By Stephanie Miller


5 Min. To Read

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If you’re a small business owner, you probably rely on a number of financial products to keep your business moving. Like most business owners in America, you probably also have quite a few credit cards in your arsenal. You may even be leveraging your personal credit and resources to meet your business’s needs, which can be a slippery slope.

A recent survey by Nav found that small business owners carry twice as many credit cards as average consumers. The craziest thing? That’s not even including business credit cards! The survey only related to personal credit cards, gauging how many were carried at a given time by business owners and non-business owners.

So, what exactly did the study find, and what does it mean for small business owners and consumers?

-The Results

The Nav survey, conducted earlier this year, took data from 271,285 respondents. Of those surveyed, 143,004 were small business owners and 128,281 were non-business-owning consumers. As mentioned, the usage data excluded business credit cards entirely, only focusing on personal credit card products.

The results were surprising. While the average consumer carried 2.32 personal credit cards, consumers that were also small business owners carried more than double that average: 4.78 cards.

Not only did the business owners carry more cards, though, they also carried higher total limits across those cards. In fact, while the everyday consumers had an average credit limit of $18,401, the business owners almost doubled that, at $35,291.

So, why is this a trend and what does it mean for small business owners… and their credit?

-The Impacts

While there’s nothing wrong with carrying more credit cards than average – many of us do, especially if we are trying to capitalize on cash back rewards – it can present a problem for small business owners.

Business credit cards are available to owners of all types of small businesses. Even if you have a side gig or an internet-based business that you run out of your living room, you can get a business credit card. And business cards are great options from a credit report standpoint, because they aren’t typically reported to the credit bureaus (the exception being if you default on an account or miss a payment). This means that you won’t impact your personal credit utilization simply because your business has had a lot of expenses lately.

Business credit cards typically offer a lot of excellent perks, too. You will usually find great rewards rates on the things that business need most, such as shipping expenses, office supplies, and cell phone bills.

Taking all of that into account, it’s interesting to note that 24% of small business owners admitted to using a personal credit card the last time their business needed something.

-Why It’s Happening

So, why are business owners leveraging their own personal credit for their companies, when stellar business credit card products are available on the market? Well, it might simply come down to convenience.

Using a personal credit card for a business expense isn’t ideal, but it’s pretty easy to reconcile. Especially if you’re the business owner, it’s simple to reimburse a personal card for an approved business expense. However, the opposite is much trickier.

Using a business credit card for personal expenses can land you in some serious hot water. If your business was ever audited, you would need to be able to prove that not only were those charges excluded from tax deductions, but that the expense was reimbursed to the company from your personal account. Let those charges slip through the cracks, and inadvertently claim them on your taxes, and you could have a serious issue on your hands.

You might earn more rewards overall by using a specific personal credit card product, versus opting for a business card. While business cards usually offer excellent rewards rates on specific business purchases, those might not make up a significant enough chunk of your expenses. Instead, you might find that a personal card in your arsenal will net you more in the long run.

It’s also easier to manage credit card rewards from a program you already have and are familiar with, rather than accruing across multiple issuers. For instance, if you exclusively utilize Chase Ultimate Rewards in your personal life, it can be difficult to also collect (and redeem) American Express Membership Rewards from a business card. Consolidating your spending makes it easier to not only track, but also earn and redeem as many rewards as possible.

-Which to Use

If you are a small business owner, you may be wondering whether to get a business credit card or simply use a personal card product. And the choice is ultimately yours. However, there are a few arguments on both sides.

If you want to spare your personal credit the impact of your business’s charges, don’t utilize your personal cards. Were your business to ever carry credit-related debt for any period of time – or if a future late payment were even a remote possibility – using a business card could spare your credit score a serious hit. Business cards also make it easier to track expenses, without having to sift through account statements each month.

However, if you’re able to keep expenses straight, have the ability to earn higher cash back rates, or just want to simplify your spending and rewards, then a personal credit card might be the right choice. You’ll need to take special care to track those purchases and not let your company’s expenses drag your personal credit down. As long as you do that, though, using a personal credit card for your small business can be a great (and apparently, a popular) idea.

If you’re a small business owner, you probably rely on a number of financial products to keep your business moving. Like most business owners in America, you probably also have quite a few credit cards in your arsenal.

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