Difference Between A Personal and Business Credit Card |
Posted: March 19, 2018 |
There are several types of credits cards, from cashback and travel reward cards to cards with 0% intro APR. This can make it difficult to choose the best card for you. What’s more, many business credit cards and personal credit cards come with similar features, making the choice even harder. However, despite their similarities, business credit cards and personal credit cards are different. Here are a few of the factors that are likely to be different, that you should know about before applying: Consumer Protections CoverageBusiness credit cards are not covered under the Credit Card Act of 2009. This means that your interest rates can change frequently without notice, on a business credit card. This is a major issue, if you need to continuously pay interest on your card, as you could incur very high fees for late payment. For personal cards, on the other hand, the interest and amount are both capped, and changes cannot be made without notice.
However, lenders don’t usually change the APR and offer the same consumer protection rights to business cards as well. It is just that they are not obligated to do so, as with personal credit cards. However, if you do come across a lender with vague terms and conditions about consumer protection for a business credit card, ask them what to expect during the application itself. Rewards OfferedBusiness credit cards are tailor-made for businesses. This means that the rewards they offer are also made for businesses, while with personal cards the rewards are for the individual borrower. However, this does not mean that an individual cannot apply for a business credit card; they can still do so as a sole proprietorship. On a business credit card, the rewards are offered on purchases that would be useful to a business, like office equipment, computer hardware/ software, phone services etc. On the other hand, personal credit cards will have rewards for personal purchases, like restaurants, grocery shopping, travel, etc. Credit LimitsBusiness credit cards tend to have higher credit limits than personal ones. This is because businesses- big or small- are likely to spend and earn more than an individual person would. Moreover, having a higher limit on your business credit card could improve your business credit score, provided you repay on time. The higher limit could also potentially increase your total available credit line, making it easier to achieve the optimum credit utilization ratio of under 30%. Balance PaymentsCredit card balance payments are applied differently for business and personal credit cards. If you’re paying different interest rates on the same account, for a personal credit card the lender, by law, has to apply the payment to the higher/ highest rate first. However, this is not the case for a business credit card. With business cards, the lender could apply the payment to a lower/ lowest interest balance first, leaving the more expensive part of your debt to rack up interest. Now that you know the major differences between personal and business credit cards, choosing one should be easier. The Bajaj Finserv RBL Bank Supercard is a great choice for both personal and business use, packed with some awesome benefits. From cash withdrawal to converting your credit limit into a loan, to EMI finance options, this RBL credit card is the only one of its kind. Moreover, it is affordable, safe, and secure, along with an option for instant approval.
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