Should people start using their personal credit cards for business?
A recent issue of Cardbeat, a report published by Auriemma Consulting Group, found that just more than one in five (21 percent) credit card users make business-related purchases with their personal credit cards, which is a big drop from a few years ago when 62 percent of cardholders were using their personal credit cards to make business purchases. In a press release, Auriemma makes the argument that credit card companies should be encouraging people to make business-related purchases with their credit cards. It would be good news for banks, they say, because cardholders will end up spending more than they normally would and will almost certainly pay the balance on the credit cards since companies tend to reimburse cardholders for business-related expenses.
I can put forward a counter-argument, though. Not using a corporate card for personal expenses might help people stay out of trouble with their companies.
A lot of people wind up in the news for putting personal expenses on their business credit cards and getting in trouble -- even when they do intend to reimburse their company. I'm not quite calling for the eradication of credit cards, but there's no question that a lot of people would probably be better off just using their personal credit cards for work, instead of being given a company card.
In just the last month alone, look at some of the incidents where people used their business credit cards to make personal purchases.
And let's try to ignore that all three examples below are politicians. It didn't even hit me until after I wrote this up. I've seen plenty of examples over the last year of school principals, businessmen and various corporate folk making similar blunders. Still, it is interesting that politicians seem to have a lot of problems separating their personal and business credit cards. Anyway, here we go:
- In Margate, Fla., it was recently learned that Vice Mayor David McLean spent almost $1,400 on his corporate credit card, charges that included boarding his dog, grocery shopping and taking some residents to bars (which is, you have to admit, a good way to get people to vote for you -- you have to give him that). As the South Florida Sun Sentinel reported, McLean paid the charges back, even though he insisted they were city-related businesses (reasoning, for instance, that when you're traveling out of the city for the city's business, you have to put your dog somewhere).
- City councilman Al Maghnieh in Windsor, Ontario, has been in hot water lately since the news broke that he used a corporate credit card for numerous personal expenses. Maghnieh, who was on the Windsor Public Library board, used his library-issued credit card to travel to Chicago, which included expenses for meals and massages for him and his girlfriend, alcohol, dinners at local restaurants and so on, to the tune of $8,400. He did pay back the expenses, he told the Windsor Star, but he had been warned by the library's CEO not to use the card for personal expenses and did anyway. Maghnieh admitted to the Star that it was "foolish, stupid, careless," saying, "I used it as if it was my own card."
- The most prominent example surfaced about a month ago when it was revealed that Republican Senator Marco Rubio had been using his Florida GOP credit card to buy personal items. He always paid for those personal items out of his pocket, he has stressed to the media, telling FOX News Channel's Bret Baier that "at the end of every month, we would get those statements. We would see what was on there that was party-related, and the party would pay that. If it wasn't party-related, I would pay that directly to American Express." But he added: "Now, obviously, in hindsight, it looks bad, right? I mean, why are you using a party credit card at all? Well, some of these expenses were because a travel agent had the number, you know, the credit card number, and they billed it to that card instead of the other card. Sometimes, it was just a mistake, you know, literally just reached for the wrong card."
By mentioning these three people using their travel rewards credit cards for personal use, I'm not trying to embarrass them more than they already are. I'm just pointing out that the idea of credit card companies urging people to use their personal credit cards for business-related expenses probably has some merit. It might get more employees in less trouble with their employers, and employees would reap the benefits of more rewards on their own cards. Plus, if it became a regular thing for more people, provided the company reimbursed them in a speedy manner, of course, it might help some cardholders improve their credit.
That said, I don't see Auriemma Consulting Group's ideas going very far unless credit cards start expanding people's credit limits. After all, it's hard to put a $900 airline ticket for a business trip on your card if you max out after $600 -- and that may be why employees -- and politicians -- are getting in trouble in the first place.