Corporate Credit Cards VS Standard Business Credit Cards: Which Is Right For Your Business?
If you’re new to the world of business credit cards, you may be surprised by how dissimilar they are to personal credit cards. But there is even another type of credit card, one that caters to larger corporations. And corporate cards can differ from regular business cards just as much as business cards differ from personal cards.
Is a corporate card right for your company, or should you stick with a more traditional business credit card? Read on, and we’ll take an in-depth look at the similarities and differences between types of business credit cards.
Table of Contents
- What Is a Corporate Credit Card?
- Corporate Cards VS Business Cards
- Corporate Credit Card Issuers
- How To Get A Corporate Credit Card
- Final Thoughts
What Is a Corporate Credit Card?
Corporate credit cards are designed for large companies and corporations. This means that issuers will expect your company to either have a sizable number of employees or gain millions in revenue per year—or both.
In some cases, corporate cards can be customized to match your businesses spending profile. With this situation, rewards and benefits will be tailored to fit your company. In other cases, such as with American Express’s corporate cards, rewards and benefits will be more standard, similar to personal and small business credit cards.
Who Is Responsible For The Debt?
One of the biggest differences between small business and corporate credit cards is liability.
For the most part, signing up for a small business credit card means making a personal guarantee. A personal guarantee holds the signatory ultimately responsible for paying the debt. That means that if your company goes out of business, the credit card issuer can come after your personal assets.
It’s different with corporate credit cards. Often, your business entity is liable for paying all charges on a corporate credit card. (In some rare agreements, the employee who makes the purchase may be liable for the debt, and may also need to pass a personal credit check. Individual liability is becoming increasingly uncommon for corporate credit cards, however.)
Note that using a corporate credit card is not a viable way to build or repair your personal credit since it won’t be reported to a personal credit bureau.
Corporate Credit Card Pros & Cons
As with small business credit cards, corporate cards come with their own pros and cons. Below we list a few of the key things to keep in mind when deciding to add a corporate card.
Corporate cards will have a lower personal risk to the owner of the company. This is because a business credit card may still require a personal guarantee. Corporate cards, on the other hand, are usually guaranteed at the company level—no personal risk needed.
Similarly, if the company is held liable for the card’s debt, employees personal credit won’t be affected. This means that employees won’t have to worry about damaging their personal credit score if something goes amiss.
Employees can also save money in the short term. With a corporate card in hand, employees won’t have to fill out an expense report and wait for reimbursement. Instead, they can just charge company purchases to their card.
However, corporate credit cards can be at higher risk for fraud. Because employees may not have their purchases monitored as closely, they might place personal purchases on their corporate card. Plus, the more cards you put in the hands of employees, the greater the chance is someone outside the company will steal a credit card or data related to the card.
In addition, many corporate cards don’t offer a rewards scheme that is as potent as business or personal credit cards. It’s quite common for those other cards to offer rewards that effectively equal 2% cash back or higher. For corporate cards, you can likely expect rewards to sit closer around 1% back.
Who Qualifies For A Corporate Card
Ultimately, the biggest dividing line between small business credit cards and corporate credit cards is your company’s bottom line. In many cases, your business must make at least $4 million in annual revenue to qualify for a corporate credit card.
By contrast, most small business credit cards don’t have stringent revenue qualifications. You just have to be willing to accept the terms and pay any applicable fees.
Additionally, qualification for a corporate credit card will depend on your company’s credit rating rather than your personal credit rating. Small business credit cards issuers, on the other hand, may opt to check your personal credit history, or look at both your personal and business credit scores. To obtain a corporate credit card, your business will need to have a good, established credit history, existing expense policies, and credit card transactions.
Corporate Cards VS Business Cards
As can be expected, corporate cards and business cards are their own separate beasts. Here are a few key differences between corporate and business credit cards to consider if you’re planning on upping your company to the corporate variety:
With their slew of requirements, corporate cards will usually pose more of a challenge to get. In many cases, you’ll need to post $4 million in annual revenue, have at least 10-15 employees, and be registered as an S corporation or a C corporation. Business cards, meanwhile, are much easier to get, making them more appealing for smaller businesses.
When it comes to corporate cards, the company is responsible for debt, protecting the owner’s personal credit score. Because business cards often require a personal guarantee, a company’s owner is on the hook for any debt. Additionally, employees with a business credit card may be subject to a credit check before becoming an authorized cardholder.
In some cases, corporate credit cards offer a bit more flexibility when it comes to rewards structures and available benefits. It’s not uncommon for issuers to work with a company to design a card that best fits the company’s spending profile. With business cards, you usually won’t have any sort of customization (although there are many more options available).
Corporate Credit Card Issuers
American Express has four options within the corporate credit card realm. These cards are generally targeted at travelers because they include features such as preferred airline seating, TSA PreCheck credit, and baggage insurance. Amex also offers a corporate card with additional benefits for booking flights with American Airlines.
To get a deeper breakdown on Amex’s corporate card lineup, visit Merchant Maverick’s in-depth look.
Capital One’s corporate card program promises a slew of features, including up to a 1.5-times rewards rate. You’ll also be able to generate virtual card numbers to protect against fraud and cardholder fees are reasonably low.
Marketed as “commercial cards”, Citibank has a range of options to suit any business’s needs. These cards are designed with travel and entertainment in mind, as well as a few options built for business-to-business purchases. Citi’s cards come with fraud protection, 24/7 customer support, and ATM withdrawal.
While Chase normally markets the credit card side of J.P. Morgan Chase & Co., the investment arm does actually put its branding on a corporate card. J.P. Morgan’s corporate card is targeted towards travel and entertainment purchase with the intent of streamlining a company’s expense management process.
Also billed as a “commercial card”, Wells Fargo’s option for bigger companies includes a range of benefits. Notable perks include tools to optimize a business’s payment process and a single sign-on to manage cards for both the USA and Canada.
How To Get A Corporate Credit Card
The application process for corporate cards is usually different from how you might apply for a personal or small business credit card. It most cases, you’ll need to contact an issuer by phone or in person or submit an online inquiry form to begin the process. The issuer will then generally set you up with a consultation where your company can begin the application and customization process.
For a more in-depth look at how to get corporate cards for your company, check out our complete article.
As your organization grows, you’ll find that new credit options become available to your business. While these offer some distinct advantages, you’ll still want to weigh the pros and cons with your accounting team to determine whether the benefits outweigh the costs.
If a corporate credit card seems like overkill, or if your business isn’t yet big enough to qualify for one, check out our 2019 business credit card guide to see what your other options are.