Finance

You have received a corporate credit card from your employer. The question that runs through your mind is whether you carry its liability personally. Of course, you assume (quite rightly in your mind) that a credit card offered by your business house cannot have any impact on your credit rating. Gerri Detweiler, the famed credit expert discusses two mails that dealt with harrowed women who may have to pay on behalf of their defaulting employers.

It would not be prudent for the consumer to go for the credit card offers where they are offered $10,000 as low interest loans all of a sudden. Such low interest would be much higher than the normal interest in the market.

The Two mails

The first mail was from a woman who had just shifted all stops and gears, to a different state. She added that a senior sales position was beckoning her and the call had to be respected. So far so good but the problem actually began when her reporting head asked her to tackle all her relocation costs through the corporate card she had been issued by the company. Unfortunately, the job did not come out as planned and now for the special revelation- she just got $5000 on a credit report as a charge-off. For the starters, dear friends, a charge-off is considered as bad debt by the lenders and it has a grievous impact on your credit report.

The second mail was from a woman who has been working on contract for a company that just got into monetary problems. Her boss informed her all of a sudden to cease any further usage of the credit card, citing liquidity reasons. Now, this woman has been receiving phone calls by the minute from lending agencies. Head pulled forward in despondence; she asks the dreadful question- will it have an impact on my credit report?

What may happen to you in such instances may depend a lot on the kind of card you are carrying. Let us read a little about it.

Two Types of Cards

Entirely the employer’s onus

Truth be said, there are two kinds of credit cards. In the first case (the gung-ho case), the employer directly receives the bill and carries the full onus of the payment. Employee just happens to be an authorized user and can use the card without any liability on his head. Of course, there is an upper ceiling they cannot breach but let us not get into it.

Employees may be partially responsible

Next, there is a card that holds an employee partially liable to the payments. In such an event, the employee fills the needed forms and is duly paid by the employer. The employee then pays the card issuers in this case. So the bottom-line reads: the employee makes the payment himself in the second case whereas the employer takes it up in the first case. Now it can be successfully argued that the latter kind of cards can impact an employee’s personal credit report.
Capital One may just be a rarity

Capital One, as an exception to the general rule being followed, stated that it did not hold the employees responsible at all for employer defaults. They unequivocally suggest that no charges are levied on the employees in any given circumstance. All the other issuers gave me a kind of information that may not give heart to the two ladies who mailed me. In essence, they said that they dealt in both kinds of cards. Make your own conclusions.