Can I Use a Personal Credit Card for Business Expenses?
If you’re concerned about the legal implications of personal credit cards used for business expenses, rest assured it’s an acceptable and fairly common practice. However, just because it’s legally okay doesn’t mean it’s always the smartest move.
Depending on the type and size of your company, you might find it easier to track business expenses with a dedicated business card. Let’s take a closer look at the advantages and disadvantages of using a personal credit card for business.
Pros for using personal credit cards for business
There can be several benefits to using personal credit cards for business expenses.
Better legal protections
Consumer credit cards generally offer higher levels of protection thanks to the following two acts.
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Credit Card Act of 2009
This act prevents credit card companies from raising APR rates unexpectedly. In fact, they can’t change your rate until the account has been active for at least one year, after which they must give 45 days’ notice outlining any upcoming increases. Companies are also prohibited from charging consumers excessive fees or penalties. -
Fair Credit Billing Act (FCBA)
This act protects you in case of credit fraud by limiting your liability for a lost or stolen personal credit card to $50. Higher amounts are covered if you communicate the incident within 60 days.
However, most business cards are exempt from these two acts. Your lender might still offer rate increase and credit fraud protection for business cards, but it’s not required by law.
Variety of reward programs
One benefit of charging business expenses to a credit card is the rewards and sign-up bonuses. Fortunately, both personal and business credit cards offer various incentives. Depending on your specific needs, you might find it easier to max out the personal rewards.
For example, the [coca name=’flex.Name’ type=’cards’] offers 5% cash back for rotating categories, which often include grocery stores, gas stations, PayPal, movie theaters and eBay purchases.
Savvy business owners can strategize their spending across multiple personal and business cards, combining points or miles into one reward program. Just be mindful about opening too many credit cards at once since it can ding your credit score.
Flexible uses
Personal credit cards generally have no limitations on what you can purchase. You can freely swipe away, later highlighting which expenses you want to claim as business deductions.
In comparison, a business credit card is usually intended for business purposes only. Although it’s probably not a big deal to occasionally charge a small personal expense to your business credit, it technically goes against your user agreement. Continued misuse of a business credit card could result in the company closing your account.
Cons for using personal credit cards for business
Although using personal cards for business purposes can be attractive, it’s important to recognize the drawbacks.
Difficulty tracking business purchases
A significant disadvantage to using personal credit for your business is that it adds extra work when doing your small business tax preparation. Although it’s possible to scour your statements for eligible expenses, having a dedicated business card could trim tedious work hours or make your bookkeeper’s job easier. Plus, it looks better to have all business purchases on a dedicated business card in case of an IRS audit.
Furthermore, you can potentially deduct paid interest as a business expense, but only if it was on a business credit card for business purposes.
Most importantly, it’s advised to keep your business and personal expenses separate to help protect your personal liability if you own an LLC.
Personal cards are not ideal for multiple employees
A personal credit card is often enough to meet a small business owner’s needs, especially if you’re a solo entrepreneur or startup. However, if you want to distribute company cards to multiple employees, it’s probably best to go the business route.
With a business credit card, you can create an account manager to oversee all purchases, manage spending limits, freeze accounts and access all statements. Additionally, all the cards’ rewards pool together — which can go toward a company retreat, new equipment or holiday bonuses.
Personal cards don’t build business credit
Building your business credit is essential if you want access to more funds, such as an SBA loan. Lenders will often consider both scores — personal and business — and if one falls short, you could get denied.
Opening and maintaining a business credit card can help establish and strengthen your business credit score, opening the door for more options for small business loans.
Lower borrowing limits
In general, personal credit cards have lower limits than business credit cards. This is because lenders consider your business revenue, your personal income and overall creditworthiness on your business credit card application. You can access more funds with a business card if you have a high business revenue and a solid credit score.
You can also consider a high-limit personal credit card or a business line of credit if you need more borrowing power.
Missing out on exclusive business rewards
As already mentioned, both personal and business cards offer sign-up bonuses and rewards. However, business cards tend to focus on business-related expenses.
