Are you thinking about getting a business card? The time is ripe. Personal credit cards are increasingly becoming common too and they have unique characteristics you should know about. To make better decisions you must understand the basic differences between business credit cards and personal credit cards. Especially in terms of travel rewards, balance transfers, and cash backs. While each card is unique with its pros and cons. Business credit cards have better terms than personal credit cards here’s why:
While both business credit cards and personal credit cards have cashback or reward points as their standard feature, business credit cards can help you get maximum reward points for use in business-related activities.
Companies prefer to offer you cashback on your business credit card than the personal credit card for activities like an advertisement, shipping, gas, airfare, software, and computers. According to Nav, since there is no single credit card that is ideal for your business, having these options can help you as a business to choose the best service that brings maximum profit to your business. You can choose the particular category in which your business spends more money for you to get more reward points on the same area of expense and consequently you can earn the greatest reward points there are for your chosen category.
Different companies also offer unique reward points for different products so it is vital that you choose a business credit card from the company that has the best cashback for the product line you are in. Credit card companies acknowledge that businesses have higher rates of spending than do individuals.
Unlike cashback, most companies that offer credit cards offer the same travel rewards for business cards and personal cards. Such similar benefits include entry fees to airport lounges, annual airline rebate fees, credit fees for global entries, and TSA pre-checks.
You can earn double mile fees with either card although you can earn extra double mileage fees for your business credit card if you are traveling for business-related activities and one mileage fee for personal credit cards in some other credit card companies. You can therefore choose the credit card companies that have higher offers for business credit cards and travel with them anytime you are going on a business trip. The business card often has an annual waiver fee for the first year of purchase in many companies too.
While using a personal credit card, you are required by some credit card companies to send monthly reports which is different from the business credit cards. For business credit cards you are required by some service providers to report your business activities to commercial credit bureaus and consumer credit card bureaus and this impacts your business and personal credit scores. This coordination between both cards is advantageous to your business as it you can earn reward points on both of your cards hence getting more rewards for your business card. Your personal spending can be used to determine the reward points you get on your business card and vice versa. As a business card holder, you should opt for the service providers that require you to report to both consumer and commercial credit bureaus.
If you are an owner of a business card, it is very likely that you spend more than how much a person with a personal card spends. Credit card limits are usually determined by both the business revenue and the personal incomes besides other aspects like your creditworthiness. Having a bad credit can also be one of the factors, so if you are in debt and planning to apply for a credit card, you can learn about credit repair vs paying off debt to fix your credit score.
If you have a business revenue that is greater than your personal income, then you can have a higher credit limit for your business card than the limit you can have for your personal card. Having a business card is thus advantageous especially if your business has high costs of operation. For instance, if you spend a lot of money on your monthly inventories then you can earn more credit premiums than the number of premiums you earn on your personal card.
While specific bonus categories like restaurant spendings and travel allowances are common to both personal and business credit cards, other categories like online advertisements, phone bills, and office supplies are only enjoyed by individuals with business credit cards. You can therefore choose a credit card company that offers bonuses for these unique categories if your business uses them and this way you will earn more bonuses.
When the time for tax payment comes, your credit cards are your major points of reference as you will want to search them and see what deductions you are supposed to pay. For a business card, it is easier for you to keep records and thus easy for you to pay the taxes you are required to pay to be on the good side of the law. Simultaneously, many credit card companies also offer annual reports for all your spending while personal credit card service providers do not. With this itemized information, you can know where to cut spending and where to increase spending for the growth of your business. Expense tracking is easier and more convenient with business cards. Some service providers also offer employees who own business cards free customizable spending limit cards, to help them manage their spending. You cannot however enjoy this feature if you have a personal credit card.
It is evident from the above benefits that business credit cards have better terms than personal credit cards. Business credit cards make it easier for you to access loans provided you do not have a poor credit history. These cards also have better reward points. Your personal cards can cause you to receive points on your business card making it easy for you to build and grow your business. The payouts on business cards are more lucrative than those wages you receive on your personal card. Besides, having a business card gives you the privilege of enjoying business-reward-specific bonuses. Business cards have a better stock-taking policy which helps you prepare adequately for your tax deductions.