How Employee Credit Cards Work & Best Practices to Follow
This article is part of a larger series on Best Small Business Credit Cards.
Employee business credit cards allow your employees to purchase goods and services online or in-store on behalf of the company. These are available as small business credit cards, corporate credit cards, or prepaid business cards and have the same annual percentage rate (APR), rewards structure, and benefits as the primary card. Most issuers typically don’t charge an additional fee per card.
The primary cardholder, usually the business owner, has the ability to monitor transactions and set spending controls that help protect the business from credit card misuse or abuse. Creating an internal credit card policy will help clarify rules on usage and liability for your team. Read our article on how to create a corporate credit card policy agreement to learn more.
Types of Employee Credit Cards at a Glance
Small Business Credit Cards | Corporate Credit Cards | Prepaid & Debit Business Cards | |
|---|---|---|---|
Best for | Startups and entrepreneurs looking to earn rewards and finance everyday business expenses | Corporations with annual revenue of at least $4 million and projected credit card charges of $250,000 or more annually | Business owners who have cash on hand or prefer no credit check |
Eligibility | All small businesses | Corporations, such as limited liability companies (LLCs), C corporations (C-corps), and S corporations (S-corps) | All businesses and individuals |
Maximum Credit Limit | $10,000 to $50,000-plus | Typically $50,000 or more | N/A |
Regular APR | 9.99% to 34.99% | Most corporate cards are charge cards, which require balances to be paid in full each month | N/A |
Annual Fee | $0 to $695-plus | $0 to $595-plus | Monthly fee per card and setup fee |
Repayment Term | Monthly | N/A; transactions are deducted directly from the card’s load balance | |
Late Fee | 2% to 4% of balance | N/A | |
Type of Credit | Revolving | Not a credit card; works like a debit card | |
Minimum Credit Score | Good | N/A | |
Age of Business | No requirement | At least 2 years | N/A |
Minimum Annual Revenue | Most issuers don’t have a minimum requirement | At least $4 million | N/A |
Personal Guarantee | Yes for most | No | |
The type of employee credit card that’s right for you and your business depends on the number of cards you need, your business’s annual revenue, and whether you want to avoid personal liability.
Corporate credit cards are generally reserved for larger businesses while firms of any size can take advantage of small business credit cards and prepaid business cards. Typically, there’s no limit to the number of additional employee cards you can request from your issuer—except for certain issuers and small business credit cards, which usually have a limit of around 100 cards.
Small Business Credit Cards for Employees
Small business credit cards are a great choice for businesses of all sizes needing easy financing. The best ones offer rich rewards, relatively low interest rates, and no annual fees. There are also cards designed for owners with fair or bad credit and for new businesses with no credit history.
| PROS | CONS |
|---|---|
| Offer rewards and sign-up bonuses | Typically require a personal guarantee |
| Don’t charge additional fees for employee cards | Need a personal credit check on the business owner |
| Come with business tools that let you monitor employee expenses and set limits | |
Our Small Business Credit Card Recommendation
Ink Business Unlimited® Credit Card
BEST FOR:
Those who want fixed-rate 1.5% cash back on all purchases
Intro APR
0% Intro APR on Purchases
Regular APR
18.49% - 24.49% Variable
Annual Fee
$0
Credit Needed
Good - Excellent
- Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening
- Earn unlimited 1.5% cash back on every purchase made for your business
- No Annual Fee
- Redeem rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®.
- Earn rewards faster with employee cards at no additional cost. Set individual spending limits for greater control.
- Round-the-clock monitoring for unusual credit card purchases
- With Zero Liability you won't be held responsible for unauthorized charges made with your card or account information.
- 0% introductory APR for 12 months on purchases
- Member FDIC
Pros
- With interest-free financing option on purchases
- Fixed unlimited cash back on all purchases
Cons
- Does not have interest-free financing option on balance transfers
- Charges high foreign transaction fees
- Auto rental collision damage waiver: You can decline the company’s collision insurance and charge the entire rental cost to this card.
