Corporate Credit Cards: How Do They Work and Are They Right for Your Business?

ByG. Dautovic
April 28, 2022

A corporate credit card is a type of business credit card that offers perks and rewards to businesses and their employees. Corporate cards come with various benefits such as cash back, points, and discounts.

If you’re thinking about getting a corporate card for your business, there are a few things you should know about how they work and whether or not they’re suitable for your business.

Don’t worry - we’re here to help and guide you through the process of qualifying for a corporate credit card so that your business can take advantage of the many benefits it has to offer!

What Is a Corporate Credit Card, and How Does It Work?

Corporate cards are credit cards issued for business purposes rather than covering personal expenses. Businesses can use corporate cards in a variety of cases - to make eligible purchases, pay employees, cover travel expenses, and so forth.

Corporate cards typically have higher credit limits than personal credit cards. Just like personal cards, they may also offer rewards, such as cash back or points, but these can be used solely for business expenses.

When a business decides to apply for a corporate credit card, the credit card issuer will consider the business’s credit history and financial stability. If the business is approved for a corporate card, the company will be responsible for making all of the required payments. 

The corporate card may have a business name on it or an individual employee’s name. In either case, the company itself will be held responsible for all charges made on the card.

Difference Between Corporate and Business Credit Cards

There are a few key differences between corporate and business credit cards. 

For one, corporate cards are usually issued by larger banks and financial institutions, while smaller banks and credit unions typically only offer business credit cards.

Corporate cards also tend to have higher credit limits and APR rates than business credit cards.

Additionally, corporate cards often come with certain perks and rewards, such as free travel insurance and concierge services that business cards don’t typically offer.

Finally, corporate cards are typically only available to employees of larger companies, while business credit cards are generally open to any small-business owner.

Overall, corporate and business credit cards both have their own set of advantages and disadvantages. It really just depends on your business needs as to which type of card is right for you.

Pros of Using Corporate Credit Cards

Corporate cards can be a valuable tool for companies of all sizes. There are many advantages that come with using corporate cards. Some of them are:

It’s Easier To Get Approved

Because corporate cards are issued by larger banks and financial institutions, they tend to be easier to get approved for than business credit cards. This is especially true if your business has a good credit history.

Increased Visibility and Control

When you use a corporate card, all of your business’s expenses are consolidated into one statement. This makes it easy to track your spending and see where your money is going. 

Additionally, many corporate cards come with some advanced online tools allowing you to set spending limits and track employee spending.

Higher Credit Limits

Corporate credit cards typically have higher credit limits than business credit cards. This can be helpful if your business often has large expenses.

Rewards and Perks

Corporate cards usually come with a number of rewards and perks, such as cash back, points, or discounts on business expenses. These perks can save your business a hefty sum of money in the long run.

Builds Business Credit

Using a corporate card can help you build your business credit. This can be helpful if you ever need to take out a loan or line of credit for your business.

Cons of Using Corporate Credit Cards

While there are many advantages of using this type of card, there are also some disadvantages you should be aware of. Here are some of them:

It Can Be Too Expensive

One of the main disadvantages of corporate cards is that they can be quite expensive, with higher APRs and fees than “regular” cards.

Complicated Application Process

Another downside of corporate cards is that they often have a more complicated application process than regular business credit cards. This is because you’ll need to provide a lot of financial information and documents to qualify for one.

It May Require a Personal Guarantee

Another thing you should keep in mind when enrolling in one of the corporate credit card programs is that some card issuers may require a personal guarantee. This means that you’ll be personally responsible for repaying the debt if your business is unable to do so, which can be a risky proposition. 

Limited Acceptance

Finally, corporate cards can sometimes be difficult to use because some businesses don’t accept them.

How To Qualify for a Corporate Credit Card

Corporate cards are a great way to manage expenses and build business credit. However, qualifying for a corporate card can be difficult, especially for new businesses. 

To qualify for a corporate card, you must have a good personal credit score and a strong business financial history. In addition, you’ll need to provide a detailed business plan and proof of income. 

Once you have met these requirements, you can request a corporate card online or through your local bank. And when you get approved, you’ll receive a credit limit based on your business’s financial history.

FAQ

What happens if you have a credit card and your company goes out of business?

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If your company goes out of business, you’ll still be responsible for repaying any debt you have on the credit card. This is why it’s crucial to use company cards responsibly and only charge what you can afford to pay back.

Can I use a corporate card for personal use?

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You should never use a corporate card for personal expenses. Doing so can result in additional fees, interest charges, and damage to your business’s credit history.

What expenses are allowed on a company credit card?

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Each company has different guidelines for what expenses are allowed on its corporate credit cards. However, common business expenses that can be charged to a corporate card include office supplies, travel expenses, and business entertainment.

To avoid any problems, it’s always best to check with your company’s accounting department before purchasing something with your corporate card.

Can you dissolve a corporation with debt?

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You must repay any debts that your corporation owes before you can dissolve the company. This includes any debts on your corporate credit card.

If you are unable to repay the debt, you may need to file for bankruptcy. This will have a significant impact on your personal and business credit scores. Therefore, it’s always best to try to repay any debts your corporation owes before dissolving the company.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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