How Does a Business Charge Card differ from a Personal Charge Card?

A business charge card can be a fantastic tool to use for your company. Many business owners use charge cards as a means to pay for many things. Personal charge cards work in much the same manner as a business card. While they are similar, they do have some differences. Here are a few ways that business and personal charge cards differ. 

Spending Limits

One key area in which business and personal charge cards differ is in the spending limits. Most of the time when you get a business charge card, the spending limit will be much higher than an equivalent personal card. Charge card companies feel much more comfortable offering these bigger spending limits to companies rather than individuals.

Charge cards are designed to be paid off each and every month. Therefore, they know that a business is going to have more cash flow than an individual in most cases on a month-to-month basis. If you are an individual, you will not typically need as much available credit as a business would. The monthly expenses that a business incurs are usually much more than an individual would. Therefore, everything is done on a larger scale for businesses. 

Approval Process

Another key area in which business and personal charge cards differ is in the approval process. When an individual applies for a charge card, the issuing company will take a good look at their personal financial situation. They will look at their individual income, their assets and liabilities, as well as their personal credit score. 

When a business applies for a charge card, they have a different set of standards. Instead of looking at an individual's credit score, they will look at the credit score of the business itself. If the business has been around for a few years with a successful operating history, they should have a good credit score.

Therefore, the decision of whether or not to offer you a charge card is directly tied to a credit score. If it is a personal charge card, it will be tied to your personal credit score. If it is a business charge card, it will be tied to your business's credit score. 

Different Terms

Most of the time with a charge card, you are expected to repay the entire balance each and every month. In the majority of cases, this is still true. However, sometimes with a business credit card you will be offered some additional terms. Some charge cards are now coming with an option for extended repayment terms. You will be able to charge something on the card and instead of paying it all off in one month, you may be granted some additional time to repay the balance.

For example, they might give you 90 days to pay off the balance instead of just the normal 30 days. They will usually offer this to more successful businesses that have a proven track record behind them. This provides a little extra flexibility to work with. 


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