The type of credit card your business may qualify for depends on its revenue and whether or not it has an established credit score. Learning more about business and corporate credit cards can help you see if you qualify and decide which is most beneficial for your company.
Business vs. Corporate Credit Cards: What’s the Difference?
While businesses of any size can open business credit cards, corporate cards are typically only available for large or highly profitable companies. If you qualify for both, choosing which is best for your business depends on how you want to spread liability, the number of authorized users you’d like to have, the fees you’re willing to pay and the rewards you wish to earn, among other factors.
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Key Differences Between Corporate & Small Business Credit Cards
Business Credit Cards
- Liability rests with the business owner.
- Carry the potential to earn high category-based rewards.
- Charge lower fees than corporate cards.
- Improper use could affect your personal credit score.
- In most cases, they don’t include purchase protection.
- Liability may rest with the business, individual employees or both.
- Require high annual spending.
- Have dedicated account managers.
- Offer lower reward rates than comparable business cards.
What Is a Business Credit Card?
In many ways, a typical business credit card works like a conventional personal credit card. As the business owner who opens the card account, you’re liable for all charges — even those incurred by authorized users. When you apply, the credit card issuer evaluates your personal credit report. If your business has its own credit file, you may expect the card provider to check that as well. Depending on what you need from a business credit card, you may be able to get one with no annual fees, category-based rewards, travel benefits and added lines of credit.
Typically, you need good to excellent credit to qualify for a business credit card. If you have a low credit score or are in the process of building your credit, you may consider applying for a secured credit card. In this case, you’ll pay a deposit that functions as your credit limit.
Advantages of a Business Credit Card
- Build a good credit profileWhen used responsibly, a business credit card can help you build a strong business credit profile.
- Simplify account keepingMany business credit cards give you easy means to integrate your credit card statements with your existing bookkeeping or account-keeping software. You may also expect to receive quarterly or annual spending reports.
- Earn rewardsSeveral business credit cards offer higher reward rates for spending across different business-related categories. Some come with great sign-up bonuses that you can make use of by meeting predetermined time-based spending criteria.
- Get higher spending limitsBusiness credit cards tend to have higher credit limits when compared to personal cards.
- Add more authorized usersWhile several personal cards let you add authorized users, the number of users you may add to a business card is typically higher.
Disadvantages of a Business Credit Card
- Increased risk of misuseYou need to keep close track of spending by authorized users because you remain liable for all their charges.
- Higher APRBusiness cards tend to come with higher APRs when compared to personal cards.
- Potential impact on personal credit scoreSince you’re liable for all charges made using the card, any misuse or default by an authorized user could affect your personal credit score.
- No purchase protectionWhile purchase protection is a fairly common feature with personal credit cards, it is hard to come by with business cards.
Who Should Apply for a Business Credit Card?
You might consider getting a business credit card if you need assistance with managing short-term debts. The high APRs on these cards make them unsuitable for purchases you plan to repay over a long period. Applying for one also makes sense if you want to build your business’ credit file.
What Is a Corporate Credit Card?
Corporate credit cards are typically meant for businesses registered as C or S corporations. Additionally, a company needs to have annual revenue of $4 million or more, at least $250,000 as projected yearly credit card charges and no fewer than 15 authorized users to qualify. When you apply for a corporate card, you can expect the card provider to check your company’s credit history.
In most cases, liability to make repayments rests with the business. However, companies may choose to get corporate credit cards with individual liability — in this case, authorized users are liable for the charges they make. Joint liability is also an option, and implies that a business and its corporate cardholders are both responsible for charges.
Advantages of a Corporate Credit Card
- No personal liabilityWith most corporate cards, you and any cardholders in your company are not liable for expenses incurred on a corporate credit card. The liability rests with the business. However, keep in mind that some cards shift liability to the business, employees or both.
- Enhanced oversightWith a corporate card, you’ll have access to detailed reporting that integrates with your existing accounting software. You can use this transaction data to identify areas to increase or decrease spending and ask vendors for volume-based discounts.
- Better customer supportMost corporate credit cards come with dedicated account managers or representatives.
- No need for reimbursementsEmployees can make business-related purchases without having to spend their own money and wait to get reimbursed.
- Minimize fraudulent expensesThere’s room for fraud when employees are required to submit proof of payment for reimbursement. Making use of corporate cards eliminates these possibilities.
- More reward-earning flexibilityDepending on the corporate credit card program you select, you may choose to earn rewards as a business or give your employees the ability to earn rewards individually.
Disadvantages of a Corporate Credit Card
- Increased risk of overspendingAccess to a corporate credit card might lead to more instances of overspending by employees.
- Increased risk of personal expensesBusinesses need to monitor card usage to ensure that employees don’t use their cards to pay for personal expenses.
- Fewer rewardsBusiness credit cards tend to offer a higher potential of earning rewards than corporate cards.
- Additional feesThe additional cardholder fee you need to pay through a corporate credit card program is usually higher than what you’d pay to add authorized users to business cards.
- Potential for adverse effects on employees’ credit scoresCredit card providers may check your employees' credit reports before issuing their cards, which could slightly affect their credit scores.
Who Should Apply for a Corporate Credit Card?
If you want to simplify how your employees make business-related transactions, earn rewards through employee spending, streamline tracking and analysis of business-related expenditure and can justify the cost, opening a corporate credit card might work well for your business.
When Should a Business Switch to a Corporate Card?
Some credit card providers require that your business be at least one year old to qualify for corporate cards. While these cards are typically made available for large companies with millions of dollars in revenue, some mid-sized and larger small businesses might also benefit from a corporate credit card.
While rewards that come with business cards might be appealing at first, you might benefit more through the control, data-driven insights and system integrations that corporate cards have to offer once your business starts to grow.
"Don’t shy away from having multiple business credit cards. You can continue to build your business’ credit score, and potentially earn thousands of dollars worth of rewards." — Brett Holzhauer, Credit Card Journalist
Other Questions You May Have About Business & Corporate Credit Cards
To help you make an informed decision for your business, MoneyGeek answered other commonly asked questions about corporate and business credit cards.
Once you understand the differences between business and corporate credit cards and have evaluated the pros and cons of each, you can make an educated decision between the two. After you decide what type of card is best (and is viable) for your business, we recommend comparing options from several providers to choose the best for you.
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The experts at MoneyGeek continuously review and analyze business-based spending trends with Bureau of Labor Statistics (BLS) data. We have studied the rates, fees and offers of almost 550 credit cards for businesses so you can find the best option for you.
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The MoneyGeek editorial team remains up-to-date on the latest business and corporate cards trends to provide our readers with helpful information and recommendations. Whether you're looking for information about how to qualify for a corporate card or want to learn more about how reward cards work, you can count on us to guide you in the right direction.
About the Author
- Bureau of Labor Statistics. "CONSUMER EXPENDITURES--2019." Accessed August 24, 2021.
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