From personal assistants to CEOs, there’s a wide range of people that can benefit from employee credit cards. Discover your options and compare credit cards here.
Employee credit cards are designed to help keep track of work expenses and to simplify accounting, with benefits for both individuals and businesses. As an employee, this type of credit card allows you to separate your work and personal spending. Some cards also offer benefits such as rewards programs and complimentary insurance.
For businesses, employee credit cards can make it easier to keep track of spending across different departments and streamline accounting processes. Credit cards with perks may also be a way to offer extra value to employees. This guide outlines the different types of credit cards available to employees, how to compare employee credit cards and the key details you need to consider to help you choose an option that suits your needs.
What types of credit cards are available for employees?
Most employee credit cards are business or corporate credit cards assigned to specific employees. An individual may also be able to use a personal credit card for the spending they do as an employee of a company. We’ve outlined the key differences between these cards below:
Business credit cards
Business credit cards are designed to simplify work spending. With these cards, a business owner or company can assign additional cards to employees. These cards are linked to the main account and can be assigned individual spending limits from a centralised system. This structure allows businesses to keep track of spending across all departments and to streamline the expense claims process, potentially saving time and money.
Providing employees with business credit cards reduces the need for expense reports and reimbursement processes, as only business funds are being used. Business credit cards can also be linked to rewards programs, giving employers and employees the opportunity to earn points or frequent flyer miles for their spending.
In addition to these benefits, business credit cards can provide a range of extras including liability insurance, spending reports and compatibility with popular accounting software programs such as MYOB or Microsoft Excel. It’s also the business owner or company that applies for a business credit card for employees, which means individual credit lending criteria don’t apply for additional cardholders.
Personal credit cards
Employees may choose to use a personal credit card for their work spending. The main benefit of choosing this type of card for employee spending is that you can decide on the features that are most important to you. For example, if you want to save money on spending, you may choose a low rate or a low fee option, while if you want additional benefits, a rewards or frequent flyer card might suit your needs.
Note that individual application criteria and credit history requirements apply for this type of card, which means funds may be more limited. There could also be annual fees and interest charges that your employer won’t cover. In some cases, you may be able to claim tax deductions for these costs, but you will have to prove that you only used the card for work expenses and that you were not reimbursed for what you claim.
If you use a personal credit card for work spending, you will also be responsible for keeping your account in order. You will have to submit statements or expense reports to your employer in order to claim reimbursement for spending on your card. Other conditions may also apply, so check with your employer and your accountant if you are considering this option for employee spending.
Pros and cons for employee credit cards
- Keeps work and personal expenses separate
- Allows businesses to track and manage work-related payments for staff
- Potential tax deductions
- Personal liability and business liability account options available
- Reward options
- Restrictions on what you can use the card for
- Personal liability options could leave you accountable for any issues
- You may not be able to choose the business credit card you want
- Interest rates and fees may apply for personal credit card options
What to consider when comparing employee credit cards
If you’re in a position to choose a business credit card or a personal credit card for employee spending, it’s important to compare a range of factors to find the right option for you. We’ve outlined the key details to consider below.
- Standard rates and fees. If you’re responsible for managing your employee credit card, it’s important to consider the standard variable interest rates for purchases, cash advances and balance transfers, as well as the card’s annual fee (both for primary and additional cardholders). These features add to the overall cost of the card. Ideally, the benefits of the account should outweigh the potential costs of an annual fee or interest charges.
- Interest-free days. If you plan on using your employee credit card to free up your cash flow, pay attention to any interest-free periods available. Many personal and business credit cards offer up to a certain number of interest-free days for each statement period, as long as you pay your balance in full by the due date on your statements. This gives you a window of time when you can use the card without being charged interest, for example, when you’re waiting to be reimbursed for work expenses.
- Rewards programs. There’s a wide range of personal rewards credit cards that employees could use if they want to earn points for their spending. Many business credit cards also come with rewards programs, although employees may need to request that they be included in the program to earn points. Check the details and requirements for individual cards to find out what you need to do to take advantage of a rewards program.
- Complimentary extras. Many credit cards provide perks such as travel insurance, transit accident insurance and even business liability insurance. These benefits can add a lot of value to the card you choose, as long as you can actually use them. In the case of business credit cards that offer additional cards for employees, for example, some of the perks may only be available to the primary account holder. Check your card’s product disclosure statement, or ask your employer to find out if there are complimentary extras you can access with an employee credit card.
