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Corporate Credit Cards VS Standard Business Credit Cards

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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 you, 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.

Who Qualifies?

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

Who Is Responsible For The Debt?

One of the biggest differences between small business and corporate credit cards is liability.

In most cases, 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. In most cases, 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.

What Are The Advantages Of A Corporate Card?

As we touched on above, one of the biggest advantages of a corporate business card is reduced liability for individuals. It’s far easier to keep up the corporate/personal partition with a corporate card than with a small business credit card.

Beyond liability, there are a number of perks offered by corporate cards. Dedicated service reps allow corporate cardholders to circumvent the normal customer service lines. Many cards also come with some form of emergency assistance benefits for employees or insurance protection for rentals.

Account management is another advantage. Large organizations create a lot of unnecessary work if they try to reimburse each employee for business expenses. A corporate credit card can provide a way to consolidate all of the organization’s travel expenses under one account.

Corporate accounts may also get to play by a different set of rules. These rules can vary greatly between banks. Payment periods may be considerably longer or shorter than a month. The bank may not charge interest at all (though expect late fees if you miss a payment window). Spending limits may also vary.

Corporate cards have rewards programs, not unlike small business cards, but the cost of maintaining a corporate account makes them less of a selling factor.

What Are The Costs?

Both types of business credit cards come with maintenance fees, but in the case of small business credit cards, those fees are mostly small and annual.

On the other hand, corporate cards come with significant costs. Rather than a membership fee, you’ll often be assessed a charge per authorized cardholder. In a large organization, this can add up pretty quickly. Capital One, for example, charges $19 per cardholder.

As mentioned above, corporate credit cards don’t necessarily charge interest, opting instead for late fees (usually a flat percentage of the amount that’s overdue). Your company may or may not be charged a fee for exceeding your credit limit.

Final Thoughts

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 2018 business credit card guide to see what your other options are.

Chris Motola

Chris Motola

Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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