Employee Credit Cards

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Let’s face it, business travel and expenses are the best way to rack up credit card rewards. When I travel on business, I like to think I am rather frugal, but I can easily ring up $1,000 a week on hotel, rental cars, and meals. I am talking about $20 dinners and $100 hotel rooms in small to mid sized cities. Go to any major world city, and those numbers double. Add in airfare and now you can easily rack up $5,000 to $10,000 a month in expenses if you are a road warrior.

Who Pays?

Obviously your company is reimbursing you for these expenses. The question is, should you accept a company credit card. The answer is: it depends. There are two types of “company credit cards.” There are one’s where you are ultimately responsible for the payments, and ones where the company is, and you are merely an authorized user.

I would not bother with a card where I am ultimately responsible for the payments. There is too much potential for abuse if others are on the same account. Here is a story about a woman who was using her company’s credit card, and then got laid off, and then got hounded by creditors for the unpaid bills to the company card. Ultimately, if the she is responsible for the charges, she is out of luck.

What If Your Company Is Responsible For The Card’s Payments?

This can be a good arrangement. If you do not have enough credit to sustain the business expenses you are expected to incur, this is a great option if your company offers it. It is also the preferred option if you carry a balance on your personal cards. The last thing you want to do is have your business expenses adding to your balance. Considering the nature of double cycle billing, this will hurt you as you will be paying interest on your business expenses, even after you and your credit card has been paid off.

The other situation in which this would be a good arrangement is if your company does not reimburse you in a timely manner. I have seen companies where the expense reports go through a few levels of approval before being rejected for a typo or an illegible receipt. If an approver or someone in accounting is on vacation, it can take several weeks until a check is cut. If your employer functions like that, you might just want to accept an offer for a company card. Typically a company will ask you not make personal charges, something that you would be wise to obey if you value your job.

When Should You Say, No Thanks.

You should try to put all business expenses on your own personal card only if you have confidence in the following:

  • Your company will reimburse you in a timely fashion.
  • Your company is not going out of business any time soon.
  • You have sufficient credit to sustain your business expenses without using up a huge percentage of your available credit.
  • You are not carrying a balance.
  • You are good enough at handling your finances to not spend your expense checks before the credit card payment is due.

This sounds like a lot of conditions, but if you can meet them, you are set to reap some serious rewards from your business travel. If you are able to charge your airline expenses to a airline partner card, you will likely get double miles. If you use a cash back card for other expenses, you can get up to 2% back.

Making It Work For You

When I had just graduated from college, I took a job traveling around the country installing software systems and training the users. I was making very little money, but I was able to charge most of my expenses to my personal credit card. The company I worked for was a small, but growing operation, that could be counted on to reimburse me almost immediately upon submitting my expense report. In fact, I probably made a little money on all the interest accrued between the time I received my expense check, and when my credit card payment was due. I also received a ton of frequent flier miles from all my travel expenses. These miles effectively increased my earnings at that company by a significant amount. Ultimately, I was able to use my vacation time to jet off to destinations that belied my entry level salary.

What If You Are The Boss

If you are a business owner, and you have employees who travel on company business, you are sitting on a potential gold mine of rewards. Just about every reward card has a corresponding business card, and the responsible party is typically the one who collects the rewards. If you trust your employees not to go on unauthorized spending sprees, you can insist that all business expenditures be made on the company card. In that way, you could easily end up collecting massive amounts of reward points or cash back, without ever leaving home.

Either way, reward points and cash back represent a large source of value to be derived from business expenses. It is up to you to make sure you can retain as much of the rewared as possible.

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