Is it a good idea to use personal credit cards for business expenses?
For many business owners or employees of a corporation that participate in using personal credit cards for business expenses there is little knowledge about the cost to credit scores.
What are the positives of using personal credit cards for business?
- Usually personal credit cards have lower interest rates and fees then business credit cards.
- Personal credit cards are posted on credit reports and can add to a consumer’s positive credit if the payment history is good.
- Personal credit cards are regulated to protect consumers from exorbitant fees and interest rates business credit cards are not.
- If you are an employee of a company & using your personal credit card for business expenses you will have earned extra points for personal use.
What are the negatives of using personal credit cards for business?
- If you are carrying high balances your scores may be much lower. The balance to limit ratios of your credit cards can directly impact your credit scores and cause great score drops. As the balances inch up to the aggregate and individual limits the scores drop even more.
- If you are relying on a company or bookkeeper to pay your bill every month and they are late with sending the check you will have to pay the consequence of the delinquency. This could cause your score to drop hundreds of points.
- If you are constantly carrying high balances your creditors can reduce your limits when you reduce the balance down since they will view you as a higher risk.
- If the business fails you are personally liable for the debt.