As a small business owner, using a business credit card is likely part of your routine. These cards often offer lower interest rates than consumer cards, along with business-specific rewards and perks.
That said, it's easy to misuse your business card by putting expenses on it that should be avoided, from personal spending to legal fees to large purchases that incur interest and weigh down your company’s finances. Many overlook the long-term cost of these missteps.
Use Business Credit Cards to Advance Your Business
Business entities exist to drive profits and returns using available capital — including credit. That means your card should be reserved for purchases that add value to your company.
Here are some expenses that don’t meet that goal and could harm your business instead.
Personal Purchases
While it may be technically legal to charge personal items to your business card, it’s best to avoid this entirely. Tempting rewards and higher limits aren’t worth the trouble. Doing so could:
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Damage your business credit score
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Violate your card’s terms of use
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Conflict with your internal company policies
Creating a clear definition of business expenses and using an organized budgeting system will help. Also remember, if you apply for a small business loan, your credit card statements will be reviewed. Personal charges mixed in with business expenses can raise red flags — and potentially cost you the loan.
The CARD Act
The Credit Card Accountability Responsibility and Disclosure (CARD) Act protects personal cardholders with consumer rights. But business credit cards aren’t covered by these protections. Using your business card for personal spending may leave you unprotected.
High-Dollar Purchases
High credit limits can be appealing when your business needs capital fast. But maxing out your card on one or two major purchases drives up your credit utilization ratio, hurting your score.
Credit utilization = Used credit ÷ Available credit
Try to keep this under 30%, or even lower if possible.
Also, interest rates on credit cards are usually higher than those on small business loans or lines of credit. Carrying large balances month to month leads to unnecessary financial strain. If you can’t pay it off immediately, consider another funding source.
Risky Investments
Some businesses have started using credit cards for cryptocurrency investments or gambling, even though many card issuers prohibit such transactions. That said, some platforms still accept them.
The danger? If the investment fails, your business is left footing the bill, plus high fees and interest. It’s a fast way to erode working capital and destabilize your finances.
Legal Fees
Using your card for routine legal services is fine, such as registering a business name or consulting with an attorney. But using it for litigation costs or settlements sends the wrong message.
It may suggest your company is struggling or in legal trouble, which could worry lenders, investors, or credit bureaus. Try negotiating a payment plan with legal counsel rather than relying on your card.
Payroll Expenses
Payroll is typically a company’s largest recurring expense. Charging it to your business card, even through a third-party service, can result in:
This also signals to outsiders that your cash flow may be unstable. A better option is a short-term business loan or line of credit, especially from your local bank or credit union.
Need Capital Today? Consider the Revenued Card
If your credit history has taken a hit, but your business is healthy and generating revenue, the Revenued Business Card may help. It’s designed for owners with subprime credit who are turning things around.
You may qualify if:
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Your business earns at least $10,000/month
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You maintain an average daily bank balance of $1,000
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You avoid overdrafts for more than three days a month
📞 Call +1 (877) 662-3489 or join our waitlist today. At Revenued, we focus more on your business strength than your FICO score.