- Security features. Credit cards for employees often include 24/7 fraud monitoring services and liability insurance to help cover the cost of unauthorised transactions. There are usually specific criteria around these features, so make sure you know what is and isn’t covered before choosing a card.
- Foreign transaction fees. This charge is particularly important if you make a lot of international transactions for work. Most credit cards charge a fee of between 2% and 3.5% of the transaction value for transactions made overseas or online with an international merchant. While there are not currently any business credit cards advertising no foreign transaction fees, there is a range of personal cards that waive this cost. Either way, make sure you find out whether or not employees will be reimbursed for this type of fee.
- Cash advance fees. If you use your credit card for a “cash transaction” such as an ATM withdrawal or a gambling purchase, you will be charged a fee of 2% to 3.5% of the total transaction cost. Many credit cards also consider utility payments and government charges as “cash advances”, so make sure you consider this if you’re an employee or a business owner planning to use a credit card for these types of payments.
- Other fees. Credit cards may apply a range of other fees including late payment and overlimit charges, emergency card replacement fees and printed statement fees. Always check the product information tables or documents before you apply for a card so that you can find one that’s affordable for you based on your needs.
Tips for using an employee credit card
Using an employee credit card comes with a range of responsibilities. Keep the following tips in mind to make sure that this type of card works for you.
- Stick to work spending. If you have a credit card for work, it’s essential that you only use it for business expenses. Otherwise, there could be legal implications and other issues if it’s misused.
- Check what transactions are approved. If you’re unsure of whether or not a transaction will be considered as “work spending”, ask your boss or the appropriate work colleague before you use your card so that you know the cost will be covered.
- Take note of the statement due date. Even if you’re not responsible for paying the balance of the account, make sure you check the due date to help reduce the risk of late payments and additional charges.
- Track your spending. Keep an eye on your account spending so that you can make sure you have enough credit available for all your transactions. If you find you’re regularly maxing out the card, you may want to request a credit limit increase.
- Provide your frequent flyer details. If you’re an employee with a business frequent flyer credit card option, you will need to provide your membership details for the frequent flyer program so that you can earn rewards points for your spending.
- Read the Product Disclosure Statement and any related work documents. Before you start using an employee credit card, make sure you read through its Product Disclosure Statement (PDS) and any work documents that could impact on your card use. This will help ensure that you follow the correct processes and get the most out of the card.
Credit cards can help both employees and employers keep track of work expenses and simplify the accounting process. Now that you know more about employee credit cards, you can compare a range of options and find one that really suits your needs.
Frequently asked questions
I’m an employee. Can I apply for a business credit card?
Generally, employees will not be eligible to apply for a business credit card for work, as the lending criteria are different. For example, most business credit cards require you to be the owner, partner or director of a company and to have a valid Australian Business Number (ABN). However, you may be able to suggest a business credit card to your employer, or apply for a personal credit card instead.
I’ve just taken a job where I’m provided with an employee credit card, but I have poor credit history. Will this affect my ability to use the card?
No. If you’re provided with a business credit card, it will usually be as an “additional cardholder”. This means that while you can use the account and may even have your name printed on the card, the business owner or company that applied for the card (and is the “primary account holder”) will be responsible for managing your account as an additional cardholder. As a result, features such as the credit limit will be based on their information and decisions, not yours.
Can I earn frequent flyer points with an employee credit card?
This depends on the credit card. There is a wide range of personal credit cards that earn frequent flyer points, and many business credit cards provide this option as well. However, some business frequent flyer cards may only earn points for the employer. If you’re an employee who wants to earn frequent flyer points, you may want to check out our guide to business frequent flyer credit cards for employees.
Comparison of Business Credit Cards
Rates last updated October 25th, 2016.
- American Express Gold Business Card
10,000 bonus Membership Rewards points offer has been extended.
February 4th, 2016
- Commonwealth Bank Business Platinum Awards Credit Card
First year annual fee waiver has been extended until 31 October 2016.
September 2nd, 2016
- American Express Platinum Business Card
100,000 bonus Membership Rewards points offer changed to 150,000 which is valid until 30 Nov 2016
October 4th, 2016