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Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the difference?

Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the difference?

According to creditcard.com.au founder Roland Bleyer, as unemployment levels rise, more people will look to becoming their own boss.
“The amount of Australians relying on contract work or starting their own side gigs generally rises in economic recessions,” he stated.
“This means that more people will be applying for an ABN and more people will be wondering about whether they should use a personal credit card or a business credit card.”
One of the first things that sole traders must consider, Mr Bleyer said, is “how they’re going to manage and spend their business’s money”.
With most people unsure that there is a difference between personal credit cards and business credit cards, the founder said “it’s a bit of a learning curve”.
For anyone who is a new ABN holder, and may be pondering a business credit card, Mr Bleyer said there are several key differences between the credit types.
What is the difference between a personal credit card and a business credit card?
Acknowledging that most people know how a personal credit card works, Mr Bleyer said such products are “good for sole traders, contractors and gig workers”.
In addition, personal credit cards can offer more personal features and earn more rewards, as well as being easier to understand and easier to obtain, he added.
But business credit cards can offer up more business-focused features, which Mr Bleyer said can present a useful option for businesses wanting to go to the next level.
While small businesses are not excluded from obtaining such credit cards, the founder said the benefits of a business credit card will grow as a business gets larger.
Here are some of the key differences:
Expenditure tracking
“Compared to your average personal credit card, business credit cards typically offer better features that allow you to keep track of expenses. They can allow you to export transaction data to accounting software like MYOB and Xero,” Mr Bleyer said.
“Depending on the bank you go with, business credit cards can also provide more advanced online software that can help you with budgeting, spending breakdowns and forecasting.”
Credit limits
It goes without saying that one of the main differences between personal and business credit cards are the credit limits attached.
According to the credit card expert, “business [credit] cards will usually have higher credit limits to account for the higher levels of spending which businesses typically use compared to individuals”.
“However, to get that higher limit, you usually have to prove that you’re a bigger business with a higher revenue,” he said.
Debt liability
Mr Bleyer said that the biggest difference of all is who is liable for the debts incurred on the credit card chosen.
“Business [credit] cards, within a Pty Ltd structure, can provide much more protection than personal cards. With personal cards, no matter what, you will be personally liable for any debt you incur,” he explained.
So, who is eligible for what card?
As mentioned earlier, business credit cards require an active ABN.
This is “on top of all the basic requirements like age, residency, credit history and income”, Mr Bleyer said.
“You will also need to provide more information about your business, such as how long it has been operating and whether your business is registered for GST.”
It’s also worth noting that “whether or not you go for a personal or a business credit card may be decided completely by your bank”.
“If you don’t meet the eligibility requirements for a business card, you have no other choice but to go for a personal card.”
But “if you’re a medium/large-sized business, there’s really no reason why you should be using a personal credit card,” he said.
“Business cards may cost a bit more, but you’re paying for extra features and extra convenience. Your accountants will love you if you use a business card instead of a personal card.”
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