A corporate credit card can be a useful tool, allowing employees to travel and buy the supplies they need without the hassle of dealing with a separate purchasing department. But are there risks involved, too?
That’s what one Credit.com reader wondered when her employer asked her to get a corporate Visa card through PNC bank. She wanted to make absolutely sure that no matter what happens with her company, she won’t be held personally liable for the debts she charges.
The short answer, according to Gerri Detweiler, Credit.com’s director of consumer education: Probably not. But just in case, it doesn’t hurt to check.
The confusion comes down to the fact that there are two different types of corporate credit cards. In most cases when an employee gets a credit card from her employer, the company gets the bill and is entirely responsible for payment. The card actually belongs to the employer, and the employee is merely an authorized user.
The other type of card is less common, and is typically used by smaller companies. In this case, employees apply for the cards themselves. As they rack up debts, their employers reimburse them. But because it’s the employee’s name on the card, she is the person responsible for paying the bill.
And if her company fails to reimburse her, any unpaid bills could wind up on the employee’s credit report and harm her credit score.
All of which means that without seeing the card and the agreement it came with, it’s difficult to know whether or not the reader is on the hook for the bill, Detweiler says.
[Related Article: Can a Business Loan Appear on My Personal Credit?]
“Unfortunately, I don’t know the answer [because] I don’t know how this card reports,” Detweiler says. “PNC is big enough that I doubt you have to worry.”
Just in case, it’s a good idea that employees in this situation do their homework. Here are some steps you can take to make sure that you are not held responsible for charges made on your corporate credit card:
- When you receive the card, call the bank and make sure that your employer is responsible for paying the bill, not you.
- Never use your corporate credit card for personal expenses. Ever.
- Read all the paperwork and agreements that came with the card, paying special attention to sections regarding liability. Keep these documents for your records.
- About three months after you first use the card, check your credit report to make sure that the new card doesn’t appear.
- If your employer reimburses you for expenses, make sure that you pay the credit card bill on time every month, even if your employer is slow to pay you back. Also, submit your receipts and expense reports quickly, if required. Keep copies of everything.
- Get and keep a written copy of your company’s expense policy. You may need it later if disputes arise about purchases.
[Credit Cards: Research and compare business credit cards at Credit.com]