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Maximising rewards and personal control: The case for using personal credit cards for company expenses

By February 3, 2023No Comments

Table of Contents

Introduction

Advantage #1: Personal credit card rewards

Advantage #2: Improved financial management

Advantage #3: Greater control over spending

Conclusion

Introduction

The concept of a company credit card (also known as a corporate credit card or business credit card) has been around for several decades. These types of credit cards are designed specifically for business use and are typically issued to employees or business owners to be used for business-related expenses.

The first company credit card was likely introduced by a bank or credit card issuer to provide businesses with a convenient and flexible way to make purchases and track expenses. Over time, company credit cards have evolved to include various features and benefits, such as rewards programs, expense tracking tools, and the ability to set spending limits and monitor employee spending.

Today, company credit cards are used by businesses of all sizes, from small startups to large corporations. They are an essential tool for managing business expenses and can help enterprises to streamline their financial processes and gain greater control over their spending..

But there are several potential drawbacks to using a company-issued credit card:

  • Lack of control: Employees who are issued a company credit card may be less inclined to monitor their expenses closely, as they may perceive the money as something other than their own.
  • Limited reward options: Company-issued credit cards may offer different rewards programs than personal credit cards. This can be a drawback for employees seeking additional benefits for their business-related spending. Employees may earn points but technically belong to the company. On a personal credit card, all rewards are owned by the users (i.e. employees). For a company credit card, the rewards go to the company.
  • Personal liability: In some cases, employees may be personally liable for any unpaid balances on a company-issued credit card. This can be a financial risk for employees, especially if the company experiences financial difficulties or goes out of business.
  • The reconciliation process is painful and difficult to track if you make out-of-policy purchases on your company credit card. However, if you use your own credit card, such expenses will simply be rejected, and you can resubmit if the expense is legitimate.An alternative for companies to consider is to allow employees to use their own credit cards instead.

Advantage #1: Personal credit card rewards

Using personal credit cards for business expenses can be a good option for employees who want to earn rewards for their spending. Many credit cards offer rewards programs that allow cardholders to earn points, miles, or cash back on their purchases. These rewards can be redeemed for various perks, such as free flights, hotel stays, or merchandise.

Employees can take advantage of these rewards programs by using a personal credit card for business expenses and earn additional benefits for their spending. This can appeal to employees who frequently travel for work or make many business-related purchases.

Another advantage of using personal credit cards for business expenses is that it allows employees to choose the credit card that best aligns with their personal financial goals and spending habits. For example, an employee who travels frequently may choose a credit card that offers generous rewards for flights and hotel stays, while an employee focused on paying off debt may prefer a card with a low-interest rate.

Advantage #2: Improved financial management

Using a personal credit card for company expenses can give employees a little taste of financial responsibility, like eating vegetables before getting dessert.For starters, using a personal credit card for business expenses means that employees are directly responsible for paying off those expenses. This can serve as a wake-up call for some employees, teaching them the importance of budgeting and being mindful of their spending. And let’s be honest; nothing screams “budget” like having to pay off a credit card bill.

Furthermore, when employees are directly responsible for paying off business expenses on their personal credit cards, they are more incentivised to find the best deals, negotiate prices and monitor their expenses. It is similar to running your own small business, where every penny counts. They may even learn a thing or two about stretching a dollar and getting the most bang for their buck.

Should they be concerned about mixing personal with business in the same statement, they can simply apply for a separate card to keep things separate.Finally, using a personal credit card for business expenses can help employees build and maintain a good credit score. By using a personal credit card responsibly and paying the bills on time, employees can establish a good credit history, which can be beneficial when applying for loans, mortgages, or other financial products in the future.

Advantage #3: Greater control over spending

Using a personal credit card for company expenses can give employees a little taste of financial responsibility, like eating vegetables before getting dessert.For starters, using a personal credit card for business expenses means that employees are directly responsible for paying off those expenses. This can serve as a wake-up call for some employees, teaching them the importance of budgeting and being mindful of their spending. And let’s be honest; nothing screams “budget” like having to pay off a credit card bill.

Get prompt reimbursement with modern expense management software.

Good reimbursement software allows companies to process claims within 15-30 days. This, combined with the 30-45 day credit window offered by credit cards, can result in a benefit of 0-15 days of cash in hand.

Conclusion

In conclusion, there are several reasons why employees should consider using their personal credit cards for business expenses instead of relying on a company-issued credit card. Employees can use a personal credit card to take advantage of rewards programs and earn additional benefits for their business-related spending. They can also choose a credit card that aligns with their personal financial goals and values, such as finding a card that earns miles or supports a particular cause.

In addition, using a personal credit card for business expenses can help employees better manage their budgets and keep track of their spending. For example, they can see how much they are spending on business-related purchases and how it compares to their overall spending, which can be helpful when it comes to making financial decisions. While there are certainly some potential benefits to using a company-issued credit card, there are numerous direct and indirect benefits for the company (and the employees) should they use their personal credit cards for business expenses, making it a viable option worth considering.

Thank you for reading!

Are you more inclined to use Company Credit Card? Or do you see benefits in using your Personal Credit Card? Let us know in the poll.

As an employee, what is your preference?

  • Company issued credit card
  • Personal Credit card
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