Is it Prohibited to Make Personal Purchases Using a Business Credit Card?

A girl holding credit card

Can I Use a Business Credit Card for Personal Purchases?

Separating a company from personal costs is one of the main reasons we advise small-enterprise owners to acquire a business credit card.

Keeping a wall between personal and company spending makes it easy to file taxes and even easier if the government ever performs an audit. This is because business expenses are often tax deductible.

But events do occur. When making a purchase at the store, you accidentally pull out the wrong card, or your business trip (whenever that may be) unexpectedly turns into a mini-vacation, and you've already booked the entire thing on your business card.

Personal Credit Cards against Business Credit Cards

The distinctions between personal and commercial credit cards are rather straightforward to explain: Personal credit cards are intended for everyday purchases like groceries, movie tickets, and gas. In the meanwhile, a business credit card is frequently used for expenditures associated with running a business, including those for supplies, travel, business services, and leisure. If you have the thought that “I need money now emergency”, then it is better to avoid purchases with a business card.

Consumer credit card safeguards are not present on business credit cards. The CARD Act (Credit Card Accountability Responsibility and Disclosure Act) includes safeguards such as limiting the number of upfront fees a card issuer may collect during the first year after an account is created and regulating the situations in which card issuers are authorized to increase interest rates.

The Golden Rule Is to Keep Business and Personal Expenses Separate

You normally have to sign a cardholder agreement when you apply for a business credit card, in which you promise not to use the card for personal costs like those for your family or home. Card issuers will occasionally email their clients to remind them that the card is only intended for business use. You technically violate your cardholder agreement if you use the corporate credit card for personal expenses, and the issuer may opt to terminate your card.

Despite these restrictions, corporate credit card providers don't meticulously scrutinize your monthly transactions to determine which charges are for personal or company expenses. In many instances, it would really be challenging for them to know. If you unintentionally use your corporate credit card to pay for groceries, you won't likely get into problems or have your card canceled. But you can learn why if your request for business credit is turned down.

It will be time-consuming and irritating to try to separate personal and business expenses on the same credit card statement month after month. This is also a certain way to make mistakes in your company's bookkeeping and create future tax and legal issues. Beyond these practical considerations, however, combining your personal and corporate funds might have a negative impact on your company's long-term financial prospects.

Risks Associated with Using a Business Credit Card for Personal Purposes

Your business card might be canceled or your credit limit can be reduced if you break the credit card issuer's rules. You can also lose all the reward points you've accumulated on the card if it is canceled because you broke the issuer's rules. It is interesting, that later in the year, the household debt-to-GDP ratio likewise substantially decreased, reverting to its pre-pandemic level.

debt-to-GDP ratio

You should keep your personal and professional costs distinct, even if there are no restrictions in your agreement against using your business credit card for personal use. You'll be glad that they're all in one place and not mixed up with your personal spending when it's time to submit your deductible company expenses during tax season.

It Will Have an Impact on Both Your Personal and Company Credit Ratings

You could be tempted to make personal transactions with your corporate credit card in order to raise your consumer credit score. Although on the surface this looks like a nice plan, it probably won't give you the outcome you want. This is so that commercial credit bureaus, which get most credit card reports, may review them. Your personal credit score is unlikely to benefit from improvements you make to your company credit score.

However, your personal credit score may suffer if you charge personal costs to your company credit card and are unable to pay them off. This is because you provided a personal guarantee when applying for a company credit card. Your personal credit will probably deteriorate if you are unable to pay off your amount.

Avoiding Personal Charges on a Business Credit Card

Have you ever heard the advice to "act as though your microphone is never muted and your camera is never off" when participating in a Zoom meeting? It basically serves as a reminder to never say or do something in front of your coworkers that can humiliate you.

Use your company credit card in the same way. Avoid doing anything that might raise red flags with your accountant, such as paying many thousand dollars per month in client entertainment costs or getting cryptocurrencies. This involves accruing personal debt while traveling for business. Although it could be alluring, charging personal spending to your company card might make it difficult to manage your cash flow and file your taxes.

What Should You Do if Your Corporate Credit Card Was Used for Personal Expenses?

Not to worry! To avoid mistakenly deducting the expenditure as a business expense on your taxes, make a note of the payment in your expense management software. You don't risk committing tax fraud as long as you report spending separately on your taxes and don't routinely use your company credit card for personal expenses.

Even using a company credit card for personal costs violates the terms of service. It might result in account cancellation, a small-scale mistaken transaction is unlikely to have serious repercussions.


Despite the fact that it is legal, there are several good reasons not to use a personal credit card for company purchases. Separating your personal and professional life pays off if you operate a firm. With a business credit card, you may increase your sign-up incentives, get advantages tailored to your industry, and keep track of your outgoing money more easily. In order to continue earning the miles and points you find most satisfying, many personal credit cards offer business versions. You may start benefiting from these advantages for your company by including a business card in the mix.

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