Important Warning If You Have a Corporate Credit Card

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Can you be personally liable for a corporate credit card you get from your employer? Can the business card you use as an employee of the company for which you work affect your credit rating? I dug into those questions recently after getting two emails from women who found themselves dealing with the spillover when their employers didn’t pay charges on the corporate cards they were issued.

The first email came from a woman who had relocated to another state to take a sales position. Her supervisor told her to charge her relocation expenses to the corporate card the company gave her. But when the job didn’t pan out, the company did not pay the bill and it now appears on her credit reports as a charge-off of just over $5000. About to buy a home, she was worried she would have to fork over the money to pay off the bill in order to get a mortgage.

The other woman who emailed me has been a contract employee for a firm that is now having financial problems. She was informed by the manager of that firm to stop using the corporate card he had given her for business expenses because he is no longer able to pay the bills. Her cell phone has been ringing off the hook with calls from the creditor. “Will this hurt my credit reports?” she asked.

To get to the bottom of this story, I talked with consumer law attorneys and contacted the major card issuers themselves. In large part, what happens depends on which type of corporate card you carry. It’s vital that you know the difference.

[Article: How Does a Corporate Card Affect Credit Scores?]

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    Two Types of Cards

    There are generally two types of corporate cards. With the vast majority, the employee gets a card from his or her employer, the bill goes to the employer, and the employer is completely responsible for payment. In those cases, the employee is an authorized user and is not responsible to the card company for payment.

    The other type of card, however, does carry individual liability. The employee fills out an application, gets the bills, gets reimbursed by his or her employer, then pays the card issuer. This type of card may affect the employee’s credit scores, since activity can appear on their personal credit reports.

    Only one issuer, Capital One, stated it does not issue corporate cards that allow for personal liability on the part of the employee. “Employees are not liable for charges. They are not reported to bureaus and not responsible for the debt. The primary (accountholder) and business are jointly liable for the debt, not the employees,” said spokesperson Pam Girardo by email.

    The other issuers I queried—American Express, Bank of America, Chase and Citibank—all said they offered cards with and without individual employee liability. Here’s what they told me…

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    American Express

    Each company (or “employer”) determines how they want billing for their American Express Corporate Card program to work. In some cases, employees get their American Express Corporate Card bill.  The employee submits their expenses to their employer; their employer reimburses them; and the employee pays American Express. In other cases, employees get their American Express Corporate Card bill and submit it to their employer, who pays American Express. Companies can also choose to set up a “centrally billed account” in which the employer receives and pays the bills for designated American Express Corporate Cards.”

    I wanted to clarify how employees would know if they could be personally liable for charges on their American Express Corporate Card and was told by email, “In most instances, employees fill out a Card application which includes disclosures about the product and the Cardmember’s responsibilities.”

    In a follow up conversation, Molly Faust, vice president of public affairs for American Express told me, “From American Express’ perspective the individual will not be held liable as long as they have fulfilled their personal responsibilities in managing the account; for example, they haven’t used the card for personal expenses and have filed their expense report in a timely way.” There are some instances where an employee could be held liable for corporate card charges, and I was told cardholders should refer to their cardholder agreement to determine whether that’s the case.

    She also told me that corporate accounts will not appear on employee’s credit reports “as long as they are in good standing.” Negative information about your corporate card can be reported if American Express determines you are personally liable for the delinquent charges.

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    Bank of America

    “We offer both corporate and individual/employee liability solutions for our clients.  If the client chooses corporate liability they are obligated to pay the bank. Any arrangement the company has with its employees for reimbursement is between the company and the employees.

    If the company chooses individual liability for its program, then individuals are liable for the charges back to the bank, and the bank can collect the funds according to its contractual relationship with the employee.  For individual liability programs there is a contract between the employee/cardholder and the bank that is confirmed during the applications process.  Any changes to that contract are disclosed to the cardholder.”

