Why You Should Have Separate Personal And Business Credit Cards

A measurable percentage of small business owners continue using their personal credit cards for business related transactions. While there is nothing inherently wrong with the practice of using personal credit cards for business purposes, there are some distinct disadvantages that could cost a business dearly, in terms of both time and money. Separate personal and business credit cards could mitigate these unnecessary costs and save you a lot of headaches in terms of organization and categorization.

Here are some reasons why you should have separate personal and business credit cards:

Business credit cards offer streamlined reporting and expense categorization

If you use your personal credit card for individual and business purposes, categorizing and separating expenses every month could cause headaches, not to mention wasted time. Errors could easily creep in, resulting in fewer deduction claims and increased taxes. If you add the opportunity cost for the time taken to handle the overall process, the costs could be very high even if handled by a minimum wage employee.

A business credit card can not only make this process easy, you can actually take advantage of the convenience of automated categorization and reporting offered by many small business credit card companies. Some business credit cards will automatically mail you an annual statement with an aggregated summary of your expenses (and categories). Some would even allow you to download this summary to your favorite spreadsheet or accounting program.

Dedicated customer support and lesser wait time for business credit cards

Dedicated specialists are specially allocated to support business customers. This could mean potentially faster access to support and a higher level of extremely knowledgeable support. The number of business credit card users tends to be lower in comparison to personal credit users, so the wait time on your calls could be significantly less.

Business credit cards offer pre-negotiated discounts and deals, perkier credit lines

Given the mass of customers, business credit cards often negotiate special deals and savings for business customers. These could range from savings on office supplies to travel rewards and special business discounts and deals. Furthermore, the credit line tends to be higher as well.

Access to networking opportunities and business resources

In contrast to personal credit cards, business credit cards leverage a vast pool of resources, facilitate networking with other business owners, provide several business resources, and help business owners take advantage of a large number of community resources.

Longer promotional periods

If you have ever come across a 0% APR credit card offer, you know that the offer is restricted to a specific duration, after which the regular APR is triggered (often a much high number). While personal credit cards could have a promotional period of six months to eighteen months, business credit cards have relatively longer introductory periods — though not always.

Despite these advantages, some business credit cards may have higher APRs after the promotional period and also specific business-related fees. Always read the fine print and make sure you understand the terms clearly.