Can I use a corporate credit card for personal use?

Editor’s Note: This guide has been updated with the latest information.

One of the main reasons small business owners recommend getting a business credit card is to separate business expenses from personal ones.

Business expenses are generally tax deductible, so putting up a wall between you and your business can significantly reduce your burden during the tax period. Even more so when governments conduct audits.

But things happen. Pulling out the wrong card when shopping at a store, or business trips (anytime) suddenly expand to include mini-vacations and book everything on your business card.

Here’s what you need to know about putting personal expenses on your business card.

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Is it illegal to put personal expenses on a corporate credit card?

It’s not illegal to use a business credit card for personal spending. But that doesn’t mean it’s a good idea. Most credit card issuers do not allow small business owners to put personal expenses on their business credit card. If so, you may be in violation of the cardmember agreement. And it can have consequences.

What happens when you add personal expenses to a corporate credit card?

Are there any other implications besides the need to organize spending on the business ledger? Yes. The issuer may close your account if it sees purchases that are clearly not related to your business and you may lose any points, miles or cashback benefits you have earned. .

Although there is no evidence that this is widely practiced, all major corporate credit card issuers agree to prohibit personal spending on business cards and to spend on business cards only for business purposes. I am even asking to .

Here’s an example of this wording from a popular business card.

American Express Business Platinum Card® — “EACH CARDMEMBER ACKNOWLEDGES AND AGREES THAT THE CARD IS INTENDED FOR OUR COMMERCIAL OR BUSINESS PURPOSES.”

Capital One Spark Cash Plus for Business — You acknowledge and agree that all Cards are to be used for business or commercial purposes only and not for personal, family or household purposes.

Ink Business Preferred Credit Card — “I certify, understand and agree…this is a business account to be used for business purposes only and not for personal, family or household purposes.”

RELATED: Best business credit cards with no annual fee

A few years ago, Chase issued a memo to some business card customers that read more like a warning than a threat.

“Dear customers of Chase Online:

Thank you for using the Chase Business Credit Card. Please continue to use it for your business purchases. However, please note that it is not intended for personal use.

Regulations covering business cards do not provide the level of protection afforded to consumer cards. We want you to get the consumer protection you are entitled to. Therefore, use a consumer credit card for personal, family, or household purchases. ”

Please note that it is very difficult for credit card issuers to determine whether your purchase is for personal or business reasons.

For example, is the dinner you just charged on your card a romantic date night or a business meeting? Is that new laptop you bought for personal or business use? Even game tickets may be for the entertainment of customers.

Related: Do I Need a Business to Get a Business Credit Card?

Is there any benefit to putting my personal expenses on my business card?

As TPG pointed out a few years ago, one reason to consider putting more than your business expenses in a business credit card is to boost your personal credit score. Many, but not all, business cards are reported only to business credit bureaus, so the amount spent on a business credit card does not affect a person’s credit. This helps keep your utilization low and your credit score high.

However, business credit cards generally have lower consumer protection and higher interest rates and fees. In fact, many of the consumer protections contained in the Credit Cards Act of 2009 do not apply to business credit cards. While issuers have voluntarily expanded some protections, a bill introduced in Congress in 2018 would:

• It prevented issuers from raising interest rates for small businesses without proper notice.
• Prohibition of increasing interest rates on existing balances.
• Prohibited interest on timely paid debts.
• Payments over the minimum interest rate will be applied to the highest interest balance.

Unfortunately, the bill was not passed.

If you pay off your balance in full on time each month, these proposed protections don’t make much sense because they focus on cardholders who tend to keep balances. This means there is little risk of putting part of your spending on your business card.

However, be aware that if you use your business card for personal spending, you may lose other protections that your business card offers. For example, Chase offers primary auto insurance when you rent a car for business with the Ink Business Preferred card, but downgrades that coverage if you rent a car for personal reasons.

“If you are renting for personal reasons within your country of residence, Auto Rental CDW is secondary coverage and complements any valid collectible insurance or reimbursement from any source and applied beyond. ”

RELATED: Who qualifies for a business credit card?

Conclusion

Consistently depositing your personal spending on your business credit card is probably not your best bet. It may not hurt, but there are risks associated with it.

Another thing to keep in mind: Mixing the two types of spending can have a negative impact on both your personal and business credit if you run into financial trouble. If you accidentally put personal expenses on your card, it’s very unlikely that you’ll get them back.

Additional reporting by Chris Dong and Robert Thorpe.