You’re about to go on your first work trip, but aren’t sure if you should use your personal credit card or ask your company for a corporate card. As with all things financial, there’s no simple right or wrong answer. Getting a business card through your company has pros and cons, and whether it’s a good option for you depends on your individual situation.
To help you decide if a corporate credit card is right for you, here are some factors to consider.
1. Save on Paperwork
If you’ve ever filed an expense report, you know it can be a hassle to save receipts and fill out all the minute details. Putting every business purchase on a corporate card does the expense documenting for you.
2. No Waiting for Reimbursements
Record keeping can get confusing, but not only that, when you pay for business expenses out of pocket, sometimes you have to wait for a reimbursement check. At some companies, it takes a month or longer, and you could end up paying interest charges on your personal credit account in the meantime. If you have a modest salary, it might be beneficial to see if your company can help you avoid dipping into your own finances by giving you a company card, as QuickBooks explains.
3. Separate Work and Personal Spendings
It’s easy to lose receipts and end up paying for incidentals, for example, a snack in the airport, especially when traveling for business. If you’re mixing business with pleasure, it may be a challenge to separate those line items on a receipt. When you have a separate business card, though, you can use the plastic for just the costs that qualify.
1. Effect on Credit Score
Just as when you apply for a personal credit account, the process of applying for a company card could temporarily ding your credit score, points out US News & World Report. That’s because anytime a hard inquiry is made (like when a creditor runs your credit to make sure you’re worthy of a new account), your score drops slightly. It’s not a huge deal, necessarily, but it’s worth considering if you plan to take out a car loan or buy a home in the near future, since you’ll want your score to be as high as possible.
2. Liability to Pay
If a card has your name on it, even if it’s a company card, there’s the possibility that you’re on the hook to pay, explains Investopedia. Be sure to clarify if your credit status is at risk if the bill is not paid in a timely manner and if you’d be expected to pay should your company forget to cough up the cash. Either way, keep tabs on the monthly statement to make sure everything is paid in full and on time.
Whether you have a corporate card or not, not all expenses will be approved. Make sure you have a clear understanding as to what your company covers, whether it’s airfare, fuel for your car, hotel reservations, or meal allowances.
If you go on work-related trips often, getting a corporate card might make sense for you. Weigh the pros and cons and make sure you understand what it means for your personal credit.