Most credit card companies allow cardholders to add one or more authorized users to their credit card accounts. The authorized user receives their own card, allowing them to make purchases without the primary cardholder present. Business credit cards have similar policies, where the business owner or primary cardholder can order additional cards for employees to make purchases on behalf of the business.
A good example is the American Express Blue Business Cash™ Card, which allows up to 99 authorized users (see rates and fees) per account. In most cases, these authorized user cards come with the employee's name printed on them.
There are pros and cons to having authorized users on company credit cards, so it's important to understand whether adding one is right for your business. Here's what you need to know about adding authorized users to a company credit card.
Remember to set spending limits
As a business owner, you're taking on some additional risk when you add an employee to your business credit card. Authorized users are given permission to make purchases with their employee cards; however, the main account holder is still responsible for all charges that occur and for paying off those charges at the end of the credit card billing cycle.
It's important to set spending limits on authorized user business credit cards, as this protects the main account holder from charges being racked up without their approval or outside of their budget. Most issuers allow the account holder to set employee credit limits online and change them if an employee needs to make a large purchase.
Benefits of adding an authorized user to a business credit card
Employee credit cards can allow businesses to operate more efficiently. If the primary account holder isn't available, an employee can still complete necessary purchases. The business owner can manage expenses without the employee having to submit receipts and obtain reimbursem*nts after the fact.
Adding authorized users to a company credit card can also make it easier for employees to look after their own business travel. Employees can use their cards to book their own flights, hotels and car rentals. Usually, card benefits — such as travel insurance, car rental insurance and purchase protection — are extended to authorized users.
For example, the various travel and purchase protections offered by the Business Platinum Card® from American Express are available to all cardholders on the account.
*Eligibility and benefit level varies by card. Terms, conditions and limitations apply. Visit americanexpress.com/benefitsguide for details. Policies are underwritten by New Hampshire Insurance Company, an AIG Company.
Daily Newsletter
Reward your inbox with the TPG Daily newsletter
Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts
If your business credit card earns rewards, you'll earn points whenever your employees make purchases with their cards. This is because the accumulated rewards belong to the business, not its authorized users.
Downsides to adding authorized users to a business credit card
Despite the many benefits, there can be drawbacks to companies issuing authorized user cards to employees. Here's a closer look at some potential disadvantages:
Fees
Adding an authorized user to a business credit card can be costly. While some business credit cards, such as the Capital One Venture X Business card, allow authorized users to be added at no additional cost (see rates and fees), others charge an annual fee for authorized users. For instance, The Business Platinum Card® from American Express charges $350 for each additional card (see rates and fees).
Related: Best authorized user credit cards
Account management
Authorized users can make account management more complicated for a business. For example, a situation could arise where the business owner wants to make a large purchase, but previous transactions conducted by one or more employees may prevent them from completing the purchase due to insufficient available credit. When managing authorized users on a company card, constant communication about the card's use should be discussed to avoid such pitfalls.
Related: Best apps for money management
Financial responsibility
Ultimately, businesses are responsible for all charges on their credit card accounts, including authorized user transactions. Even if a business owner sets limits on their employees' cards, irresponsible activity or unapproved transactions are the business' responsibility in the eyes of the credit card issuer.
Credit score
While a business credit card is usually opened using a company's EIN, it may appear on the business owner's personal credit report. If employees mismanage the account, this can affect the business owner's credit score.
Additionally, late or missed payments can also show up on an employee's personal credit if their social security number was obtained to be added as an authorized user, though it's usually not the case.
Related: Business credit card impact on credit score
Bottom line
Adding an authorized user to a company credit card can benefit both the business and its employees. Business owners can easily manage expenses, earn rewards on employee purchases and limit how much each employee can spend.
Employees are covered by certain card benefits, such as travel insurance and other protections when using their cards for business purposes.
Remember that the business is ultimately responsible for all credit card transactions, including authorized user purchases. For that reason, you should always keep track of employee spending to ensure you don't become liable for incorrect usage.
For rates and fees of the Amex Blue Business Cash, click here.
For rates and fees of the Amex Business Platinum, click here.
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
