Corporate credit card vs. business card: What to know

Corporate credit cards and business credit cards are two different types of credit products for businesses. While both provide access to a line of credit, the potential to earn rewards and the ability to manage expenses, there are some key differences between each type of credit card.

Learn more about the eligibility requirements, features, benefits and other details of corporate and business credit cards.

What you’ll learn:

• Corporate credit cards and business credit cards are both used for business-related expenses but have several key differences.
• Most businesses are eligible for a corporate card once they have annual revenues of $1 million or more, but hitting that annual revenue doesn’t always mean that a corporate card is the right option for your business.
• Other factors, such as personal liability, types of rewards and how the account affects credit scores, differentiate corporate cards from business cards. 

There are a few things to keep in mind when considering what type of credit card would best meet your company’s needs. How large is your organization? How much are your monthly expenses, and do you need help managing them? How important is it to earn rewards like cash back or bonus miles?

Corporate credit cards and business credit cards share some similarities, but some key factors differentiate them. Learning the differences can help you understand which option you may be eligible for and which can help your business grow and thrive. 

In general, larger organizations with an established business credit history use corporate credit cards. Instead of being issued to the business owner, corporate credit cards are issued to the corporation itself. So the liability for all charges made to the card goes to the business entity rather than to the owner.

Corporate credit cards can be issued to individual employees for business-related expenses, like travel or client entertainment. And many types of corporate cards come with the option to earn rewards on purchases. It’s possible that the business may also receive other perks, like discounts on some types of expenses.

Corporate cards also come with some additional features, like the ability to integrate with accounting software to help simplify expense management.
 

Companies of all sizes can use business credit cards for work-related purchases—start-ups and long-standing corporations included. Some small business owners might consider using their own personal credit cards for company expenses, like office supplies or paying vendors. But it can be helpful to get a business credit card solely for work in order to keep all purchases separate for tax and bookkeeping purposes.

Business credit cards allow organizations to build their business credit history and often provide the opportunity to earn beneficial rewards, like cash back or bonus miles. 

Companies with over $1 million in annual revenue are most likely to use corporate credit cards over business credit cards. Business credit cards tend to be more accessible for owners of smaller businesses, sole proprietors and even freelancers. So the size of the business plays a major role in the type of credit card the organization chooses.

Several other key differences between corporate and business credit cards include:

A major difference between a corporate credit card and a business card is who is responsible for paying the card issuer back. With a corporate credit card, the liability for the debt falls to the business entity. But with a business card, the business owner most often signs a personal guarantee when applying for the card, which holds them liable for all debt incurred.

This means that if the business should go under, a business cardholder is personally responsible for the debts and must pay the card issuer back. And this may ultimately impact their personal credit scores. 

A corporate credit card won’t impact the business owner’s personal credit score. And when employees use corporate cards for their own business-related purchases, those accounts aren’t reported in their names to the three credit bureaus.

But a business credit card can affect the business owner’s scores. First, applying for a business card triggers a hard inquiry that could temporarily decrease the owner’s personal score. Employee cards and authorized users on the business card account may also be reported to the bureaus under their names.

Smaller businesses’ cash flow could change often, making it tricky to cover large, unexpected expenses or even pay some recurring monthly costs. Some types of business credit cards offer more flexible payment terms for companies that often carry their balances over from month to month.

However, most corporate credit cards require the balance to be paid in full every month.

Corporate credit cards may offer some rewards, like the ability to earn cash back on monthly payments or the option to save on purchases made with specific retailers.

But business credit cards generally include more beneficial rewards and perks for the business owner. For instance, if the company is involved in a lot of travel, a travel business card offers cash back rewards or bonus miles to put toward future travel expenses. Plus, the business owner may enjoy a 0% introductory APR in addition to the other rewards they can earn.

Corporate credit cards have annual fees that vary in cost. And there are usually other fees involved with a corporate card, such as service fees or interchange fees.

Business credit card fees vary by issuer. Options with no annual fee are available, but they might come with fewer rewards.

Established businesses with millions of dollars in revenue might find corporate credit cards most beneficial for their organization. But as with any credit product, it’s important to weigh the pros and the cons before making a decision about what type of credit card to apply for.

Some of the pros of corporate credit cards are:

• Simplified expense management
• No effect on personal credit scores
• Ability to earn some rewards

Some of the cons of corporate credit cards are:

• They must be paid off in full every month.
• They may be more difficult to apply for.
• They must have an established business credit history for approval. 

Business credit cards also come with their own advantages and disadvantages. Here’s what to know.

Some of the pros of business credit cards are:

• Ability to keep work and personal expenses separate
• Ease of earning rewards like bonus miles or cash back
• Flexible repayment terms

Some of the cons of business credit cards are:

• Personal liability of the business owner for the debt
• Impact that negative information could have on personal credit scores

Here are answers to some frequently asked questions about corporate credit cards and business credit cards:

Corporate credit cards and business credit cards are similar in nature but have some key differences when it comes to qualification, liability and rewards. And smaller businesses won’t be eligible for corporate credit cards until they’ve grown their annual revenue and built their credit history.

Capital One offers the One Card, a corporate credit card that streamlines your business expenses while enabling you to earn market-leading rewards on everyday business purchases. And our business credit cards are available for companies with excellent to fair credit—all with benefits like one-time cash bonuses, low introductory APRs, unlimited cash back or bonus miles. Explore your options today.