May 14, 2021

Charge Card Vs Business Charge Card: The Major Differences

Charge cards and business charge cards serve the same function: they both allow you to spend on something and offer the convenience of paying later. They both come in handy especially when you’re a business owner or a freelancer serving clients. These cards can also offer rewards and get interests over time. 

Although they sound the same, there are major differences between the two. Here are some key differences someone should consider. We’re here to help you which one you should choose based on your needs.

Credit Limit and Spending Power

Business charge cards generally give a higher credit limit which gives business owners more freedom on ways they spend for their business. The credit limit amount is based on your capacity to pay, payment history and credit record. 

While these cards offer higher credit limits, spending higher might be a downside especially to startups. These new businesses tend to have lower profit on the first months of launching and of course, the startup costs are also higher. 

Duration of Payment

According to Jeff White, Editor at Fit Small Business, a business charge card differs from a normal credit in one important area – you generally must pay it off entirely every month. It’s true that they offer higher spending power but the downside is shorter duration of payment. 

If you fail to pay the full balance at the end of the month, you’ll get penalties and can result in account suspension. “These cards can be riskier for businesses struggling with cash flow,” White added. 

Credit Score Implications

We all know that maintaining good credit is an absolute must in today’s society. Both cards affect your credit scores but in different ways. 

For charge cards, the balance is not carried out each month meaning the credit utilization doesn’t have as much impact on your credit score as opposed to a business charge card. This is an advantage of a charge card as it doesn’t carry off high balances from month to month and therefore, no effect on your current ratio. 

Detailed Bookkeeping Perks

Good news to business owners, business charge cards offer itemized reports on spending. This will come handy around filing taxes - no need to find those detailed expenses on the vault. Regular charge cards don't have those options as detailed and this feature can be hard to find. 


Which One Should You Choose? 

Both cards offer benefits unique to every need. It is best to choose what’s best for you and your business. Here’s a checklist for you to know more which one suits you better. 

Check the amount you spend on a monthly basis

Ask yourself how much your business is spending each month and see if you really need a higher spending limit. If so, a business charge card might be good for you or otherwise, opt for the charge card.

Check the cash flow and income of your business

Does your business earn enough or more cashflow in a month? Can you afford to pay a business charge card monthly? If not, you may stick to the regular charge card and may want to upgrade on a later date. 

Review and compare rewards or perks

Most cards offer rewards and perks which you should definitely consider. Some offer points, cash back or miles and it’s best to consider which one is more important to you or your business right now. 


We have laid out the major differences between charge cards and business charge cards. If you still have trouble which one you should choose, you may consult our credit repair professionals for FREE here at CreditPlanned. 

Save your FREE consultation today!

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