Can I use a personal card for business expenses?

Whether you’re starting a startup or running an established company, credit products are a valuable source of capital and a great way to make secure transactions.

Although many cards are created specifically for small businesses, accounts designed for personal expenses can also be used. And they usually are. According to the Small Business Administration, 65 percent of small businesses regularly use credit cards, but only about half of these accounts are in the name of the business.

So why as an entrepreneur should you choose a personal card for your business over a business credit card? For some small business owners, personal cards are easier to get and offer lower annual fees and better rewards on their business expenses. A personal card may be the best card for your business, for many reasons, at least in the early stages of your business.

When a personal card is necessary for business

There are some situations where you may find that a personal credit card is your best — or only — option for your small business expenses.

A personal card is the only card you can get.

Most business credit cards require applicants to have a high credit score. If you’re new to credit or have a low credit score but want it for business purposes, a personal credit card can be a stepping stone.

“People need to establish their personal credit before they can establish their business credit,” says Ray Smith, credit expert and president of Tricera Financial in Newport Beach, Calif. “It’s very easy to get personal credit, and it shows how to use it properly. Lenders that you are financially responsible.

There are many secured credit cards that you can open in your own name and have forgiving eligibility requirements. Lines of credit generally start small, but after managing the account responsibly, the issuer may increase the line. After you build or repair your credit, you can choose a business card if you want to go in that direction.

Your business is a temporary or occasional side hustle.

While it’s often possible to open a business credit card without a full-time, money-making business, your venture may be a more casual endeavor. For example, maybe you walk your neighbors’ dogs after your nine-to-five job is over to earn a little extra cash. Yes, you’re running your own operation, which costs money, but you don’t need to take out an extra credit card for it.

There is nothing wrong with using a personal credit card for temporary, occasional business. Make sure the card you choose works for you.

If you have two rewards cards already open, choose the one that earns you the most cash back, miles, or points for your business-related expenses. As long as you pay the bill in full by the due date, you’ll keep the prize.

Your personal credit is vulnerable anyway.

Almost all small business credit card applications require you to accept personal liability for the account. This ensures that the guarantor can pursue the business owner for damages if the account is delinquent. Not only does it affect the person’s credit history and score, but they also risk having their property foreclosed and taxed if the lender takes the case to court.

That’s one reason Jeremy Knauf, founder of Spartan Media, headquartered in Tampa, Florida, decided to use the Citi® Diamond Preferred® Card and Amex Everyday® Card for company expenses. There wasn’t enough variety to open business cards.

“I only use these two personal cards for my business,” says Knauff. “We spend an obscene amount on software and other equipment. The rewards are stacking up and I can probably use them for Home Depot or Lowes gift cards to get things for my business. And I don’t have to open a new card that requires a personal guarantee.”

You want to streamline your credit management

The last thing small business owners want is to spend time on unnecessary tasks. A 2022 Capital One Business Report found that 47 percent of business owners surveyed reported feeling physically or emotionally drained. This can be reason enough to lean on the credit cards you open for your personal life. That’s what Vanessa Gordon, publisher of East End Taste magazine, did in East Hampton, New York.

“A business credit card would be another card to keep track of,” says Gordon. I found it easy to use my personal cards.

The magazine is global, so the Gordon Emirates Skids Rewards World Elite Mastercard® and Citi/AAdvantage® Executive World Elite Mastercard® come in handy. Each is rich in travel benefits, including access to the world’s best airport accommodations. The rewards are also appropriate for her business. She pays for flights, gas, food, photo shoot accessories, photographers, videographers and event planners, then pays the balance down to zero.

Gordon is now planning a press trip to Italy, and will travel business class to Milan on her Emirates Card award — all without an additional business credit card to manage.

You can get the same benefits for a lower annual fee.

When looking for a credit card that offers rewards and benefits for your business, look at the annual fee and benefits. As long as you get a lot of spending from the card, the payout will be fine. However, if a personal credit card has great benefits at a lower price than the business card option, you may consider it instead.

The Business Platinum Card® from American Express, for example, has an annual fee of $695. And even though it comes with a generous welcome gift of 120,000 Membership Rewards points, you’ll have to spend $15,000 on eligible purchases in the first three months of opening the account to get it. Depending on your needs, the American Express® Gold Card with a $250 annual fee may be a more attractive option. With it, you can earn 60,000 points for a slightly lower cost and longer term: $4,000 in qualifying purchases within the first six months of opening the account.

Compare and contrast offers before applying. The best card for your business may be the one designed for personal use.

You can avoid finance charges for a long time

Both business credit cards and personal credit cards can come with an interesting feature: the ability to charge expenses and carry a balance for a certain period of time without accruing interest. When you charge more, this saves you a significant amount on finance charges. Most 0 percent APR introductory offers are available on personal accounts, which appeals to small business owners trying to save money.

That’s what Kim Hawkins did. Hawkins is president of EventsWholesale.com, a discount event and wedding planning supply company based in Watkinsville, Georgia. Her company recently began manufacturing in-house, commercial-grade plastic columns and colonnades — a particularly expensive undertaking. To get what she wanted, she decided to open the Chase Freedom Unlimited® credit card, which offered her 0 percent APR for 15 months from the day she opened the account.

“This visa allowed us to buy about $100,000 worth of columns on the card and pay it all off next year, once we started bringing in more income, interest-free,” Hawkins says. “On top of that, we received cash back bonuses and points to use toward travel to future conferences and trade shows!”

You may receive stronger legal protection.

However, there is another reason why a business owner may choose a personal card over a business card: legal protection. The Credit Card Act of 2009, a powerful consumer protection law, does not apply to most small business credit cards. This assures cardholders that the legislature cannot raise the account’s APR without reason or fair warning.

Some business credit cards offer the same or similar customer protections as those guaranteed to personal cards. But not all. If you can’t find a business credit card that offers that protection voluntarily, you can consider a personal account instead because it’s legal to do so.

How to manage a personal card for business expenses

Just as it’s not illegal to use a business card for personal expenses, there’s no law that says you can’t use a personal credit card for your business. Once you have a personal card, make sure you use it properly for your business. The rules are simple:

• Pay on time and keep revolving debt low. These are the two most important credit score points.
• Raise the rewards. From welcome bonuses to points, miles and cash, you can earn rewards with your credit card. Just pay the bill in full on payday or if you have a 0% APR card before the standard fee applies.
• Separate and track your business expenses. If you use your card for business and personal expenses, review your statements each month. In order to plan for the future and plan for taxes, you need to know how much your business will spend.

Don’t hesitate to use a personal credit card for your business, especially if it’s the only thing you can get right now. “Eliminating debt is a terrible approach because it limits your options and your growth potential,” Smith says. You should absolutely use both personal and business credit cards. But as you are financially responsible, you should start with personal cards first and then start looking for more business credit cards.