7 Benefits of Corporate Credit Cards: Reasons to Get a Corporate Credit Card

Q: Can corporate credit cards build my credit?

Using a corporate credit card won’t have any affect on your personal credit — positive or negative. It can, however, help you build your business credit.

Q: What are the advantages of getting a company credit card?

Corporate credit cards enable companies to extend purchasing power to their employees without asking them to shoulder any of the liability for repayment.

Q: How can corporate credit cards benefit employers and employees?

Corporate credit cards shield employers from personal liability, simplify expense tracking, and help the business accrue cash back, points, and other rewards. They help employees by making it easier to pay for business-related expenses. It’s one step, as opposed to paying out-of-pocket, then filling out an expense report and waiting for reimbursement.

Jason SteeleUpdated June 24, 2022

Share this article:

Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Corporate credit cards come with many advantages. They can be used by both business owners and employees, shield cardholders from personal liability, and offer business-friendly perks like expense tracking and spending limits. They do have some downsides, however, including strict qualification requirements and potentially high fees.So, is a corporate card right for your business? Read on to learn the advantages of a corporate credit card, how these cards work, and when a personal or business credit card might be a better fit.

What Is a Corporate Credit Card?

A corporate credit card is a type of credit card issued to a corporation. With the typical set-up, the corporation itself is legally responsible for repaying charges made to the card. That means that should the company go out of business, no individual would be responsible for paying any outstanding debt — the business would bear that responsibility. Because of this, corporate cards are generally only issued to companies that have strong business credit scores and high revenue.If you qualify for a corporate credit card, you can issue cards to your employees, who can use it for authorized business expenses — such as travel or entertaining clients — without having to use their own card or cash.

How Corporate Cards Impact Credit

A corporate credit card typically only affects the business credit of the corporation. The business is required to repay the debt, and the corporation’s business credit can suffer if payments are delinquent or in default. On the other hand, using a corporate card responsibly can be a good way to continue building business credit.With most corporate credit cards, payment history will have no impact on the user’s personal credit. However, some corporate credit cards are set up to have individual or joint liability. If that’s the case, failure to pay bills on time can hurt the credit of individual cardholders. Recommended: Comparing Business and Personal Credit Scores

Benefits of a Corporate Credit Card

Corporate credit cards are popular with many large companies, and for good reason. In addition to protecting your personal assets, here are seven other advantages of a corporate credit card.

1. Personal Rewards

Some corporate credit cards offer rewards for individual cardholders in order to incentivize them to use the card for business expenses. In some cases, you can even transfer the points you earn on your corporate card to your personal card. The catch is that there is often an annual fee associated with these rewards programs that the business owner would need to pay, and employees lose the rewards if they leave the company.

2. Business Rewards

Corporate cards also offer rewards to the business itself. For example, a corporate card might offer cash back, points, and miles to the company based on cumulative spending of both owners and the employees, which could be significant. The business owner can then decide how to use these rewards. They can use them to help the business save money, or they might decide to issue them to employees as a perk.

3. Advanced Security

Corporate credit cards typically come with several layers of security to protect against theft, misuse, loss, and fraud. This makes it a much safer form of payment than using cash or a check for business expenses. Some corporate credit cards also offer extra protections, such as emergency cash advances and insurance coverage for car rentals in case of theft or an accident.

4. Easier Payments

There’s no doubt that one of the most valuable features of a corporate credit card is how easy it is to use for business-related purchases. Owners and employees who are authorized corporate card users can quickly and easily book travel, entertain clients, and procure necessary business supplies. It’s one step, versus the multi-step process of paying for the expenses with a personal card, then filling out expense paperwork and waiting to be reimbursed.

5. Spending Controls

While one fear of issuing corporate cards to employees is that they will overspend or use the card for personal use, corporate credit cards typically offer strong spending controls. Companies can set spending limits for each employee, and can monitor spending in real time. For example, companies can limit the days and times that employees can make charges, as well as the number of transactions or the dollar amounts. Companies can even restrict which types of transactions employees can make with their corporate cards or even confine charges to a list of preferred vendors.

6. Financial Management Tools

Another valuable benefit of corporate credit cards is the financial management tools that they offer. These tools can help companies better analyze their spending and more accurately predict their cash flow. Corporate cards can even integrate purchasing data into a company’s existing accounting software to eliminate the time-consuming need for data entry.

7. Increased Employee Satisfaction

When employees don’t have to spend as much time tracking expenses and filling out reports, they can focus more on what they’ve been hired to do. Having a corporate credit card also takes the stress out of paying out-of-pocket for business expenses, and being out all that money until they get reimbursement. A corporate card also reduces their exposure to identity theft. And, when a corporate card offers travel perks such as airport lounge access and hotel elite status, it makes their time on the road less taxing. Issuing corporate cards to employees also sends the message that you trust and care about them.

Should You Get a Corporate Credit Card for Your Business?

If these benefits seem compelling, you may be wondering: Should I get a corporate credit card? The answer is – it depends. One thing to consider right off the bat is whether or not your business can qualify for a corporate card.Typically, you need to be formally incorporated as an S-corp, C-corp, or LLC in order to qualify. Corporate card issuers also typically require businesses to have a certain amount of annual revenue (which could be in the millions) and solid business credit scores. In addition, you may need to guarantee a certain number of users (which could be as high as 15), as well as a certain level of spending, which could be $250,000 or more each year. Another consideration is cost, as corporate cards often charge higher fees (including an annual fee for each card issued) than personal cards do.

When to Use a Personal Credit Card Instead

For smaller businesses, using a personal or a small business credit card for business expenses might be a better option than getting a corporate card. These cards are easier to qualify for, and typically come with lower fees and more personal rewards (including airline miles and other travel rewards) than corporate credit cards. If you need a higher credit limit than you can get with a personal or business credit card, you might also look into a business line of credit. Recommended: No Doc Business Line of Credit: What It Is and Where to Get One

The Takeaway

Corporate credit cards can be a great option for medium- to large-size businesses. They protect personal liability, make it easy for employees to pay for business-related expenses, and offer business-friendly perks and accounting tools. Corporate credit cards aren’t your only option, however. From cashback credit cards to credit-building cards, there are many different types of cards that could work well for your small business. Interested in exploring your options? With Lantern by SoFi, you can compare multiple credit card offers quickly and all in one place.

Frequently Asked Questions

Can corporate credit cards build my credit?

What are the advantages of getting a company credit card?

How can corporate credit cards benefit employers and employees?

Photo credit: iStock/Jay Yuno

LCCC0422001

About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

Share this article: