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Is it Acceptable to Use a Business Credit Card for Personal Use?

Is it Acceptable to Use a Business Credit Card for Personal Use?
Jason Steele
Jason SteeleUpdated August 12, 2022
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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.
Whether you own a small business or simply have a side hustle, having a business credit card can be a great way to keep your business-related spending separate from your personal spending. But what happens if you accidentally pull out the wrong card and put personal expenses on your business card?There are no laws against using a business credit card for personal use. However, you will likely be violating your credit card agreement, as well as making your life more complicated come tax time. What’s more, business cards don’t always have the same consumer protections that personal credit cards do.Here’s what you need to know about putting personal expenses on a business credit card and what to do if you inadvertently put a non-business purchase on your business card.

What Is a Business Credit Card?

A business credit card is a credit card intended for business rather than personal use.  You can use a business credit card to pay for any business-related expense, including office supplies, inventory, business entertainment, and business travel. Business cards are available to companies of all types and sizes. Freelancers and gig workers can also apply to get a business credit card.

Business Credit Card vs Personal Credit Card: Key Differences

What makes business cards different from personal credit cards is that the credit line is typically higher, and rewards and perks are usually more geared toward business use. For example, business credit cards often offer bonus rewards for spending in business categories, along with robust expense tracking and accounting tools.Another key difference: Personal card accounts are only reported to the consumer credit bureaus (Experian, Equifax, and TransUnion). Business cards, on the other hand, may be reported to business credit bureaus (Experian or Dun & Bradstreet), as well as the consumer bureaus. Because of this, a business credit card can help you build a business credit profile, which may help you qualify for other types of business financing in the future.Business credit cards also typically come with fewer consumer protections. The CARD (Credit Card Accountability Responsibility and Disclosure) Act of 2009 guarantees protections, such as limitations on interest rate hikes and fees, for personal credit cards. The Act doesn’t apply to business credit cards, though many business card issuers offer these protections as a courtesy.Here’s a side-by-side comparison of business credit cards vs. personal credit cards.
Personal Credit CardsBusiness Credit Cards
Credit reportingConsumer credit bureau onlyBusiness and consumer credit bureaus
Credit limitsSmallerHigher
Bonus reward categoriesFocused on personal spendingFocused on business spending
O% APR offersLongerShorter
Expense trackingLimited toolsExtensive tools
Consumer protectionsMoreLess
Recommended: Differences Between Business and Personal Credit Scores 

Is It Illegal to Use a Business Credit Card for Personal Use?

No, it’s not illegal to use a business credit card for personal use. So long as you are the primary account holder, you can legally use the credit card for any purpose that you’d like. However, card issuers generally don’t allow business owners to use business cards to pay for personal expenses. If you do, you may be violating the cardholder agreement and there can be consequences for that, including the closure of your account.

Consequences of Using Business Credit Cards for Personal Expenses

While you can use a personal card for business expenses, it’s generally not a good idea to do things the other way around. While you won’t be breaking any laws by using your business credit card for personal expenses, there are consequences that you need to be aware of. 

It Can Lead to Closure of Your Account

Using your business credit card for personal expenses will likely violate your cardmember agreement. Buried in the small print of most business credit card agreements is the requirement that your business credit card only be used for business purposes. Your issuer could close your account if it sees purchases obviously unrelated to your business. And if that happens, you might lose any points, miles, or cash-back rewards you have saved up.

You May Become Liable for Business Debts

If you have a limited liability company (LLC), your business structure likely protects your personal assets from the company’s liabilities. By putting personal purchases on your business credit card, however, you can end up muddying the waters between what is a business asset and what is a personal asset. This can make it hard to determine what assets should be protected should your business get sued or become unable to repay its debts.  

Limited Consumer Protection 

If you use a business credit card for your personal spending, you may lose certain protections you would have had if you’d used a personal credit card. This is due to the fact that business credit cards are not governed by the same laws as consumer cards. The best business credit cards, however, will offer similar protections as a courtesy to their customers. Both a business and a personal credit card may (or may not) offer purchase protection. This is an added perk, in which the card issuer will cover the cost to repair or replace items you buy for months after a purchase is made.

It Affects Personal and Business Credit Scores

Business credit card issuers typically report to the business credit bureaus. However, issuers will often ask small business owners to sign a personal guarantee on the card. If you do so, the issuer will likely report your card activity to both the consumer and the business credit bureaus. If you sign a personal guarantee and miss a payment on your business card, or pay late, both your business and personal credit could take a hit. That’s why you have to worry about your business credit cards affecting your personal credit.

Tracking Business Expenses Gets Harder

One of the major advantages of having a business credit card is that it helps separate your personal and business finances. When you mix your personal and business purchases, it becomes much harder to keep track of how much your business is spending each month. This can make it difficult to understand and manage your company’s cash flow on a day-to-day basis. 

Filing Taxes Becomes More Complicated

One of the benefits of business credit cards is that they put a wall between business and personal spending. Since business expenses are generally tax deductible, keeping them separate makes filing your taxes a lot easier. Business cards also typically offer expense tracking features that make it simple to calculate different types of expenses that you need to report on your taxes.

What Happens When You Accidentally Use a Business Credit Card for a Personal Expense?

Despite your best efforts, you may occasionally use your business card for a personal expense. If this happens, it’s not the end of the world. Your card issuer is not likely to notice and, if they do, might simply send you a warning. On your end, you can simply flag that expense in your records so it’s not included in your company’s bookkeeping or deducted as a business expense on your taxes. It can also be a good idea to pay off any personal expenses on your card as quickly as possible, so they don’t take away any available credit from your business.

The Takeaway

While it’s not illegal to use your business credit card for personal expenses, it’s not recommended. If you do so, you’ll likely be violating your credit card agreement, which could potentially lead to the closure of your account. Even if your card issuer doesn’t notice, mixing your personal and business spending makes it harder to track your company’s expenses and prepare your taxes. You also lose some of the legal protections that are afforded to consumers and, depending on your business structure, you may also lose some of your personal liability protection. If you’re curious about what type of credit card your company might qualify for, Lantern by SoFi can help. With our easy online comparison tool, you can research the lowest interest rates and fees, and find the best rewards for your business.  

Frequently Asked Questions

Is using a business credit card for personal expenses embezzlement?
Can I use a personal credit card for business?
Does using a business credit card affect your personal credit score?
Photo credit: iStock/AsiaVision

About the Author

Jason Steele

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.
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