What Are the Advantages of a Business vs Personal Credit Card?

07 Nov 2022

Written by: Holly Woodward

As a small business owner, you have undoubtedly been swarmed with offers for business credit cards. While they are quick to tout their value, you may be left wondering - what’s the point if I can just use my personal card for business expenses? The truth is, there are a lot of benefits of using a business vs personal credit card that extend far beyond what you’ve seen in the ads. 

What are the main differences between business and personal credit cards?

The core difference between business and personal credit cards is that business credit cards are issued to businesses, report to business credit bureaus, and can help build business credit. The same is true in reverse for personal credit cards, which are issued to individuals, report to personal credit bureaus, and can help build credit for the individual.

Typically, the benefits of business credit cards are better (higher credit limits, more rewards, etc.) because more money tends to move in and out of businesses than personal accounts.


Credit limits 

Business credit cards will typically offer higher limits since this is based on a business’s annual revenue and spending, rather than the individual’s. The Capital on Tap Business Credit Card offers credit limits of up to £250,000.

A business credit card is in your company name

A business credit card is in your company name, whereas a personal credit card is in the individual’s name (whether it is for you, your spouse or your child).

A business credit card can be used by multiple people within the organisation. Most business credit card providers offer supplementary cards at no extra cost that can be given to your partners or employees. 

Credit reporting

Business vs personal credit cards report to separate credit bureaus as business and personal credit scores are independent of one another.

Usually, personal credit cards report to credit bureaus such as TransUnion and Experian, whereas business credit cards report to commercial credit bureaus that specifically track business credit behaviour and can be used to generate your unique business credit score.

Most small business credit cards (including the Capital on Tap Business Credit Card) do not report to personal credit bureaus unless the business fails to pay their credit card bill.

Bonus and rewards

Because more money is moving in and out of businesses than personal accounts, business credit cards are typically able to offer more attractive bonuses and rewards.

The Capital on Tap Business Credit Card offers uncapped 1% cashback on card spend for everyday business spending like bills, operating costs, and general expenses. You can also redeem points against your balance, or as discounted gift cards, with merchants like Amazon, Airbnb, and many more.

Perks

Because more money is moving in and out of businesses than personal accounts, business credit cards are typically able to offer more attractive bonuses and rewards.

The Capital on Tap Business Credit Card offers uncapped 1% cashback on card spend for everyday business spending like bills, operating costs, and general expenses. You can also redeem points against your balance, or as discounted gift cards, with merchants like Amazon, Airbnb, and many more.

Bookkeeping

One of the main benefits of a business credit card is that you can keep business and personal expenses separate, which makes life much easier come tax season. Business credit cards also often provide better reporting on business spend, and many will even integrate with your business’s accounting software. Capital on Tap integrates with Xero, Freshbooks, FreeAgent, and Quickbooks so you can see all of your business spend in one place.

If you are making business purchases through a personal credit card, your business expenses will become muddled with your personal expenses, making your accounting much more of a hassle than it needs to be.

Interest rates

Interest rates vary widely between different providers, regardless of whether you’re looking at business or personal credit cards. Carrying a balance on an interest bearing credit card can be costly no matter what.

Separate lines of credit

Business vs. personal credit cards offer separate lines of credit. Your business credit card funds your business whereas your personal credit card funds everything else. Maintaining separate lines of credit can be immensely beneficial both to your accounting, as well as building up both business and personal credit.

While you can use a personal credit card for business expenses, doing so will not help you build business credit. The reverse, however, is not true. You can’t use a business credit card to pay for personal expenses. Therefore, it’s essential to maintain separate lines of credit.

Annual fees

While some cards have no annual fees, others can charge hundreds of pounds each year. It is crucial to carefully weigh the benefits and rewards offered by a card against its annual fees. Will those benefits offset or even exceed the cost of the fees?

It may also be worth checking if there are options to waive or reduce fees by spending a certain amount or maintaining a specific credit score. Whether you’re looking at a business or personal credit card, it’s important to read the “fine print” and understand all the ways in which you can incur fees, and how you can avoid them.

The Capital on Tap Business Credit Card is completely free, with no annual or foreign exchange fees. Meaning you can spend every single pound on your business.

Company cards

One great perk of having a business credit card is the ability to issue employee cards. These cards can be set with spending limits and used for company expenses such as travel, office supplies, or client gifts.

This not only saves time and energy for employee purchases, but it also helps with budgeting and accounting. Instead of juggling personal expenses and company expenses on one statement, employee cards allow for clear categorisation.

