Can I use a personal credit card for business?

While you can legally use your personal credit card for business expenses, many small business owners find it useful to have a separate business credit card. Business credit cards come with a host of benefits, such as potentially higher credit limits, and they allow you to keep your finances separate.

6 min read
Woman holding credit card whilst looking at laptop screen

Business credit card vs personal credit card 

When you initially start a business, getting a business credit card may not be at the top of your agenda. Using your personal credit card for business transactions is perfectly legal. As your business grows, however, you may find bookkeeping easier if you separate your personal and business finances. Or you may find that your personal credit card no longer suits your needs.

In this guide, we’re going to take you through the basics of business credit cards. We’ll explain the differences between business and personal credit cards, run through what you can and can’t use them for, and discuss their benefits and drawbacks. So, you can feel confident deciding whether a business credit card is right for you.

What is a personal credit card? 

A personal credit card is a method of borrowing money from a lender to make a purchase or pay for a service. You borrow the money on a revolving basis, which means the amount you pay can vary from one month to the next depending on your balance and the minimum payment amount, for example.

There is no maximum repayment amount, as you can repay the full amount at any point. You could either choose to pay at least the minimum amount including interest or pay off the full balance each month to avoid paying any interest.

You can borrow any amount up to a certain credit limit, which is set by your lender when you sign your credit card agreement. However, it’s wise to try and keep your spending to 30% or less of your credit limit to improve your credit score.

Some credit cards come with additional benefits, such as rewards and cashback. These perks are usually reserved for people with high credit scores. If you are eligible for rewards, it’s best to check if you will use them though. Otherwise, you could end up paying extra for something that won’t benefit you.

What is a business credit card? 

A business credit card works just like a personal credit card, but it’s designed specifically for business transactions made by business owners (and employees who are listed as cardholders), rather than for personal use.

As with personal credit cards, business credit cards have set credit limits – though this amount may be higher, depending on the size of the business. Again, there’s a minimum monthly repayment amount, and there is the option to clear the balance in full every month to avoid interest.

Business credit cards also come with the chance to earn rewards (if you choose wisely, these can be beneficial for your business, such as money off travel) and a variety of other benefits. However, there are some protections that personal credit cards possess that business credit cards do not – we’ll go into this in more detail below.

What is the difference between a business credit card and a personal credit card? 

For the most part, personal and business credit cards are very similar – they both serve as a method of borrowing money to pay for goods and services, they both have set credit limits, rules about repayments, and interest is added if balances aren’t cleared. However, there are some key differences between the two to be aware of:

  • payments made with business credit cards are not protected by Section 75 of the Consumer Credit Act, whereas those made with personal credit cards are usually covered (but not always)
  • business credit cards tend to have higher payment limits than personal credit cards, however the exact limits will depend on the size of your business as well as other eligibility factors set by the lender
  • personal credit cards can help you build your personal credit score, but they won’t help you build business credit – unlike a business credit card
  • business credit cards tend to come with higher fees and interest rates than personal credit cards, though this will depend on the lender’s criteria
  • applying for a personal credit card will only require information about you, but applying for a business credit card will require information about you and your business, such as your annual turnover, number of employees and so on

Can you use a business credit card for personal use?  

While you can use a business credit card for personal use, it’s generally discouraged. As a business owner, keeping your personal and business finances separate is the best way to keep track of your expenses.

Ensuring you only use your business credit card for business transactions means you can carefully keep track of your business spending, it’ll make budgeting and monitoring cash flow easier, and it allows you a level of safety over your personal finances should your business get into trouble.

If you’re an employee with access to a business credit card, you most definitely should not use your business credit card for personal use. Doing so could result in you losing your job and/or facing legal action.

Should I get a personal or business credit card? 

If you’re considering getting a credit card, the first question you should be asking yourself is what you intend to use the card for.

If it’s going to be mostly for personal use with just a few business expenses here and there, then getting a personal credit card could be the way to go. If, on the other hand, you’re looking for a credit card to use for your business transactions, then a business credit card is the natural option.

Beyond this, there are some important elements to take into consideration when deciding whether to get a business credit card. Here’s a quick run-through to help you decide.

Pros of business credit cards compared to personal credit cards 

  • business credit cards tend to have higher limits than personal ones, which can be particularly helpful if you need access to larger amounts for your business transactions
  • using a business credit card responsibly can improve your business credit score (as well as your personal credit score if you’ve taken out a small business credit card as the primary account holder/sole trader and you’ve signed a personal guarantee)
  • you can access additional cards to provide employees with if required. So they can be classed as additional cardholders
  • the benefits available can be tailored to your business needs, such as money off travel, for example
  • business credit cards allow you to keep all of your business finances separate from your personal finances, which can make accounting and budgeting easier and more manageable

Cons of business credit cards compared to personal credit cards 

  • if you take out a business credit card and sign a personal guarantee, your personal credit score can be affected if you don’t make your payments on time, every time
  • business credit cards do not come with the same purchase protection (Section 75 of the Consumer Credit Act) as personal credit cards. So, you may find it harder to get your money back if you are mis-sold an item or it arrives faulty, for example
  • annual fees and interest rates can be higher with business credit cards than personal ones, though this depends on the card
  • the options available for business credit cards may be more limited than for personal ones

Remember, getting a credit card of any kind is a big commitment and shouldn’t be undertaken lightly.

Disclaimer: All information and links are correct at the time of publishing.