A corporate credit card is intended for employees working in large corporations or businesses with several million dollars earned in annual revenue. The terms ‘corporate credit card’ and ‘business credit card’, though used interchangeably, differ technically. A corporate credit card differs from a business credit card, as a corporate credit card does not need a personal guarantor to get the approval of the card. The corporation to which the employee belongs stands as the guarantor of the card, taking responsibility for the repayment of loans and dues. Therefore, any delayed payments, delinquencies or other circumstances related to the card are linked to the company. Credit scores are attached to the corporation as a whole, and not to individuals who use the credit card through the corporation. In this way, credit scores are the company’s and not the individual’s own. Corporate credit cards are issued by large banks and finance companies like Bajaj Finserv. They also have rewards and bonuses tied to them, as are fees and charges. Corporate credit cards are meant to be used to meet company-related expenses — for instance, if an employee books a flight ticket to go abroad for work.
The Upside of Corporate Credit Cards
The advantages of a credit card, compared to the disadvantages, are many. First, a credit card offers you the perk of having readily available money anywhere you go. Additionally, it meets emergency expenses, and gives you the freedom to afford flagship products and services with flexible payment options such as EMIs. Corporate credit cards are a boon to companies as they provide a way to keep corporate expenses segregated from individual ones. Payment of dues is also easier for the employee, as the corporation directly pays the bill at the end of the credit period, or the employee may get reimbursed for the same. A corporate credit card offers transparency with regard to company expenses, and this leads to companies having a clear picture of corporate expenditure. The major downside of using a corporate credit card comes into play if you consider your credit score.
The Impact of Corporate Cards on Credit Scores
Credit scores are a representation of the creditworthiness or the financial health of an individual, and corporate creditworthiness tells you about the financial state of a company. Corporate credit cards may either negatively affect your credit score or may not impact it at all. Any spending you do by swiping your corporate credit card will not build up your credit score, since a corporate credit card account doesn’t show up as part of your own individual credit history. One of the advantages of a credit card used for corporate expenses is that you get to enjoy spending on dining and stays, as part of your professional life. You can also use the rewards and miles earned on such credit card payments, albeit only for professional purposes.
If you are a corporate employee and are about to be issued a corporate credit card, the card issuer may run a credit check against your personal credit history. This, of course, depends on the bank or finance company in question. For instance, American Express undertakes such policies. This may have a temporary negative impact on your score (if you have defaulted in your personal capacity or are in debt), but it is minimal. The new credit card account that is linked to your company will not show up as a part of your credit history file, as mentioned earlier. Late payments and any financial faults on the company’s part will not impact your own score as a consequence. Nonetheless, if you fail to submit an expense report to your company, or your company refuses to cover specific expenses, things change. If dues aren’t cleared within a six-month period (for most corporate credit cards), card issuers claim to report individual employees to relevant agencies keeping tabs on credit scores.
The advantages of holding a credit card are many, but it’s important to keep an eye on how you use them. You shouldn’t let your guard down in cases where your personal creditworthiness is affected negatively. Keeping your credit score high, or at least at a respectable level at 700 – 750 can be beneficial to you if you want to take a personal loan. If you do get a corporate credit card, it’s vital that you file expense reports on time, and make sure you use cards according to company expense policies. These need to be clarified before you get a corporate card.
An excellent credit card is the Bajaj Finserv RBL Bank SuperCard, giving you multiple uses. You can use this as your personal credit card, and variants like the Platinum Card for corporate use. The Bajaj Finserv RBL Bank SuperCard lets you afford any product when you pay in EMIs, and gives you cash on hand when you use it as an ATM card.