If you have a business startup, it is crucial that you have a credit card because it brings numerous businesses on board. First of all, your business will get an opportunity to get loans should there be a need. The credit card allows both businesses and people to gather points every time they are used. But there are differences that one should know about personal and business credit cards. That is why we have prepared this article to help you understand this.
You Can Use Business Credit Card for Personal Use
Do you know that business cards can be used to purchase personal items? After all, credit card service providers do not restrict what you buy as long as you are within the limit. As we will mention below, business credit cards have a higher limit. Therefore, they are recommended for people with higher monthly expenses.
Additionally, excellent repayment of credit boosts your score in a better way than with personal credit cards. The best thing is to keep a higher credit balance on your business card even if you are using a business credit card for personal use.
Business Credit Cards Have a Higher Limit
Almost all credit card service providers allow a higher limit on business credit cards as compared to those for personal use. That is why a person with higher monthly needs can go for this option. They understand that businesses may need more money to run their operations.
However, interest rates might be higher to discourage entrepreneurs from overreliance on a credit card. But the good thing is that this is also a chance to increase your credit score if you pay off the balance in a timely way every month.
It Has an Effect on Both Personal and Business Scores
Unlike personal credit, which only affects personal credit scores, business credit cards are more that. It will determine the business score, which has independent trade lines and goes on to affect the score of the entrepreneur attached to it. It is, therefore, an excellent way to improve your score even if they were initially not that good.
According to the Boostcredit101 website, the best thing is to improve both of them simultaneously. If you have more than one credit card for both your personal and business, then you can still enhance both of them.
Personal Credit Cards Are More Protected
Many laws protect personal credit card use and resolution of discrepancies in almost every country. However, you will rarely get one that takes care of your business credit score.
Most of them try to modify these to suit business credit card use or create their own. It means that entrepreneurs who have a credit card for their businesses are very exposed. This lack of legal regulations is a major cause of irregular interest rates as well as terms and conditions.
These differences define both personal and business credit cards. Now that you know them, it is time to make your decisions well to avoid making any costly mistakes.