A credit card is a payment card that is issued by the banks or financial institutions to customers. It gives them the privilege of borrowing funds in advance to pay for goods and services. Credit cards offer several perks like reward points, cashback, discounts, and more than allowing customers to pay in advance.
Credit cards come in many variants, such as personal credit cards and business credit cards. Both cards are meant for different purposes and hold significant benefits and features. Here we will look at how these cards function and what makes them unique.
What is a Personal Credit Card?
Anyone can use a personal credit card. It offers rewards based on consumer spending, which consumers can use for various purposes. Using a personal credit card can affect your credit score, which is crucial for future credit, such as loans or mortgages. The most significant advantage of a personal credit card is that it can be used for business-related transactions. Personal credit cards give consumers a lot of protections, thus making them a bit safer.
What is a Business Credit Card?
A business credit card is designed for businesses. These cards help a business to build a credit history to secure a loan in the future. Among other benefits, these cards offer flexible repayment terms and rewards for businesses. Irrespective of the business, business credit cards provide instant money and enable business owners to manage transactions easily.
Difference Between Personal and Business Credit Cards
Despite sharing many common features between them, both cards differ from each other in many ways. Here are some key differences that you should consider before you choose the one.
- Credit Limits: Business credit cards come with higher credit limits than personal credit cards.
- Regulation: Business credit cards are less regulated than personal credit cards, which means credit card issuers could charge new transaction fees without any notice.
- 0% Intro APR Period: Introductory 0% APR period can last 12 months or longer on personal credit cards, while for business credit cards, it could be nine or 12 months.
- Credit Score: A credit card issuer considers personal credit score when you apply for a personal credit card, but your business credit score and personal credit score are checked when you apply for a business credit card.
- Rewards: Though both personal and business credit cards offer several bonuses and rewards in different spending categories, perks are just bigger on business credit cards.
- Balance Payments: The credit card issuer can apply your payment to the highest interest rate if you own a personal credit card, but to the lowest interest rate if you own a business credit card.
- Bookkeeping: The credit card issuer can provide expense management reports for a business credit card, but no such report is provided to personal credit cardholders.
Conclusion
Credit cards give you the freedom to spend on things without the need to carry the cash or worry about not having enough bank balance. Both cards have their own pros and cons, and the selection of them is totally dependent on your needs. A personal credit card is a much better choice for individuals who want more protection. A business credit card is a must go for businesses that want to establish a business credit report. Whatever your requirements are, before applying for any of these cards, you should consider and compare the benefits and features they offer and ensure that they meet your needs.