Credit Cards For Small Business – Is A Personal Credit Card OK?

Information verified correct on October 26th, 2016

Small business credit cards are often considered by Australians looking to start their own business. The question is, do we really need a specific credit card designed for small businesses, or can we get by on a personal credit card instead?

If you are planning to start a small business and you are looking for funds and starting capital, you might be tempted to use your personal credit cards with varying credit limits. You don’t want to take a new loan and aside from that, you also don’t have enough savings for the expenses you will incur for your small business. So what can you do to get by in those early – and important days of business? Read on…

Business Credit Card Comparison

Rates last updated October 26th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Commonwealth Bank Business Interest-Free Days Credit Card
Take advantage of $0 annual fee for the first year and receive $250 cash back (spend $500 by 31 December 2016).
17.57% p.a. $0 p.a. annual fee for the first year ($60 p.a. thereafter) Go to site More info
Commonwealth Bank Business Platinum Awards Credit Card
Earn up to 3 Awards points per dollar spent, enjoy complimentary insurances and $0 annual fee for the first year.
20.74% p.a. $0 p.a. annual fee for the first year ($300 p.a. thereafter) Go to site More info
American Express Platinum Business Card
Receive 150,000 bonus points, earn up to 2 Membership Rewards points for every dollar spent, complimentary insurances and access to 800 VIP Lounges in 100 countries.
$1,500 p.a. Go to site More info
American Express Business Card
One of the original charge cards from American Express that offers complimentary insurances including purchase protection and accident cover.
$109 p.a. Go to site More info
American Express Gold Business Card
Receive 10,000 bonus points on signup and earn 1 Membership Rewards points per $1 spent with uncapped earnings.
$169 p.a. Go to site More info
American Express Velocity Business Card
A truly dedicated business rewards credit card. Download all your card expenses in a format readable by Quicken, MYOB, Microsoft Excel and more.
$249 p.a. Go to site More info

Advantages and disadvantages of using personal credit cards for your business:

Personal credit card use for financing a business can be very risky, especially if you are not so sure if your business will be successful in the long run. Aside from that, you can’t be assured that you will be able to immediately pay for your debts and keep your personal credit history clean because it can take some time to make your business a success. If you are not sure your business will be able to cover all of the start-up expenses then don’t risk damaging your personal credit history by using a personal credit card.

Various factors have to be considered; how to pay off your debt and current credit card interest rates. If you plan to use a credit card with low interest rates, then it is almost the same as getting a personal loan. It is important to do your research and find a credit card with a low interest rate to justify your decision to apply for a credit card more viable than applying for a personal loan.

Although there are obviously some disadvantages, there are also advantages when it comes to using personal credit cards for small business with the most obvious being to have instant access to funds. One clear advantage is that you don’t need to apply for additional financing that will appear on your credit file.

Guidelines for using small business credit cards:

Here are some tips for using credit cards in your small business:

  • Try not to miscalculate your expenses. You might want to seek out professional financial assistance to help you set a realistic budget. If you don’t, you might end up with business debt that could have been prevented with the right planning.
  • Do not forget to include the costs for operation. When the beginning phase of your business is over, it doesn’t mean your expenses will stop. You will still need money to pay for ongoing expenses such as utility fees, leases, as well as employee salaries.
  • Do not rely solely on credit cards. For example, if you do not have enough cash when you are making smaller purchases for your business you can use your credit cards temporarily. The dangers of using credit cards for small business are found in debt accumulation if you mis-handle your finances.
  • Don’t use your credit card if you won’t be able to pay for it. You might be tempted to pay for large amounts of expenses using your credit card. However, if you won’t be able to pay the card off each month, you might as well drop the idea of using your credit card for these business expenses.
  • Use an alternative to credit cards. If you plan to use your personal credit cards to finance your business then you may do so, as long as you are able to pay the card off each month to avoid interest charges and debt. One example is to use the card as a temporary source of funds while waiting for your loan to be approved.

In general, using your personal credit card as your main financial source for starting up a small business can be very risky. If you are going to use your personal credit card, you have to make sure that it will be your last resort.

Using your personal credit cards for business purchases

Understand exactly how small business credit cards can help you financially by reading our Guide to Business Credit Cards for Small Business.

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Credit Cards Comparison

Rates last updated October 26th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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