Friday Financial Tidbit-Beware of the Corporate Credit Card

If you have read this blog for very long you know that I am not a fan of using credit cards. I do, however, get asked from time to time about corporate credit cards that are issued to employees for business expenses and travel. My answer is to be very careful when signing up for these cards especially those issued by American Express.

What is the problem with the American Express corporate card you may ask? The main reason is that you are personally 100% responsible for the charges! If you do not believe me take a look at section 5 of the user agreement. It clearly states that you are responsible to pay the monthly bill, not the company. So if the company is late in reimbursing your company expenses, you have to pay it all out of your checking account. If you do not have the money to pay it all you have to pay the interest charges and if you are late on a payment, it dings up your credit.

This is a real life example that happened to a worker where I am employee. The employee had used their card for corporate charges and was reimbursed from the company. However he did not pay the bill when it was due and resigned from the company. Now the employee is getting monthly charges and his credit is being destroyed each month. Granted, the employee should have been paid off the bill when he received the reimbursement, but he now has a huge mess on his hands.

Overall just be very wary when opening a corporate credit card. Read all agreements before signing up to receive the card. For the reasons mentioned above, I would not sign up for the American Express card, because I would be a signing up for a card in my name. If the company goes belly up and is not able to reimburse me for my expenses, I have to pay for it. I think it is very poor taste for companies to expect that their employees become their bank. There are stories everywhere on the Internet of people having to pay their corporate credit card because the company they worked for did not pay the bill.

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