The main difference between a business credit card and a personal credit card is that you can use one for eligible work expenses and the other for everything else.
If you’re a small-business owner (even a sole proprietor), you can use business credit cards to cover costs such as office supplies, advertising and vendor fees. You can use your personal credit cards for everyday expenses, like groceries, clothes and bills.
Knowing the five key differences between personal and business credit cards can help you better understand these products and decide whether a business credit card is right for you.
1. Business Credit Cards Help Build Business Credit
Using only personal credit cards for your business can quickly muddle finances. While they’re fine when you’re just starting out, a business credit card will help you build business credit, strengthening your business profile to lenders and vendors.
If you want to take out a small-business loan or other business credit, you’ll want to have a strong business credit score from a business credit bureau, such as Dun & Bradstreet, Equifax, FICO SBSS or Experian. Your business credit card issuer will typically report to one or more of those bureaus.
“Like you build your personal credit score, business credit cards can help you start a business credit score, which (will) help you with financing options in the future,” says Maria Castillo Dominguez, a certified financial planner and founder of Valoria Wealth Management.
But your business credit card can affect your personal credit score if you miss payments. Also, the separate credit history doesn’t mean your personal finances are totally detached from the card account. With small-business credit cards, you’ll typically have to promise to personally repay the card balance if your business fails.
2. Business Credit Cards Include Financial Management Tools
If you charge all of your business expenses to a separate, dedicated card, you’ll have a much smoother experience at tax time. Taking small-business tax deductions can be more complicated when you’ve combined personal and business expenses on one card.
“If you are taking deductions for your business expenses — which you should take as many deductions as you can — those things can start getting a little bit tricky,” says Castillo Dominguez.
A business card can help you stay organized by offering you accounting features, such as expense summaries. Free employee cards are also common, and you can typically set custom spending limits on those.
If your business venture is more of a short-term thing, though, you may not feel as compelled to separate your expenses. For example, say you’re just casually reselling items on eBay, and you don’t plan on making it a business.
“In that case, it might make sense to just go ahead and keep the existing finances you have and then just do some bookkeeping, let’s say in a spreadsheet, around what you’re doing with that business, since you know it’s going to be short-lived,” says Kerrie Carden, a certified financial planner and CEO of Equip Advisory, a wealth-building firm.
[Read: Rewards Credit Cards]
3. Business Credit Cards Have Fewer Consumer Protections
Under federal law, credit card issuers can only increase interest rates under certain circumstances, and fees are limited. The legislation that imposes those protections, the Credit CARD Act of 2009, doesn’t apply to business credit cards.
“They may do things like increase the interest rate without notice,” Castillo Dominguez says. Fees and terms can also change without notice.
Issuers often still provide protections, despite the lack of legal requirements. Just make sure to read the fine print on the cards you’re considering, and contact the issuer if you have questions about protections.
4. Business Credit Cards Offer Higher Credit Limits
Business credit cards often come with higher limits because they take into account your business’s creditworthiness, not just your own. So your business’s credit score, revenue, history of repayment and current debt obligations help to determine your credit limit on a business credit card.
This is, of course, if you have already established some business credit. Otherwise, lenders will most likely look at your personal credit. Which is why it’s so important to build business credit.
Higher limits let you order in bulk and act as a financial cushion for unexpected expenses — even if you don’t spend that much month to month. Keep in mind that credit limits vary by business, and you might be approved for a lower limit when you first start out. That just means there’s room for growth!
[Read: High Limit Credit Cards]
5. Business Credit Cards Offer Business Rewards and Perks
Personal credit cards mostly offer rewards on categories like dining, groceries and gas. Business credit cards, on the other hand, offer rewards on categories such as advertising, software, shipping and office supply stores. And the cards usually come with business-specific perks, like free employee cards and expense management tools.
With either type of card, you can also find options with flat-rate rewards on all purchases or strong travel rewards. If you’re a frequent business traveler, compare top personal travel credit cards with business credit cards that offer travel perks, and see which one best suits your needs. Pro tip: Keep an eye out for benefits like travel insurance and the number of transfer partners to make traveling easier.
But if you’re in the market for a 0% annual percentage rate, you’ll find the best options in the personal credit card market, which offers 0% APR terms of up to 21 months.
[Read: Travel Credit Cards]
How to Choose a Business Credit Card
When choosing a business credit card, carefully consider your typical business expenses, your average monthly spend and potential fees the card charges. For instance, if your business involves a lot of international transactions, you should look for a card with no foreign transaction fee.
“I always encourage folks, work backwards from how that tool is going to be used to then choose the right tool for what you want your business to accomplish,” says Carden.
As your business evolves, your credit card needs can change — so don’t put too much pressure on yourself to pick the perfect card that you’ll have forever.
“It’s healthy to assess on an annual basis: Are the benefits or rewards that we’re getting from this card fitting for what our business does now versus what it did a year ago?” Carden says.
If you’re having trouble securing a business credit card as a new business, you may have better luck starting with the bank where you do your business checking.
More from U.S. News
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Business Credit Cards vs. Personal: 5 Major Differences originally appeared on usnews.com
Update 08/07/26: This story was previously published at an earlier date and has been updated with new information.