For example, the [coca name=’ink-cash.Name’ type=’cards’] offers 5% cash back for purchases at office supply stores, internet, cable and phone expenses. Or the [coca name=’business-gold-rewards.Name’ type=’cards’] allows you to pick two categories to earn 4x Membership Rewards, such as airfare, computer hardware, restaurants and more.
Rewards programs for personal and business cards
Some companies offer personal and business credit cards where you can pool rewards into the same reward program. If you’re debating over business credit vs. personal credit, you can’t switch from a business card to a personal card, but you can potentially transfer reward points before canceling a card. Or better yet, keep multiple cards open to maximize rewards.
How Does LendingTree Get Paid? LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.| Rewards program | Personal card | Business card | ||
|---|---|---|---|---|
| Chase Ultimate Rewards | [coca name=’chase-sapphire-preferred.Name’ type=’cards’] | – [coca name=’chase-sapphire-preferred.Signupbonus’ type=’cards’] – [coca name=’chase-sapphire-preferred.Rewardsrate’ type=’cards’] | [coca name=’ink-business-preferred.Name’ type=’cards’] | – [coca name=’ink-business-preferred.Signupbonus’ type=’cards’] – [coca name=’ink-business-preferred.Rewardsrate’ type=’cards’] |
| American Express Membership Rewards | [coca name=’gold-card.Name’ type=’cards’] | – [coca name=’gold-card.Signupbonus’ type=’cards’] – [coca name=’gold-card.Rewardsrate’ type=’cards’] | [coca name=’business-gold-rewards.Name’ type=’cards’] | – [coca name=’business-gold-rewards.Signupbonus’ type=’cards’] – [coca name=’business-gold-rewards.Rewardsrate’ type=’cards’] |
| Capital One Miles | [coca name=’ventureone-rewards.Name’ type=’cards’] | – [coca name=’ventureone-rewards.Signupbonus’ type=’cards’] – [coca name=’ventureone-rewards.Rewardsrate’ type=’cards’] | [coca name=’capital-one-spark.Name’ type=’cards’] | – [coca name=’capital-one-spark.Signupbonus’ type=’cards’] – [coca name=’capital-one-spark.Rewardsrate’ type=’cards’] – 5x on hotels and rental cars booked through Capital One Travel – $100 travel credit |
| Delta SkyMiles | [coca name=’gold-delta-skymiles.Name’ type=’cards’] | – [coca name=’gold-delta-skymiles.Signupbonus’ type=’cards’] – [coca name=’gold-delta-skymiles.Rewardsrate’ type=’cards’] | [coca name=’gold-delta-skymiles-business.Name’ type=’cards’] | – [coca name=’gold-delta-skymiles-business.Signupbonus’ type=’cards’] – [coca name=’gold-delta-skymiles-business.Rewardsrate’ type=’cards’] – 1x on everything else – $100 flight credit after spending $10k |
| Wells Fargo Rewards | [coca name=’active-cash.Name’ type=’cards’] | – [coca name=’active-cash.Signupbonus’ type=’cards’] – [coca name=’active-cash.Rewardsrate’ type=’cards’] | [coca name=’wells-fargo-business-platinum-credit-card.Name’ type=’cards’] | – [coca name=’wells-fargo-business-platinum-credit-card.Signupbonus’ type=’cards’] – [coca name=’wells-fargo-business-platinum-credit-card.Rewardsrate’ type=’cards’] |
The information related to the [coca name=’flex.Name’ type=’cards’] and the [coca name=’wells-fargo-business-platinum-credit-card.Name’ type=’cards’] has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication.
For Capital One products listed on this page, some of the benefits may be provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply
The information related to the Chase Freedom Flex℠, Ink Business Cash® Credit Card, American Express® Business Gold Card, Chase Sapphire Preferred® Card, Ink Business Preferred® Credit Card, American Express® Gold Card, Capital One VentureOne Rewards Credit Card, Capital One Spark Miles for Business, Delta SkyMiles® Gold American Express Card, Delta SkyMiles® Gold Business American Express Card, Wells Fargo Active Cash® Card and Wells Fargo Business Platinum Credit Card has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.
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