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Corporate card vs. business card: Which is right for you?

Summary

A quick look at the differences between corporate and business cards.

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When it comes to making business purchases, it can be hard to know the best card to use. A business card can help you build your company credit, but an individual cardholder will still be at risk for late payment fees.

With a corporate card, the company takes all the risk for late payments, and managing spend limits is simple. But the cost of each additional card can add up quickly and the application process is much more difficult.

Overall, deciding between these options comes down to a few key factors – the size of your business, importance of earning rewards and how much you’re willing to pay. To help you understand what is best for you, here’s a quick breakdown of what makes these cards different and their pros and cons.

Corporate credit cards: What they are, pros and cons

Corporate credit cards are typically only available to large businesses who bring in millions in revenue each year. For example, the One Card from Capital One® requires its users to have a minimum annual card spend over $1 million. Cards are issued to the company itself (rather than any individual) and require that you submit your Tax ID and require an audit of company financials before approval.

Once an account has been opened, the company is responsible for paying the balance in full each billing cycle and managing spending of each cardholder. However, it is also the company who reaps any rewards the card may include, including statement credits or travel perks. In the case of the One Card from Capital One, businesses earn competitive rewards up to 1.5x net purchases.

Corporate credit cards can also be quite expensive. Additional cardholder fees on corporate cards can add up quickly, ranging anywhere from $19 a card – with the One Card – to almost $100. But with these cards, the company is also liable for any late payments and don’t risk the negative effect on an employee’s personal credit score.

The biggest perk attached to corporate cards is the ease of tracking employee spending. Rather than having employees make personal charges and submit expense reports or receipts for reimbursement, the company can easily manage spend limits, track budget needs and manage fraud risk. Most corporate cards offer detailed analytics all in one system about where and how company money is being spent.

Since these cards are sometimes more complex, corporate cards often come with their own designated customer service representative who can help resolve any issues quickly. These representatives are usually on-call 24/7 and have an intricate knowledge of each company’s individual needs.

The pros:

  • Simplified tracking and analysis of work-related purchases
  • Benefits and rewards help the company directly
  • Dedicated or on-call customer service representative
  • Prevents employees from trying to make personal charges on a company card with clearer visibility and better spending controls than most business cards

The cons:

  • Additional cardholder fees can add up quickly
  • Not an option for smaller companies
  • Tough application process
  • Employees can’t earn their own rewards by using a personal card and getting reimbursed

Business credit cards: What they are, pros and cons

Unlike corporate credit cards, business cards are available to any-sized business – even entrepreneurs just getting started on their own. The application process is much less intensive and usually doesn’t require an audit of company finances. There are also fewer fees, including no additional charge for employee cards with cards such as Capital One Spark® Cash for Business.

Business cards are issued to an individual and the company (unless it is a sole proprietor), and even if additional cards are added for employees, the business owner is responsible for managing payments. Luckily, business owners can set individual spending limits on employee cards to help maintain control.

For business credit cards, it is the business ownerswho can rack up rewards. With the Spark Cash card, the primary cardholder earns all the rewards for purchases made by employees, which at 2 percent cash back or 2x miles can add up quickly.

While corporate cards are typically used for work-related travel and accommodation, business cards can be used to make all sorts of work purchases, including supplies or merchandise. This allows even small businesses to build a great credit profile. By using a business card to make larger payments, business owners can avoid racking up charges on their personal credit cards while steadily building their business credit.

The pros:

  • Helps build business credit and separates personal from business expenses
  • Easy application process that doesn’t typically require company financial documentation
  • Allows business owners to pay off larger company purchases over time (for cards that allow you to carry a balance)

The cons:

  • Business cards tend to offer higher APRs and fees than personal cards
  • Risk to personal credit score
  • Liability lies with the business owner

Which card fits your business?

While corporate cards offer a wide range of great benefits such as easy expense tracking, dedicated customer service representatives and no liability for individual employees, they are typically only available to large corporations with millions in annual revenue.

If you own a small business, a business credit card can help steadily build a credit history for your company. Business cards can also help you make large purchases to pay off over time. If you’re still not sure which card is right for you, check out our comparison of two options from Capital One.

Comparing a corporate credit card to a business credit card

One Card from Capital One

One® Card from Capital One®

Capital One Spark Cash for Business

Capital One® Spark® Cash for Business

  • Offered to organizations generating more than $20M in revenue, looking to leverage corporate liability
  • Up to 1.5x rewards depending on length of billing cycle
  • Real-time spend controls, custom reporting options for employee transactions, and a dedicated account representative
  • $19 per employee card
  • Payment due in full each billing cycle
  • Available to businesses with excellent credit
  • 2% cash back for primary cardholder including all employee card rewards
  • Quarterly spend reports and downloadable purchase records
  • No additional charge for employee cards
  • 19.24% APR (variable)

See related: A guide to the new One Card from Capital One®Earn up to $2,000 bonus cash back with Spark Cash for Business cards

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Published: December 6, 2018

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Credit Card Rate Report Updated: August 21st, 2019
Business
15.55%
Airline
17.49%
Cash Back
17.63%
Reward
17.49%
Student
17.69%

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