    I asked Bank of America to clarify how the individual liability program works. How would the employee know he or she would be personally responsible for the debt? I was told by email that “For individual liability programs, individual cardholders/employees typically will complete an application for the bank to review. This is our policy for individual liability programs. ”

    Capital One

    “Employees are not liable for charges. They are not reported to bureaus and not responsible for the debt. The primary and business are jointly liable for the debt, not the employees.”

    At Capital One, we offer employee cards with unique account numbers so that the business owner can:

    1. Track each employee’s spending separately not just online but also on statement

    2. Set spend limits on how much each employee can spend monthly

    3. If one card is compromised, the other cards can still continue to be used and active and are not affected.

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    Ink from Chase offers free additional cards for employees with individual spending limits. However, employees are not personally responsible for payment. The authorizing officer of the small business who signs the application and the business itself are responsible for payment.

    J.P. Morgan offers Purchasing Cards and Corporate Cards (travel and entertainment) to Large Corporate clients. For our Purchasing Cards, individual liability is not offered.  They are Corporate Liability only.

    Corporate Card (T&E) programs can be Corporate, Joint & Several (J&S), or Individual Liability with a variety of billing and payment options.  The vast majority do not select to offer Individual Liability.  From a contractual, pricing, implementation and workflow standpoint, Corporate Liability and Joint & Several (J&S) Liability programs generally offer advantages over Individual Liability programs in areas such as: a stronger financial arrangement and the elimination of individual cardholder credit reviews.  Under Individual Liability, prospective cardholder credit reviews may limit distribution of cards and/or appropriate spending limits for traveling employees.

    Some clients select Joint & Several, which means that they share the responsibility with the cardholder. While the liability for payment initially resides with the cardholder (up to a certain number of days), it then reverts back to the client.”

    When I asked Chase to clarify how the employee would know he or she is personally responsible for the charges, and was told that the employee would fill out an application that states that they are personally responsible for the charges incurred, and the bills would come to the employee. In the individual liability scenario, the employee would pay the bills and be reimbursed by his or her employer. (Read our full review of the Chase Ink Business Cash credit card for more information.)

    Chase reiterated that “the Corporate Card offers Individual Liability as one of many options, but the vast majority of clients do not select to offer Individual Liability. Individual Liability for Corporate Card clients is not a best practice today.”


    “We offer two different programs. One is for large commercial card programs. For commercial cards, the employer can choose whether they want to bear the liability or if they want to bear joint liability (with the employee). In any program where the employee has liability they must complete an application accepting liability for the card.”

    The other program is for the CitiBusiness Cards designed for small business. With these cards, “There is an authorized officer of the small business. The authorized officer and the business are both jointly liable. Should the authorized officer request that a card be issued to an employee, that employee would not be liable.” Spokesperson Emily Collins told me, “This is all clear through the application process.”

    [Article: Bill for Small Business Cards Introduced]

    The Bottom Line?

    If you have a corporate credit card, it’s crucial that you understand what type of corporate or business card you carry, and whether it involves personal liability. If it does, and the company does not pay the bills, you could find yourself stuck with the bill, or suffer from damaged credit due to late payments that could be reported. Here are some things to keep in mind:

    1. Keep a copy of any application you sign for a corporate card.
    2. Read and keep a copy of the cardholder agreement you receive. If you do not receive one when you get your corporate card, request a copy.
    3. Submit your expense reports and receipts to your employer quickly, if required. Again, keep copies.
    4. Don’t use your corporate card for personal purchases. Period.
    5. If your card requires you to get reimbursed and pay the bill yourself, make sure you pay on time, even if your employer is slow to reimburse you. Otherwise, your credit may be hurt by the late payment.
    6. Get and save a written copy of your employer’s expense policy. It can come in handy if there were any disputes about whether purchases are permitted.

    Has a corporate card come back to bite you? Share your experience in the comments section below.

    [Credit Card Review: Business Credit Cards to Cut Travel Costs]

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    At publishing time, the Chase Ink Business Cash credit cards mentioned in this article are offered through product pages, and is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s). 

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