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Video SRQ: Using a Business Credit Card to Separate Expenses

by on May 12, 2013 · 9 comments

in Business Rewards, Chase, Sunday Reader Questions, Video Blog Post

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TPG reader John needs to separate his personal expenses from those he incurs from his college alumni club and wants to know what the best business card to do so would be:

“I’m looking ahead to my next round of credit card applications and would like to add a Chase Ink or Amex business cards into the mix. I am currently president of my local college alumni club and we were just given a grant from the university to plan an event over the next year. With me not technically being employed by the university in the formal sense and with my role not having an income to report, would I qualify for a business card if I were to use it to separate out these expenses from my personal ones? I do have a day job income I could lean on and have a healthy relationship with Chase through my personal cards.”

John is the perfect example of someone who should absolutely open up a business credit card. All business credit cards are secured by your personal credit so if you have a good relationship with Chase, Citi or American Express and have a good credit score you can easily get approved for a business card. You can apply by using your name as the business name, applying as a sole proprietorship and using your social security number (leaving the field for EIN blank).

This is a great option if you have a big expense in your duty as the alumni president and you need to charge that expense until you are later reimbursed by the school. You don’t want that charge sitting on your personal credit report and potentially damaging your credit until you can eventually pay it off. That is the beauty of having a business credit card, any business expense can sit on a separate credit report so it doesn’t damage your personal debt to credit ratio.

Even if you pay your bills off on time a lot of credit reporting agencies will report a large balance and it will show huge utilization of your credit – one of the factors in determining your credit score – and your score can instantly drop month to month. So as long as you can pay off large balances and you pay them off early, your score wont be affected.

I think most people get very nervous applying for business credit cards, which is understandable because they are not for everyone since their APR’s are higher and you don’t get the same consumer protections on purchases sometimes. But if you’re going to be paying your bills off every month anyway, you might as well get a business credit card since it will help your month to month credit score and you can get in on one of those with a 50,000-point sign-up bonus like the Ink BoldInk Plus or Amex Business Gold, or even 75k bonuses that come along from time to time. Plus, these cards often offer great bonus spending categories such as office supplies, hotels and gas on the Ink cards and airfare, advertising, gas and shipping with the Amex Business Gold Rewards card.

Either way, if you’re responsible with your spending, will be reimbursed in a timely manner and can maximize your spending, there’s no reason you shouldn’t reap the rewards of opening business credit cards.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • yang

    if I use my newly approved Amex biz gold to pay a large bill– 5k as first purchase and fulfill the spending requirement, how easily that will incur the Amex financial review? just dont wanna that trouble..

  • Graydon

    You will be fine yang, I do out of the ordinary large purchases all the time on my amex business cards. Amex FR is very rare and I have never seen proof that one purchase triggered the action. Relax, use the card and PIF.

  • Graydon

    You will be fine yang, I do out of the ordinary large purchases all the time on my amex business cards. Amex FR is very rare and I have never seen proof that one purchase triggered the action. Relax, use the card and PIF.

  • Graydon

    You will be fine yang, I do out of the ordinary large purchases all the time on my amex business cards. Amex FR is very rare and I have never seen proof that one purchase triggered the action. Relax, use the card and PIF.

  • Graydon

    You will be fine yang, I do out of the ordinary large purchases all the time on my amex business cards. Amex FR is very rare and I have never seen proof that one purchase triggered the action. Relax, use the card and PIF.

  • Whitesoxchamps05

    If I charge $5000 (or smaller amounts) using a Square Up iphone credit card reader or a simar PayPal device, etc, will that qualify me to receive the 50,000 bonus points? Square up deposits into my checking account the $5000 charge minus $137.50 in fees (0.0275%), but the 50,000 chase points are worth $500 cash back or $625 in travel so it seems well worth it…unless chase will flag the 5,000 “purchase” and make it ineligible for the bonus points. Thoughts?

  • Duffman

    That would work. But bluebird/v-reload would lower this cost to about $40. If you don’t care for the extra $$$ your way would be a less hassle to go through. Also, however you get your 5k use that cc as your daily card for 3-4 weeks so you will have some normal activity.

  • new

    HI TPG, the terms of business credit cards all say that only business expenses are allowed. But honestly speaking, spending 5k in 3 months strictly on business purchases are hard for me (who has very small business). So, I may have to put some arguable personal/business expenses on the card for the bonus. In your opinion, what are those personal expenses that I should avoid putting on the business card to avoid a red flag with Chase/Amen? Are putting mortgage, house insurance, vehicle registration fee, grocery etc on the business card a problem? Thanks.

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