Some people may confuse corporate and business credit cards as the same thing, but they are two different types of cards. Corporate cards are typically for businesses earning millions of dollars and the company is liable, however, Business credit cards are for companies of all sizes or for LLCs.
Before you apply for a credit card, you should know the details of your card and any fees it may have. In this guide, we will help breakdown everything you need to know about corporate and business credit cards.
What is a Corporate Credit Card
A corporate credit card is a credit card made for large multimillion-dollar corporations. What separates them from business credit cards are that corporate credit cards do not require a personal guarantor. If you want to get a corporate card, the corporation must give a tax ID along with financial records for the credit card company to review.
With a corporate credit card, the corporation is held liable for all purchases made on the card.
When You Should Use a Corporate Credit Card
Because corporations have so many employees, it is hard to keep track of all expenses. This is why a corporate credit card is necessary. In certain cases, companies could have employees that travel frequently for business. If the employees had to track all the charges and write a report for reimbursement, it could take lots of time. This is why a corporate credit card is a great idea to help keep track of any expenses.
When employees use corporate credit cards, all the charges can be analyzed and organized. All employees need to do is to turn in the original receipts of any charges made and to avoid charging personal expenses on the company card.
Pros and Cons of Using a Corporate Credit Card
A corporate credit card is ideal for large businesses. Here are some Pros and Cons for a Corporate Credit Card:
Pros
- Better record keeping of all expenses
- Ability for corporation to monitor expenses
- Special Corporate Card Benefits
- Employees streamline paying for business expenses.
- Dedicated CSR
Cons
- Hefty Card Fees
- Must ensure personal charges not made
- Hard Pull Inquiry in some cases
- Opportunity Loss of other Rewards
What Is a Business Credit Card?
Most credit card companies and banks offer business credit cards that are suitable for smaller companies. Business Credit Cards can be used for a variety of reasons including business credit history.
The main difference between a business credit card and a corporate card is that there is liability for late payments or nonpayment. A specific person is responsible for business card payments for a business credit card rather than a corporation for a corporate card.
Pros and Cons of Using a Business Credit Card
A corporate credit card is ideal for smaller businesses. Here are some Pros and Cons for a Business Credit Card:
Pros
- Paid off through active balance
- Helps build business credit history
- Comes with Spending Reports to track purchases
- Higher Spending Limit than personal credit card
- Low to No Fees on accounts
Cons
- Employers must monitor for misuse and fraud
- Subject to a higher annual percentage rate than a personal credit card
Conclusion
In conclusion, unless you are an employee or member of a major corporation, small business credit cards are the most flexible and affordable work-related cards. I recommend you take a look at both cards and see which one seems to fit your business needs.