How to create an employee credit card agreement

Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.

What is an employee credit card agreement?

An employee credit card agreement is a document that clearly outlines the guidelines for using your company’s corporate cards. This includes rules like what types of expenses can be charged to the card and the process for filing expense reports.

Giving your employees corporate cards eliminates the need for reimbursements, but employees are typically still required to track their expenses and keep receipts. Such an agreement states these rules in writing.

Why companies have credit card agreements

Companies put credit card agreements in place to make sure it's clear which business expenses are authorized and which aren't. This helps employees know what they can purchase on their card and avoids the risk of unauthorized spending or overspending.

Additionally, these agreements often detail the procedures for reporting expenses, which is crucial for accurate financial recordkeeping and compliance with tax regulations.

What is a cardholder agreement?

Separate from a company's internal credit card policy is your business credit card's cardholder agreement.

A cardholder agreement is a legal document that outlines the terms and conditions of your credit card account. For your business credit cards, you should read these terms to understand the interest rate and how minimum balances are calculated.

What to include in an employee credit card agreement

A comprehensive employee credit card agreement should include an overview, eligibility criteria, usage guidelines, reporting procedures, consequences for misuse, and card deactivation steps.

1. Overview

The overview section explains what this agreement is and why it’s required. It should also have the effective date and emphasize that it’s a binding agreement once signed by both the employee and an authorized company representative.

2. Eligibility criteria

Who is eligible for an employee credit card and what’s the criteria for their approval? Many companies only offer this service to certain departments, like sales or purchasing.

Clarify the eligibility criteria in your credit card agreement so employees know they may no longer be eligible if they leave their department. You might also decide to run a credit check before issuing cards, in which case you should let your employees know in this section.

3. Usage guidelines

This is the section where you can define which purchases are allowed on the cards. You can also include spending limits and authorized expense categories, though that’s tough to enforce without expense automation. Be specific here so that there’s no room for misinterpretation.

4. Reporting procedures

If you think asking your employees to get receipts for business charges on their personal credit card is difficult, wait until you require it for the employee credit card you give them. Make sure you include a mandatory receipt collection and expense report clause in the agreement. Enforcing it may be difficult, but you’ll need to have it.

5. Consequences for misuse

What happens if the employee doesn’t follow the rules for using their employee credit card? The usage guidelines can be found in the agreement. The “consequences” section should provide details on what happens if employees don’t follow those rules. The consequences for noncompliance could range anywhere from losing the card to termination of employment.

6. Card deactivation steps

Employees sometimes leave the company or change departments. Write out card deactivation procedures for these scenarios. This is also a good place to add a “safety and security” section that explains what the employee is responsible for if they lose their card and don’t report it. That requires a card cancellation and a reissue if warranted.

Employee credit card agreement template

These are the guidelines your employees will follow when using the corporate cards distributed by your company.

Here’s a template you can modify for your own corporate credit card use agreement:

EMPLOYEE CREDIT CARD USE AGREEMENT

This Employee Credit Card Use Agreement (“Agreement”) is between _______________ (“Company”) and _____________________________ _____________________________.

Employee Name (Print) Credit Card Number (exactly as shown on card)

I, the undersigned, acknowledge receipt of the above-listed credit card issued by the Company (“Card”) and affirm my information is accurate. By signing this Agreement, I agree to adhere to the following terms:

1. The Card is provided exclusively for professional expenditures sanctioned by the Company. Personal expenses and unauthorized or illegal use of the Card are strictly forbidden and may result in disciplinary actions, including but not limited to, termination of the card or termination of employment.
2. I agree that my usage of the Card may be monitored and audited by the Company. I have no expectation of privacy in regards to any transactions made using this Card. In case of any misuse, I am responsible for the full amount of the unauthorized charges along with any additional fees incurred, and agree to reimburse the Company for these costs.
3. I will promptly submit detailed and accurate expense reports for all transactions made with the Card, following the Company's standard procedures for expense reporting. Failure to provide these reports in a timely manner will result in the transactions being considered personal in nature, obligating me to reimburse the Company for these amounts.
4. I agree to return the Card immediately upon management's request or upon termination of my employment, for any reason. Should I choose to revoke this Agreement, I will cease using the Card immediately and return it along with a written notice of revocation. I understand that I am responsible for any charges incurred until the Card is returned, even after the revocation of this Agreement.
5. I will promptly report any loss, theft, or suspected unauthorized use of the Card to the appropriate authority within the Company. I agree to fully cooperate in any investigation relating to the Card's misuse, loss, or theft, and to assist in the recovery or security of the Card if necessary.
6. I understand that any changes to my contact information, including address or phone number, must be promptly communicated to the Company to ensure accurate and timely correspondence regarding Card-related matters.

Employee Signature: _____________________

Disclaimer: This template is provided as a general guide for informational purposes only. It is not legal advice, nor does it establish any form of attorney-client relationship with Ramp or the creators of this document.

We recommend that you consult with your own legal counsel to review and customize this template for your specific needs and to ensure its compliance with applicable laws and regulations prior to its use.