How to handle your first company credit card
If you're management-bound at a large or midsized company, you'll probably wind up with a corporate credit card. Here's what you need to know.
This post is from Justin Boyle at partner site CardRatings.com.
Once you reach a certain level of responsibility at work, you may be chosen for a company credit card. You won't be alone, either -- ABC News reported that Americans charged $140 billion on corporate cards in 2009. Corporate credit cards are often used to help streamline a company's financial logistics, or to demonstrate to a valued employee that he or she has earned the company's trust.
Even though you might get a quick primer on appropriate use of company funds, it might not be precise in covering the finer points of corporate credit. Do you get to keep the rewards points? Can your corporate card affect your credit score? Here are a few words of advice from credit experts and industry insiders to give you some confidence as you enter the world of corporate credit cards.
Get the full scoop
While some basics of financial policy are common across a majority of organizations, just about every company has its own special accounting and finance details. David Bakke, money management expert and personal finance author, stresses the importance of getting the rules in writing.
"Employees should request a copy of the overall policy regarding corporate credit card use, as well as the one specific to his or her particular department," he says.
Bakke also warns not to play fast and loose with your company's expense approval policy. It's fairly well understood that corporate credit cards are for business expenses only, but the gray area between personal and business expense can have a pretty wide footprint in certain lines of work.
"If the employee is in doubt at all, the charge should be put on a personal credit card and submitted to the employer separately for review," Bakke says.
Watch your credit
As founder of Easy Credit Relief, Inc., a credit repair and litigation support agency, Doug Minor has seen his share of unfortunate situations.
"I have been involved on a few occasions when an employee has been issued a corporate or company credit card and had their personal credit damaged because the accounting department missed a payment," he says.
The usage of some corporate cards may be included in your credit utilization, which can have an upside or a downside, Minor says. Credit utilization accounts for a chunk of your credit score, so this can actually help you if your corporate limit is high and you don't charge very often. If the opposite is true, though -- if you have a low limit that you nearly max out every billing period -- your credit score and debt-to-income ratio can suffer.
Check your liability
There's also the matter of individual liability corporate cards, which means the company foots the bill but the employee is responsible for keeping up with the payment schedule. Not knowing that you're supposed to be keeping up with the bills is a surefire way to wreck your credit, so be prepared for an individual liability structure if you're asked to provide a bunch of personal information on an application for your company card.
A personal credit check is another way to know if you'll be expected to pay your corporate credit bill on time, Bakke says. If you've just received a credit card through your company and you haven't ordered your free credit report yet for the year, it might be a good time to check and see if the issuer made an inquiry.
Ask about perks and benefits
Some corporate accounts provide individual perks for cardholders, while others have a central pool for points and still others let the employer decide how the rewards will work. According to Jay Singer, head of U.S. Commercial Products for MasterCard, it really varies from account to account.
"Corporate cardholders have access to many different rewards, loyalty programs and unique offers," Singer says. "However, the availability of these perks to employees is determined by the employer. For example, if you have a MasterCard corporate card and want to host a potential new client at a one-of-a-kind event, you could . . . but only if such purchases are approved by your company."
Most of all, rewards or no rewards, individual or company liability, it's important to treat your first corporate credit card with due caution. Learn all you can about your company's specific credit policy and tread lightly until you know the ropes. The better decisions you can make with your company's money, the better they'll feel about letting you handle some of it in the first place.
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