Pros and Cons of Business Credit Card and Debit Card

You should go for a business credit card if you want to build your credit and access to more money than you have in the bank.

Updated: May 31, 2024

Pros and Cons of Business Credit Card and Debit Card


A business credit card is a credit card intended for use by a business to build a credit profile to improve future credit borrowing terms. It lets you borrow funds from a pre-approved limit to pay for your purchases and in exchange, you pay interest and fees on your balance, known as the annual percentage rate or APR. It also offer loyalty programs that provides cash back or rewards points to the user on purchases.


A business debit card serves as a payment card that is issued by a bank against your current or savings accounts and you can use it to spend only the amount of money already available in your accounts.

The main difference between a business credit card and debit card is that the money gets deducted from your bank account when you swipe a debit card; whereas, the money is taken from your pre-approved limit in case of a credit card.

Pros of a business credit card:

A business credit card can be used by a business owners to put all their monthly expenses on it. They can pay it off each month or carry a balance. There are many benefits of a business credit card if you can avoid carrying a balance. These include:

  • It helps build up your credit score with a proper use which can be a great advantage if you need a business loan for growing your business or solution to cash flow issues as the interest rate would be low for a good credit score.
  • The more you spend each month, the more will be the reward point and higher is the payback.
  • A business credit card can serve as a backup for unexpected expenses, which could help avoiding strain your cash flow.
  • More flexible terms are provide for a business credit card than for a personal credit card.
  • A business credit card comes with fraud protection. So, you need not to worry about owing money for charges you did not make if your card is lost or stolen.
  • Business credit cards can be integrated with your back office accounting systems so that spending can be tracked and managing cash flow becomes easier.
  • A business credit card helps you keep your business and personal expenses separate.

Cons of a business credit card:

There are many disadvantages of a business credit card if you carry a balance. These include:

  • The biggest drawback of using a business credit card is the interest you pay on purchases which will increase if you carry a balance and ultimately you could run into financial trouble.
  • Depending on the way of handling your account, credit card companies have the right to change the interest they charge.

Pros of a business debit card:

There are many advantages of using a business debit card that include:

  • It is easy to get a a business debit card as it doesn't require your credit score. You just need to open a business checking account to get it.
  • There is no interest to pay. However, you may get overdraft fees if you exceed your balance.

Cons of a business debit card:

  • There is no direct way to boost your credit score with a debit card as you are using your own cash, the credit bureaus won't track how you managed it.
  • It is not as easy as disputing the charge if your debt card is lost or stolen and a transaction is made with it.
  • It is not effective as an emergency backup as your limit is the only amount of money in your account

You should go for a business credit card if you want to build your credit and access to more money than you have in the bank. But, if you prefer paying with cash and do not care about getting cash back or other rewards, then a debit card is the best option for you.