit cards, safe and responsible use of business credit cards involves charging only what you can pay back at the end of the billing period, quarter or year. In addition, any purchases that you make on your business credit cards will be reported to credit agencies, and these may also have an impact on your personal credit report, just as if you had used a personal credit card.
For both business credit cards and personal credit cards, it is very important to read the fine print in the agreement carefully, since this will inform you of any restrictions and other terms of use.
Similarities and Differences
Business credit cards
- Credit cards primarily intended for business expenses
- Users are expected to pay the balance in full after each billing period
Personal credit cards
- Issued as a system of payment for personal use
- Allows users to make purchases of goods and/or services in return for a legally-binding promise to pay for them at a future date
