Corporate card vs. business card: Which is right for you?
How to make the most out of your business spending
The following post has been sponsored by our partner,
Capital One. The analysis and opinions in the story are our own and may not
reflect the views of Capital One. Learn
more about our editorial policy
The following post has been sponsored by our partner, Capital One. The analysis and opinions in the story are our own and may not reflect the views of Capital One. Learn more about our editorial policy
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 month 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 these cards also take liability away from any individual for 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 have 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.
- 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
- 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 even if additional cards are added for employees, it is one person who is liable for any fees for late payments. Therefore, personal credit scores can take a big hit if things go wrong.
On the bright side, it is also the individual who can rack up rewards. With the Spark 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 history. 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.
- Helps build business credit
- 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)
- Higher APRs and fees than a personal credit card
- Risk to personal credit score
- Potential for fraud if employees use cards for personal purchases
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®
- Chase unveils its cash back category for Q1 2019 – From January through March 2019, Chase Freedom cardholders can earn 5 percent back at gas stations, drugstores and tolls ...
- Discover it® Cash Back vs. Discover it® Student Cash Back: Which is best for you? – The Discover it Cash Back card and Discover it Student card are two great options for college students -- we'll help you decide which is best for you ...
- United Airlines MileagePlus Shopping guide – Our guide to MileagePlus Shopping shows you how to earn more miles through United's shopping portal ...