A business credit card is just like any other regular credit card, only that it is meant to be used by a business. So it will be tied to the finances of the business that requested the card, and it will be used to cover expenses caused by everyday business activities.
Usually, there will be a limit on the amount you can spend on a business card, and if you have one, chances are that it has been given to you by the business that you work for. It is essential so that employers can cover the costs that might incur as part of the job or business.
However, there is always that nagging temptation of “could I get away with using a business card for personal expenses?” Maybe not something big, but a few coffees here and there, a fancy lunch there…how much harm can it cause, right?
But here’s the thing, that credit card is intended for business expenses only, and your personal expenses aren’t included in that, so technically you would be stealing money from them.
But anyway, let’s address the main question: can you use a business card for personal expenses? You can definitely use it. The better question is whether you should or not, and whether it is illegal or not. So let’s get into that!
Is It Illegal To Use A Business Card For Personal Expenses?
It’s very easy to blur the line of what’s right and what isn’t, and be tempted by the idea of spending money on some personal things, on your business card. It saves you from spending your own money, and if it’s just simple things like a few shoppings items and lunch, then what’s the harm, right? But what if this is actually illegal?
Well, the truth is that it isn’t actually technically illegal. That being said, depending on what the terms and conditions are on your business card agreement, you might be directly breaching them, and that can have legal consequences.
Basically, do not use your business card for personal expenses, unless otherwise stated this will be in breach of the standard terms of usage of the card.
What Will Happen If You Use A Business Card For Personal Expenses
If you do end up using a business card for personal expenses, there are going to be consequences. Most of them aren’t that serious, but some could get you into a bit of trouble, so let’s go through them!
Practical Consequences Of Using A Business Card For Personal Expenses
We will start by looking at the consequences regardless of whether the business card is yours, or given to you for use by an employee.
- Your card could get canceled
When you get a business card, you agree to certain terms and conditions regarding its usage, and these often specify that the card is not to be used for personal expenses outside of the business.
So by doing so, you run the risk of the card getting canceled, and sometimes they might even close up your account completely!
- You will have limited consumer protection on the purchases made
Business cards do not have the same regulations as personal credit cards, and as such, they do not have the same consumer protections.
For example, prevention against raising interest rates without notice, the prohibition of an interest rate increase on existing balances, the prohibition of interest charges on a debt that is paid on time, or the application of payment to the highest interest rate charges first.
All of these are valid with a personal card, but not with a business card, so it’s a risk to use it!
- Your credit score will be affected
Yes, both your business and your personal credit score will be affected, and usually, in a negative way. So just avoid doing it!
- You end up paying more long-term
Business expenses and interests are tax-deductible, but they have higher fees and higher interest rates as a result. Personal purchases made by your business card, however, will not be tax-deductible. So you end up paying more in the end!
- It’s harder to track the business expenses
If you mix personal expenses with your business expenses you can very quickly lose track, and without proper control of business expenses…it can turn into a disaster.
- More complicated taxes
Business expenses are tax-deductible, but personal expenses are not. If you’re mixing them both on the same card then you’re going to overly complicate everything, and you might end up in some trouble.
Legal And Work-Related Consequences Of Using A Business Card For Personal Expenses
Now for some legal and work-related consequences, or rather, reasons why you should never use the business card for personal expenses!
- You could become personally liable
It will cause you to be personally liable and responsible for the purchases made on the business card, and you might end up having to pay everything back, or similar!
- You could get fired
This one is kind of obvious, your boss is not going to be happy if you’ve been using the business money to buy yourself things, so yeah, you’ll probably get fired and maybe even be charged with some legal consequences.
So to sum this all up, can you use a business credit card for personal expenses? Technically, yes, you can. However, you absolutely should never do this, as it will bring about a whole lot of negative consequences.
Basically, the business card is intended for business expenses only, and there are terms and conditions attached to the use of this credit card, which you will be liable and held accountable for.
Also, it’s just not a good idea to use the business card for personal purchase, because it muddles things up and offers no real benefit, other than the fact that you’re using the company money rather than your own (something you would totally get fired for).
Best to keep the business credit card for business stuff, and use your own personal credit card for any personal expenses. You can always have a second credit card personally if needed.