In the business world, corporate credit cards often come with the territory. As a petty cash replacement, these plastic companions cover work-related travel, lodging, dining, supplies, and more. While you may feel privileged to take advantage of the corporate cash, think again before you sign your name on the application.
Corporate credit cards are meant to serve as a convenient alternative for the business-minded workforce. Rather than covering work-related expenses yourself and being reimbursed later, cardholders have the luxury of charging it to the company account directly. Sounds great, right? Maybe not. While the practice is fairly common among Fortune 500 companies, few employees realize their role of responsibility for the debt. Should reimbursement ever become a problem, not only could you be left with the bill, you could also face years of credit repair troubles. Ask yourself (and your employer) the following questions before signing up. The answers could save you from a plethora of problems.
Ask your employer:
- Am I personally responsible for this debt if the company fails to pay? If you fill out a corporate card application, you may be agreeing to accept partial responsibility for any charges you incur in the form of a “joint liability clause.” This means the creditor could come after you for the balance.
- May I have a copy of the credit contract? If your name is on the card, you have a right to know what you’re getting into. Review the agreement carefully before signing on.
- Will I be responsible for paying the bill before being reimbursed? In some odd scenarios, companies require their employees to pay the card’s balance before being reimbursed. Such situations beg the question, why have a corporate card? If you encounter this issue, ask your employer to explain the policy.
- Will my corporate card affect my credit report? Chances are, a corporate card will appear on your credit report if you provided personal information (e.g., your Social Security Number, date of birth, etc.) to become approved. This means any non-payments on your employer’s part could actually damage your credit score. Keep the need for credit repair at bay by ordering a free copy of your report and reviewing the actual effects. Are you comfortable allowing outside forces to impact your score? If not, it may be time to ask your boss about available alternatives.
- Can I cover expenses on my own? Speaking of alternatives, why not cover corporate costs with your own credit card so that you can track the balance and work to prevent payment trouble before it starts. If you are concerned about controlling your credit destiny, tell your boss you’d like to skip the corporate account in favor of your own.
- Can I handle the consequences of unpaid debt? If you received a $15,000 credit card bill tomorrow, what would you do? As many companies fall victim to a harsh economy, some of their employees have been left to clean up the mess. Accepting joint liability means bearing the brunt of your employer’s bottom line if they cannot pay their bills. It could also mean a mountain of credit repair if you are unable to pay as well. Keep this in mind the next time you’re offered company “perks,” and read the fine print. Opting out of “elite” opportunities may be the wiser path.