Most people have the notion that one’s business and personal lives should be entirely separate, and in many cases this is true. The ability to manage a personal life away from a business one can be vital to one’s sanity.
However, if you’re the owner of a business or hope to start one in the near future that separation can be nonexistent. This is especially true when it comes to the capital that is needed to either start or maintain a business.
Unless you have a healthy bank account or investors to fall back on you’re likely going to use your personal money to finance portions of your business expenses at some point.
While there are ample reasons to use business credit cards for those expenses, in some cases it’s just as good or better to use your personal credit cards, especially when your company is in its initial stages. Check out some of these reasons why your personal plastic can be your business’ best asset.
1. Better Interest Rates.
One thing that many people might not know is that personal credit cards carry a fixed interest rate and business credit cards’ interest rates can be variable. The fixed personal rate is due to government regulations and is designed to protect an individual from unfair practices on the part of the credit company. Business accounts do not hold the same privileges.
If you qualify for a low-interest personal credit card you will save money in the long run, especially if you pay the balance in full each and every month. Just be sure to use this personal card only for business expenses. If you mix the two you may have trouble tracking your spending.
2. Rewards Programs.
Business credit cards are not without their own rewards programs, but these tend to be targeted toward business expenses such as office supplies and furniture. If these aren’t reward items that you would use then consider your personal card which has benefits that you’d take advantage of, such as travel points or cash back for grocery or gas purchases.
Be sure to choose the card that offers the best rewards program for you, and always take into account the annual fees that may or may not be charged.
3. Maintain Your Credit Score.
You’re proud of your good credit score and you want to keep it that way. Monthly spending on a personal credit card then paying the balance each month keeps your credit score where it should be. Business credit cards are not often scrutinized by the major credit reporting companies, therefore those expenses won’t show up and may not affect your score in a positive way.
If you keep a personal card for business costs and use it wisely you’ll have the opportunity to maintain your credit score, and you may even be able to raise it with smart practices.
4. Higher Credit Limits.
If you have a long and good standing relationship with your personal credit card company you likely have access to a relatively high credit limit. This could come in very handy when you need seed money or need to make several large purchases at once.
Business cards can also come with high spending limits, but if you already have the availability on your personal card then you may as well use it. As always, don’t spend more than you can pay off at the end of the month.
5. Fund Major Purchases.
This relates to the fact that you have a high spending limit on your personal card, but if you need to make large purchases to maintain your business or to get it up and running this is the best way to do it. If computers or other office machines are on your list, use your personal card.
In addition to the ability to buy them when you need them, by using your personal card you may be able to take advantage of extended warranties. Check with your credit card company to see what they offer.
Running your own business is an exciting adventure, but each business needs money to make money. Before you apply for a business card, take advantage of your personal card and find out more about the rewards and benefits of doing so.
