For every business owner, especially the small ones, providing enough funding for their businesses is a real nightmare. Therefore they often tend to fund the purchases by using their credit cards. At the beginning many small business owners fund most of their business purchases from their personal credit cards as they don’t have much choice. Many of them still don’t have their business credit cards so they don’t have a lot to play with.

Obtaining a business credit will definitely make your life easier; however sometimes even using your own personal credit card for business purchases can also be a plus. In some cases this can bring benefits to your company you have never though it would.

All credit cards differ and at the end of the day it’s up to you to decide which one would work better for you and be better for the line of work you do. So let’s make a short analysis of your options and try to work out which credit card would be better for you.

Credit Limits

Winner: Business credit cards

The consumer credit cards always come with a limit, especially if it’s the starter version. The limit is usually $500 with a possibility to be increased. Once you are able to create a reliable credit history and prove you are able to make big profit, the limit can be increased to up to $35,000. The small business credit cards unlike the consumer’s credit cards have a higher starting limit. It goes between $1,000 and $5,000 with the potential to increase up to $100,000 assuming you build strong credit history.

Rewards

Winner: Tie

The rewards are a common method the banks use to attract clients. Both the consumer’s credit cards and the business credit cards have different programs were they reward you with some cash back rewards; they give you points for air travels, dinning or accommodation. For example if you get the Spark Cash Card you are offered an unlimited cash back for up to 2 % and a possibility of a one-time bonus that can be up to  $500.

With the Spark Miles Cards you get double miles for your airline travels for unlimited time and up to 50,000 expressed in bonus miles.

When choosing the right card you should take into consideration the offer that fits your needs and is in line with your most common business expenses.

Financing

Winner: Consumer credit cards

When it comes to financing the consumer credit cards are entitled to the protections outlined in the Credit Card Act of 2009. With this program you get 21-day grace period for every payment, a 45 day upfront notice of any change of the rate, and a guarantee that the your rate will not increase unless your minimum payment is 60 day pass the payment deadline.

On the other hand, most banks do not extend the Credit Card Act protections for the issued business credit cards which lead to many business owners deciding to use their personal credit cards for different business purchases. If the worst comes to the worst and you miss out a payment for some of your business expenses charged on your personal credit card, you don’t have to worry that the interest rate would immediately increase.

Credit Reporting

Winner: Business credit cards

The procedure when applying for a business credit card is as it follows: The bank in question will check your credit report and look into your FICO score. When you receive your card and start making purchases in the name of your business, the activity on your business card will not be reflected on your personal credit condition. That means that even if you have a huge balance on your business card it will have no influence on the credit score of your personal account. However, that will also mean that the good business credit will not work in your favor and will not be shown as a positive indicator in case your personal credit is unstable.

The good thing about the business credit cards that many people are not aware of is that it can be used to make personal purchases. If for some reason you decide not to use your personal credit card and you want to spend the funds you have on your business card, you can simply use the business card. However, you should be aware that using the business card for personal purchases can at times be dangerous and should be dealt with great attention so it wouldn’t have negative effect on your business and personal life.

Expense Control

Winner: Business credit cards

Those businesses that have solid credit ratings are offered the possibility of using charge cards instead of using credit cards that have a certain limit. The advantage of these charge cards is that you have the liberty to spend as much as you want to spend assuming that you pay the entire balance when the month ends. In addition, most business card providers will send quarterly reports to your company for the expenses in the previous period that give you good overview of your expenditure and can be used as guidance to reallocate your funds.