How Employee Credit Cards Work

Weighing the Pros and Cons of Employee Credit Card Use

Employee makes credit card touch transaction at a store

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Employee credit cards can provide an easy-to-use method of payment for workers to make business purchases. These credit cards give employees access to funds in the business account when they are added as authorized users. Once authorized on the account, they can then use the card for approved business purchases—such as supplies, equipment, and travel expenses—that can be easily monitored. 

Employee credit card use can be beneficial, though it may not be the best option for all businesses depending on their size and budget. Some businesses can benefit if they require the use of a credit card for daily tasks. Others, however, might consider these credit cards an added expenditure due to fees and interest, especially if they are rarely used.

If you’re considering employee credit cards for your business, it’s important to take a look at some of the basics, compare the pros and cons of using business credit cards, and consider your options before deciding if they're right for your business. 

How Employee Credit Cards Work

Authorizing employees on your business credit card account can make it easier to conduct business, especially when frequent purchases are necessary to run your operation. Employees are able to use a credit card that’s linked to the business account for these kinds of job-related expenses, and as authorized users, employees can take responsibility for such tasks as credit card activation, viewing transactions, and resolving fraud issues. 

With this access, employees have the ability to handle purchases entirely on their own. For example, if they need to travel for meetings, having an employee listed as an authorized user makes it easier for them to cover expenses such as airline tickets, hotel stays, and meals. This way, employees don’t have to cover their own expenses and wait to be reimbursed. Their expenses are then added to the business account and are considered operating expenses of the business. 

Another example of when employee credit cards may be used is for those who work in sales. Since sales representatives and consultants often spend most of their day meeting with clients, they usually require a form of payment in order to pay for things on the go, such as meals provided for clients and gas.

There are different options to choose from when deciding on a business credit card. Some credit cards offer rewards programs, while others offer a 0% annual percentage rate (APR), meaning you don’t have to pay any interest on purchases made within the specified timeframe. You’ll need to compare rates and perks to decide which credit cards offer better benefits to fit your business needs.


If you are a small business owner or freelancer looking to open a new business credit card account, make sure to monitor your personal credit, as it’s almost always used to determine your business creditworthiness, even if you’re using an employer identification number (EIN). 

Types of Business Cards

Depending on the needs of your business, there are different types of business cards that employees can use to make business purchases. Some businesses use a small business credit card for all purchases, while others may use a combination of procurement cards and travel cards as well. 

Small Business Credit Cards 

Small business cards are ideal for businesses with one or more employees to pay for common expenses like office supplies and equipment. Interest rates and annual fees can vary depending on the card issuer, but many offer rewards or cash-back programs for expenses like travel. 

Procurement Cards

Also called P-cards, procurement cards are similar to consumer credit cards but differ in the sense that the funds are not borrowed. Because these cards are required to be paid in full by the account holder each month, they don’t incur interest. This type of card is also known as a purchase card. Travel procurement cards are also sometimes used by businesses solely for travel expenses. 

Prepaid Cards

Businesses also have the option to use a prepaid card. This card allows employees to have access to funds but does not require a credit check since the funds are paid for in advance and are not linked to a bank checking account. 

Pros and Cons of Employee Credit Cards

  • Ability to track employees' purchases

  • Authorized users have access only to their own purchases

  • Managers can place limits on spending

  • May offer rewards benefits

  • Business owner’s good personal credit necessary

  • Possible misuse of business cards

  • Credit card fees and interest

  • Funds may not be readily available

Pros of Employee Credit Cards Explained

  • Ability to track employees’ purchases: By using employee credit cards, companies can track purchases made by the employee. This allows the business to track their expenses quickly and easily without waiting for receipts or having to take extra steps to reimburse employees for business expenses.
  • Authorized users have access only to their own purchases: Authorized users can easily access their purchases, but they will not have access to the main account and overall spending by the company. 
  • Managers can place limits on spending: With employee credit cards, managers can set limits for those authorized on the account. This allows companies to stay within budget, providing only the necessary funds for the employee. 
  • May offer rewards benefits: Some credit cards offer the ability to earn points on certain purchases as well as auto rental insurance.   

Cons of Employee Credit Cards Explained

  • Business owner’s good personal credit necessary: Most business credit card issuers require a personal guarantee, which means small business owners must provide their Social Security number and personal credit history to qualify. 
  • Possible misuse of business cards: By giving an employee access to funds, there’s the possibility of misuse for personal purchases, which can in turn affect a small business owner’s personal credit score. 
  • Credit card fees and interest: Some business credit cards may incur annual fees and foreign transaction fees, and carry high interest rates. Consider whether these fees will be worth the benefits or opt for cards with lower fees and rates. 
  • Funds may not be readily available: After approval, new business card users may have to wait several weeks to receive their credit cards in the mail before being able to make purchases on the account. 

Should You Get Credit Cards for Your Employees?

Deciding whether you should authorize employees on your business credit account comes down to the needs of your business and preferences for conducting business. Different industries may see more of a need for credit cards compared to others. Some businesses may benefit greatly from authorizing employees on their credit cards, while others may find it easier to use other methods for business purchases, like prepaid cards or reimbursements. 


Make sure to calculate the fees required for the primary account as well as the additional authorized users. Some credit card companies offer free additional employee cards, which may come in handy when adding several employees to a card.  

When Employee Credit Cards May Be a Good Fit

  • There is a consistent need for business-related purchases.
  • Employees frequently travel to conduct business.
  • There is a need to better manage cash flow.
  • Rules are set in place regarding misconduct with employee credit cards.
  • You can benefit from a credit card rewards system as you often spend on purchases in certain categories (i.e. travel purchases and dining out).

When Employee Credit Cards May Not Work

  • Business expenses are not frequently required.
  • No rules are set in place for misconduct regarding employee credit cards.
  • Prior issues with credit card security and employee spending habits.

Frequently Asked Questions (FAQs)

How do you prevent an employee from running up the company credit card?

Setting rules in place at the beginning, offering training on how to use a business credit card, and informing employees that purchases are tracked can prevent them from using the card for personal use. If employees are aware of the rules and expectations, they likely won’t take advantage of the credit card, knowing they can be reprimanded or terminated if the card is misused.

How do you add an employee to a business credit card?

Businesses can easily add authorized users to their business account by contacting their bank or logging into their account. They’ll need to provide the name and contact information of the authorized user and decide on a spending limit. These additional employee cards are often free. 

How do you reimburse an employee who paid for something with a personal credit card?

Companies may reimburse employees for business-related expenses if a purchase is recognized by the company as a necessity for conducting business. Employees typically must fill out a form and provide receipts or proofs of purchase. They are usually paid the same way they receive their paychecks, with either an additional payment or an adjustment to their pay.

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  1. U.S. Small Business Administration. "Business Credit Card Offers: 5 Things You Should Look Out For."

  2. Capital One. "Spark Business Credit Card Questions."

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