Does a business card's guarantor own its rewards points?
Ask a question.
Dear Your Business Credit,
I am the guarantor for an American Express Small Business account in the name of the small business. Who legally owns the rewards points accumulated? Thanks! -- Larry
According to American Express's terms and conditions for the Membership Rewards Points program, no one actually owns them.
"Points are not your property," the document says. "You can't transfer points to any other person or program account. Additionally, points can't be transferred by operation of law, such as by inheritance, in bankruptcy or in connection with a divorce."
But what I think you are really asking is who gets to use the points and cash them in. I called American Express's customer service team to ask about this because I happened to be thinking about getting a business card from American Express and had a similar question.
What I was told is that the cardholder -- the person whose name is on the card -- gets to use the points. As you probably know, a guarantor agrees to pay the debt on the card if the primary cardholder defaults. It's similar to a being a co-signer, though the bank must jump through more hoops to collect from a guarantor than from a co-signer.
If you are the guarantor but your name is not on the card, then you do not get to use the points. Assuming the primary cardholder has issued additional cards on the account, he gets to use the points from those additional cards or can opt to let the people holding the additional cards use the points. This is not a law, but it reflects the rules of the American Express Membership Rewards program, the representative told me.
If you are the guarantor and have an additional card, asking the primary cardholder to assign the points to you would seem to be a fair request. If you have a personal American Express card and rack up points on that card, too, you can combine the points from both cards to redeem them for rewards, the rep says.
That said, there are pros and cons for the company in allowing you to keep all of your points. Some businesses find that letting employees keep the points can build a lot of good will. And if you are vacation-deprived, as many small-business employees are, and you're more likely to take a much-needed break if you can redeem points to pay for it, then keeping the points could be smart not just for you but for the company.
But the owner may decide the points are more valuable to the business. For instance, if you have a salesperson who flies a lot and stays in hotels, the company could save some money by using the points to pay for those travel expenses. Whatever is decided, I would recommend the company set a clear company policy about whom the points belong to before handing out any additional cards and let American Express know what the preference is. A clear, written memo for employees who have the cards will prevent misunderstandings later.
Meet CreditCards.com's reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- Is it OK to charge lunch with co-workers on a company credit card? – Charging lunch with co-workers on a company card might not be considered misuse of company funds if it was business-related. But make sure to know your employer's policy before charging ...
- How to dispute fraudulent charges on a corporate credit card – If fraudulent charges were put on your corporate credit card, don't assume the card's automatically covered by zero liability policies. However, you have options. Here's what to do ...
- Pros, cons of transferring business card balance to a 0-percent personal card – Transferring a balance from a business credit card to a 0-percent personal card can help you save money and give you more protections – just make sure your utilization doesn't spike ...