- Travel and emergency assistance services: Call the Benefit Administrator for legal and medical referrals or other travel and emergency assistance.
- Purchase protection: You can ensure that your new purchases are covered for 120 days against damage or theft up to $10,000 per claim and $50,000 per account.
- Zero liability protection: Chase will not hold you responsible for unauthorized transactions made with both your card and your account information.
- Cellphone protection: Receive up to $1,000 per claim in cellphone protection against covered theft or damage for you and your employees included in your monthly cellphone bills when using your card to pay for it. This applies for a maximum of three claims within a 12-month period and will charge a $100 deductible per claim.
Intro APR
0% Intro APR on Purchases
Regular APR
18.49% - 24.49% Variable
Annual Fee
$0
Credit Needed
Good - Excellent
- Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening
- Earn unlimited 1.5% cash back on every purchase made for your business
- No Annual Fee
- Redeem rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®.
- Earn rewards faster with employee cards at no additional cost. Set individual spending limits for greater control.
- Round-the-clock monitoring for unusual credit card purchases
- With Zero Liability you won't be held responsible for unauthorized charges made with your card or account information.
- 0% introductory APR for 12 months on purchases
- Member FDIC
Pros
- With interest-free financing option on purchases
- Fixed unlimited cash back on all purchases
Cons
- Does not have interest-free financing option on balance transfers
- Charges high foreign transaction fees
- Auto rental collision damage waiver: You can decline the company’s collision insurance and charge the entire rental cost to this card.
- Travel and emergency assistance services: Call the Benefit Administrator for legal and medical referrals or other travel and emergency assistance.
- Purchase protection: You can ensure that your new purchases are covered for 120 days against damage or theft up to $10,000 per claim and $50,000 per account.
- Zero liability protection: Chase will not hold you responsible for unauthorized transactions made with both your card and your account information.
- Cellphone protection: Receive up to $1,000 per claim in cellphone protection against covered theft or damage for you and your employees included in your monthly cellphone bills when using your card to pay for it. This applies for a maximum of three claims within a 12-month period and will charge a $100 deductible per claim.
If your business is a startup, you may want to consider Chase Ink Business Cash®, our top-recommended business credit card for startups. It has no annual fee and lets you earn up to 5% cash back, which you can redeem as a statement credit or for gift cards, travel, and merchandise through Chase Ultimate Rewards®.
On top of that, you can take advantage of 0% APR for the first 12 months of card ownership. You can also receive a $900 bonus cash back when you spend $6,000 within the first three months.
You may check out our guide to the best small business credit cards for options.
Corporate Credit Cards for Employees
Corporate credit cards are best for large businesses with at least $4 million in annual revenue and $250,000 in yearly credit card expenses. Most corporate credit cards are charge cards, which means that the balance is due in full each month, so they don’t come with APRs. They offer the most robust controls, account management, and reporting features of all employee card types. Plus, the owners don’t need to provide a personal guarantee.
| PROS | CONS |
|---|---|
| Robust controls and account management features | Balance is due in full each month |
| Higher credit limits compared to most small business credit cards | Small businesses won’t qualify |
Our Corporate Credit Card Recommendation
Apply for One Card from Capital One® now
The One Card from Capital One® is a corporate-liability card that offers rewards on your payments—however, the cash back rate is not disclosed. On top of that, you can enjoy 1% to 4% savings on more than 30,000 qualifying businesses with Mastercard Easy Savings®, making it one of our leading purchasing cards.
You’ll also have access to dedicated customer service, user-friendly technology, and business tools that let you manage expenses and access expense reporting conveniently. You can also integrate your transactions easily with accounting software, including QuickBooks and Quicken.
Prepaid & Debit Business Cards for Employees
Prepaid and debit business cards limit your risk because you’re not borrowing money. They are best for business owners who have plenty of cash on hand and either can’t qualify for or don’t want a small business or corporate credit card.
