You may find it easier to manage a personal card for business and personal expenses if you keep track of expenses across multiple accounts and credit cards. You will not be declined for either expense type you choose. Still, is it smart to use a personal card for business costs?
There are both advantages and disadvantages when using a personal card to pay for business expenses. Keeping your personal and business finances separate is the most practical way to track them. If you plan to use a personal credit card, use it for business purchases to be able to keep track. If you’re planning on using your personal card to make business purchases, weigh the pros and cons before purchasing.
Reasons You Shouldn’t Use Your Personal Card for Business Transactions.
1) Personal cards don’t protect your business the same way a business credit card does. Many charge cards have special features that protect you from fraud and provide perks like extended warranties, price protection, and travel insurance.
2) Unnecessary fees: If you use a personal card for business expenses, you could rack up late fees and over-limit fees if you’re not careful. You also risk interest charges typically much higher on personal cards than on business credit cards.
3) Personal cards don’t offer the same rewards as business credit cards, which give you points or cashback for every dollar spent. If your business spends a lot of money on travel or advertising, you may be better off with a card that offers travel miles or cashback.
4) Personal prospects get nervous when they see the credit limit on your personal card is close to $0. It can look like you’re maxed out and unable to pay your bills. If the business goes under, it’s possible that outstanding personal debt can be turned over to a collection agency.
5) A personal card doesn’t help your credit score as much as a business credit card. Your FICO scores look at how many accounts are open, the types of accounts you have, and the length of each account’s history. Personal cards aren’t included on that list.
