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When should you use a company credit card? It’s a question that can confuse everyone from administrative assistants to a United States senator.
In fact, Florida Sen. (and possible vice presidential candidate) Marco Rubio admitted this month that he mistakenly used the Florida Republican Party’s credit card to charge personal expenses.
“The Republican Party of Florida never paid my personal expenses,” Rubio told Fox News. Instead, Rubio used the party’s card for personal expenses that he paid off himself. But, he admitted, “I shouldn’t have done it that way. It was a lesson learned. It was a mistake.”
There are three different types of credit cards that can be lumped into the term “company card,” and whether you should use one depends on the type of card and, most importantly, your company’s guidelines…
1. Business card accounts you open
These cards are very similar to consumer cards and are marketed to individuals and small businesses. Like consumer cards, the primary account holder is responsible for repayment. And since you’re the one paying the bill, you can legally use it for anything you want.
PROS: Business cards allow individuals to charge company expenses to a separate card rather than mix them with personal items. Some of these cards feature more robust reports that make it easier to track expenses. You also get to keep any miles, points, or cash back earned.
CONS: Business cards were specifically excluded from most of the credit card reforms contained in The CARD Act of 2009. That means that payments can be applied to the balance with the lowest interest, terms can be more easily changed, and over-the-limit fees can be charged.
2. Business cards in someone else’s name
If you work for a small business, the owner may open a business card in his or her name, then add you and other employees as authorized cardholders.
PROS: You’re not directly responsible for paying the bill, since it will go to the primary cardholder. If you have trouble managing your finances and submitting expense reports, this lessens your burden. This is also a great option if your employer doesn’t cut expense checks in a timely fashion.
CONS: You have to be very careful to read and understand your company’s policies regarding the use of these cards. Your employer won’t look kindly on any unauthorized use, and you’ll be asked to reimburse the company for any personal charges. Furthermore, it’ll be your employer who receives any credit card rewards that result from your expenses. Personally, I would avoid this option unless my employer required me to use one.
3. Corporate cards
Large businesses, nonprofits, and government agencies may qualify for an actual corporate card that’s issued against the organization’s line of credit. Presumably, Sen. Rubio’s card was a corporate card issued to his state party.
PROS: Just like with business cards issued to an employer, using a corporate card means never being personally liable to the bank for the charges. Instead, you’re held accountable by the organization that issued the card. At the same time, these corporate cards are often high-end products with added perks.
CONS: When you use a corporate card, your strict compliance with authorized use policies will be vital to retaining your job. And again, you don’t get any rewards from using the card.
Like all employees, Sen. Rubio should have taken great care to keep his personal expenses off his company card. And if you have the option of using a business or corporate credit card, it’s important that you learn all of the benefits and drawbacks of these products.