Living with credit

My credit card credo: Don’t mix business with pleasure

John Egan

This blog post is like one of those scary public service announcements that urge you not to drink and drive or not to text and drive. In other words, this blog post is a warning.

My public service announcement to you is this: Don’t make the same stupid mistake I made with a business credit card I had about 10 years ago.

Charging ahead

Back in 2006, I left a full-time job here in Austin, Texas, and jumped into full-time freelancing. Ah, the freedom! I was in business for myself!

As part of setting up my new business, I applied for and received an American Express credit card (one of the gold ones). Having your own credit card bearing the name of your own business makes you feel like a big shot.

Well, Mr. Big Shot’s spending habits soon shot down that I’m-my-own-boss euphoria.

Mixing business and pleasure

I ended up breaking a cardinal rule of having a business credit card: Never use it for personal purchases.

You’ve heard of separation of church and state? Well, when it comes to putting business and personal expenses on a credit card, there also should be a significant separation.

At some point (I don’t remember when), I began to accumulate an almost out-of-control balance on my AmEx card. And if I remember correctly, most — if not all — of those charges were unrelated to my business. They were, however, related to my out-of-bounds spending.

An old spreadsheet I discovered shows that as of March 31, 2008 (10 years ago!), I had amassed an AmEx balance of a little over $4,600.

I’m not crystal clear about why I had that much of a balance on the AmEx, but I can guarantee that personal expenses accounted for most it. A furniture shopping spree comes to mind. And I wouldn’t be surprised if airfare and other vacation costs appeared on my AmEx bill as well.

Say no to personal expenses on your business card

Regardless of how I spent that money, I shouldn’t have been charging my personal expenses to a business credit card.

Why? I’ll give you three reasons:

1. Having a business card lets you track business expenses and keep them apart from personal expenses. Mingling those two types of expenses voids the accounting value of having a business card that’s used solely for your business.

2. Running up personal debt on a business card can wreck your business credit.

3. Treating your business card like a personal piggy bank can put you deeper into debt, particularly if you’ve already maxed out any personal cards you’ve got.

Need I go on?

Crushed by debt

What made matters worse with the AmEx-as-piggy-bank card is that back then I didn’t have the option to make payments on a month-by-month basis. Instead, the full balance was due every month.

When you’re in over your head financially, as I was then, making that full-balance payment each month is a struggle.

Soon, the debt on the AmEx and other credit cards (along with overdue federal taxes) was crushing me. I turned to a nonprofit credit counseling agency here in Austin for help. With my counselor’s help, I eventually settled all of my debts (but not after most, if not all, of my credit card accounts were closed).

Bouncing back

Since that painful and, frankly, humiliating experience, I’ve managed to rebuild my credit. And now, I’m proud to say, I have two AmEx cards — one for my freelance business, which I restarted in 2017, and one for me. (And with both of those cards, I do have the option of paying on a month-by-month basis.)

I’m even prouder to tell you, though, that there’s no cross-pollination between my two AmEx cards. The American Express Platinum card is for personal expenses, and the SimplyCash Plus card is for business expenses.

Put another way, I’m not embarking on a furniture shopping spree with the SimplyCash Plus card in hand.

So, in summary, here’s my public service announcement:

  • Don’t drink and drive.
  • Don’t text and drive.
  • Don’t use your business credit card for personal purchases, and vice versa.

You’ve been warned.

See related: My business credit card makes me feel like a grown-up, How many business credit cards should you have?

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