There's nothing like having a shiny company credit card to make you feel like a high roller. Entertaining clients? No problem. Taking a business trip to Chicago? You'll book that flight. Attending an annual conference? The registration fee is covered.
But there are some pesky downsides to flashing company plastic, especially when it comes to managing your personal credit and financial health. Here's what to know about using the company credit card.
A side note: Many of these downsides depend on the type of card and the arrangement with your employer. "Generally speaking, with a corporate card, most of the responsibility with the balances belongs with the company," says Matt Schulz, senior industry analyst for CreditCards.com. "That's opposed to small-business cards, where it can sometimes be more jointly held with the cardholder." So, be sure to ask questions and read the fine print before you take on the card.
1. It may ding your credit. Some company cards are tied to your credit, which can be risky. (If your boss asks for permission to run your information through a check before handing off the card, that's indication that your credit is attached in some way.)
You may know this from holding personal debt: The process of applying for, and taking on, a new credit card can result in a temporary credit hit. For one thing, it lowers the average age of your accounts, which can reduce your score. "Once it shows up on your personal credit report, it is treated no differently than a true personal credit card in your name," says John Ulzheimer, a national credit expert.
While this dip should eventually right itself, it can spell trouble if you're simultaneously in the process of negotiating some other kind of personal debt. That means if you're looking into buying a new car or taking on a mortgage, consider doing it before you apply or waiting until your credit restrengthens.
Another issue can arise if you're constantly maxing out your company card for pricey business trips and decadent meals. Having a high debt-to-limit ratio, called a credit utilization ratio, hurts your credit. So, if work is having you buy $3,000 steak dinners for clients or jetting off to Portugal every month for a weeklong stay, you may find that a jointly held card starts to eat away at your score.
Even more worrying: If your credit's not strong, there's a chance you could be declined when applying for the card.
2. You may be on the hook for late or missed payments. With some arrangements, a company has the credit card bill sent to itself, and you have no responsibility to repay it. But other arrangements may require you to handle the payments -- and absorb any charges for missed or late payments.
That's especially risky when you have the whole company-mandated rigmarole -- itemizing receipts, filling out paperwork and filing your expense report -- potentially delaying your reimbursement check from human resources. "You are often at the whim of how quickly your expenses are paid by your employer," Ulzheimer says.
3. They don't have the same protections. The Credit CARD Act of 2009, which is like a Bill of Rights for credit card holders, offers certain protections to card users. Those include making rates and fees more transparent and predictable. But those lovely protections don't apply to corporate cards, Schulz says.
4. You might not get the rewards. Again, depending on the card and your employer, your credit card may not offer rewards -- or your company may get to keep them. In contrast, if you are using a personal card for travel expenses, you still get to choose the rewards -- cash back, airline miles or something else -- and use them as you wish. "The advantage of going the personal route is that you get to pick the card, so you can maximize the rewards," says Gerri Detweiler, head of market education for Nav, which offers free credit scores to small business owners.
5. You need to protect yourself. When it comes to company credit cards, it's tough to tell your boss that you don't want one. But, experts warn, you have to draw a line when it comes to risking your financial situation for your company's convenience. "Don't do anything that could screw up your personal financial journey, just because your company makes you have a personal corporate credit card," Ulzheimer says.
"You may not have a choice about getting a corporate card," Schulz says, "but at the minimum, you can be informed."
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