If you're approved for the Capital on Tap Business Credit Card, you can create an unlimited amount of cards for your employees, with easy management from your app or account.

Additionally, Capital on Tap account holders can now create up to five virtual cards for the main account holder, as well as up to five individual virtual cards for employees.

How do I get a business credit card?

There are certain steps you need to take in order to qualify for a business credit card. 

Find the right card for you

The first step is to compare the different fees, benefits, rewards, and other features of different business credit cards to find the right one for you.

Check your eligibility

Once you’ve found the right card for you, make sure you meet the eligibility criteria.  These can include:

  • Being 18 years or older
  • Having a UK registered business
  • Revenue

You’re eligible for a Capital on Tap Business Credit Card if:

  • You are an active director of the company or majority shareholder of 25%+ ownership. If neither of these titles matches your role within the company we will unfortunately not be able to accept your application
  • You and your business are based in the UK
  • Your business has a turnover of at least £24,000 per annum
  • You have no unsatisfied CCJs against you or your business in the last 12 months


Apply for the card

Gather the information you’ll need to apply. Fill out the application carefully, then await your credit decision.

Applying for the Capital on Tap Business Credit Card takes just two minutes and the majority of applicants receive an instant decision!

Set yourself up for success

Before using your card, make sure you have a budget and payment plan to ensure responsible use and avoid accumulating debt.

The benefits of keeping your business expenses separate from personal finances

As a small business owner, it can be tempting to use the same bank account for both personal and professional expenses. However, keeping a separate account for your business can be beneficial for a few reasons.

Easier cash flow management

By separating your business finances from your personal, you can improve your cashflow by making it easier to track income and expenses in the short term. It also makes budgeting simpler, as you just have to look at one statement per account type, rather than sorting through different transactions. Starling found that the average small business spends ten weeks a year sorting their finances - valuable time that could be spent on growing your business. 

Improve your accounting

When it comes to tax season, having separate business and personal expenses can be a lifesaver. Keeping track of expenses for tax deductions becomes much simpler when they are all organised in one place.

Beyond that, having clearly defined expenses can provide added protection in the event of an audit. Any personal purchases or payments can easily be distinguished from business purchases.

Protect your business

Mixing personal and business expenses means you run the risk of commingling assets, which can open you up to legal liability in the event that your business is sued. By keeping your business expenses clearly marked and separate, you establish a clear paper trail that shows the distinction between personal and business funds.

This can protect you both financially and legally, as it allows for easy audits and reduces the chance of any confusion or misconceptions about where funds are coming from or going to.

What are the risks of getting a business credit card?

Before you apply for any type of credit, it's important to consider the potential risks. Just like with a personal credit card, the biggest risk is often overspending money you can’t pay back. However, when used responsibly and with careful budgeting, a business credit card can offer some major benefits. In addition to a crucial line of credit to grow your business, these benefits also include building your business credit, earning rewards and perks, streamlining expenses, and providing financial flexibility.

At the end of the day, it's up to every business owner to weigh the potential risks against the potential benefits and make an informed decision about whether a business credit card is right for their company. Just remember- use responsibly!

If you’re ready to get a business credit card to grow your business, apply now for the Capital on Tap Business Credit Card with credit limits up to £250,000, 1% cashback on every purchase, free employee cards for all of your staff and receive an instant decision.

Frequently Asked Questions

Do I need to have a large business to get a business credit card?

Contrary to popular belief, having a business credit card is not reserved only for big companies. In fact, it can be an essential financial tool for small businesses as well.

To qualify for the Capital on Tap Business Credit Card, all you need is:

  • You are an active director of the company or majority shareholder of 25%+ ownership. If neither of these titles matches your role within the company we will unfortunately not be able to accept your application
  • You and your business are based in the UK
  • Your business has a turnover of at least £24,000 per annum
  • You have no unsatisfied CCJs against you or your business in the last 12 months

If you answered yes to all the above, click here to start your application!

Do you have to use a business credit card for business expenses?

Yes, a business credit card must be used exclusively for business expenses. Should you use a business credit card for anything else, you risk your credit card being closed and penalties for both your business and personal credit scores.

Is business credit better than personal?

If you’re looking for a way to fund your business, a business credit card is far superior to a personal credit card in this capacity. In addition to higher credit limits and improved rewards, a dedicated line of credit for your business is more suited to help you grow your business over time than a credit card created for personal use.

When weighing your business vs personal credit card options, make sure to consider the Capital on Tap Business Credit Card. With unlimited free 1% cashback on card spend, unlimited employee cards, and no annual or foreign exchange fees, the Capital on Tap Business Credit Card is custom-built for small businesses.

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