To use a prepaid or debit card, you need to fund the card with cash, and only then can employees spend the funds available on the card. This means your business doesn’t incur debt for using the card, so it doesn’t require a personal guarantee or a credit check. Head over to our guide to the best business prepaid cards to see your options.
| PROS | CONS |
|---|---|
| Your company will not incur debt | You need to have cash on hand to use the card |
| Personal credit check and personal guarantee are not required | They may not be ideal for businesses with large expenses because of daily spending limits and load limits |
| They are relatively easier to apply for | Most issuers charge additional cardholder fees |
Our Prepaid & Debit Business Card Recommendation
Apply for Emburse Spend Card now
Emburse Spend Card lets you earn an unlimited 1% cash back on your purchases. It doesn’t charge monthly fees or local transaction fees, so it’s essentially free to use. You can load your card up to a maximum of $100,000—if your business has higher spending needs than that, you may request an increased load limit, subject to additional review and approval.
You can access a streamlined expense management system to approve or reject transactions made by your employees. The system also allows you to track real-time expenses and categorize vendors. While the system is free to use if your company has fewer than 100 employees, it has a premium version for those who need more than 100 employee cards.
Best Practices for Using Employee Credit Cards
In addition to creating a company credit card policy and having employees sign the agreement, the following best practices when using employee credit cards can also limit your risks and improve your process:
- Limit card access: Only issue employee credit cards to those who will frequently need to spend money on behalf of the company. Employees with occasional business-related expenses are best reimbursed instead of being given a credit card.
- Set up account restrictions: Employee credit card issuers offer many tools to help you limit your risk. Take advantage of the ability to set individual card limits, such as spending caps and restrictions on spending categories. For example, your office manager needs the ability to purchase office supplies, not fuel or dining.
- Ensure employees understand the rules: Your employee credit card policy should spell out clear rules about the allowed usage, limits, and reporting requirements. Discuss the terms of the policy with them in person and address any questions they may have.
- Turn on alerts: Card issuers allow you to set text alerts based on card spending. Set an alert for spending over a certain threshold or suspicious activity.
- Ask for receipts: Most employee credit cards limit the need for reimbursements. However, continue the practice of requiring receipts and matching them up to your monthly billing statement to ensure all charges made on the card are well accounted for.
- Review your account: Limit the risk of employee fraud or abuse by regularly reviewing account transactions prior to receiving your monthly bill. Many employee credit card issuers allow you to track individual spending online so that you can trace expenses back to each employee.
Frequently Asked Questions (FAQs)
The maximum limit varies per small business credit card issuer, but it’s somewhere around 100 cards. On the other hand, corporate credit cards typically have no restrictions on the number of employee cards you can request. For prepaid cards, your fees will depend on how many cards you need—the more cards you add, the higher your fees will be.
Among the three types of employee cards (small business credit cards, corporate credit cards, and business prepaid cards), debit and prepaid business cards are the easiest to apply for because issuers won’t need to perform a credit check or need a personal guarantee from the business owner. However, you need to have cash on hand to use prepaid business cards, and they typically come with higher costs, especially if you need to add more cards.
It depends on the type of company card you choose. A small business credit card can affect both the owner’s personal and business credit, as most issuers report transactions to personal and business credit bureaus. If you don’t want your business transactions to affect your personal credit, consider one of the leading business credit cards that don’t report to personal credit bureaus.
Meanwhile, corporate credit cards may affect your employees’ personal credit if you establish individual or joint liability to repay the charges. However, prepaid cards won’t affect personal or business credit.
Most business credit cards may require you to provide a personal guarantee, which will ultimately increase your personal risk and liability. In addition, giving credit cards to employees means you’ll have more cardholders and corresponding expenses to monitor. Should you fail to keep your business expenses under control, you run the risk of harming your personal and/or business credit.
Bottom Line
Understanding how employee credit cards work and what their features are could help you streamline your business’ expense process and control your employees’ spending on behalf of the company. Using employee credit cards can also help you monitor and restrict employees’ use of company funds. Be vigilant, however, as some types of employee credit cards expose you to personal risk in case of employee theft, unauthorized transactions, or late or missed payments. Also, be sure to choose a card that offers valuable benefits to your business.
