Is it bad to have others pay your account?

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benhollberg
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Is it bad to have others pay your account?

Postby benhollberg » Mon Sep 23, 2013 5:12 pm

Sometimes I make purchase for others on my card, done it for every card I've had, and instead of them just giving me cash I have them just write a check to the credit card company and I send it in with my own payments. My question is, is this a bad practice if, say AMEX, sees that somebody else is paying part of the bill? The majority of the payments, and charges, are my own that I pay myself. For example, I've done with buying airline tickets for a group, paid an entire restaurant check, cell phone bill and so on.

Is this a bad practice? Should I be having them giving me cash instead? My guess is they don't care who pays as long as it is paid, am I wrong?
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Midori
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Postby Midori » Mon Sep 23, 2013 8:35 pm

I picked up a starter Cap One card. Since it doesn't have revolving categories, it's been easy to use it just for biz purchases and get a few rewards here and there. So I pay for it out of my business checking account. Cap One hasn't made any noises about the fact that the account is issued to a personal name, and that a business check with a totally different name and address is paying for the purchases, although it is my sig on the line. But I don't even think they've even spammed the biz mailing account with solicitations.

If it was me, I'd probably cash the reimbursement to my personal account and then pay off the card in a single transaction, if only to keep something stupid like a check bounce from happening. I'd also feel a little odd about telling my friends, "Okay, pay me back, but make it out to Amex." Paying me back for carrying an $x tab on dinner split ten ways is one thing... it's warm, fuzzy, friendly, accommodating, personal. Telling them to make their check out to my credit card company is crossing social/business boundaries that I can't quite put my finger on.

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Postby PhoenixDown » Mon Sep 23, 2013 8:38 pm

I prefer they give me a check and I cut the payment .... this way if there's an issue where they don't receive the payment (happens more often than you'd know) its easier for me to run down. Imagine going to a friend and asking them to get a copy of the cashed check from their bank -- they may do it but that's after you missed a payment and are paying late fees.

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otter
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Postby otter » Mon Sep 23, 2013 9:04 pm

As Phoenix and Midori have said... if it were me, I'd have them give me the money or check because it's your credit score at stake here, not your friends. Even if I knew the friend were trustworthy, I've had too many bad experiences with the US Postal service to leave my credit in their hands. If I need to send something somewhere, I'll use FedEx or UPS and that's only if I have no alternative (and any credit card company that doesn't offer a way to pay online doesn't deserve your business, IMHO).

But addressing your original concern:
benhollberg wrote: My question is, is this a bad practice if, say AMEX, sees that somebody else is paying part of the bill?


I seriously doubt the clerk at AMEX(your friend's check may be check #356 out of 984 that they have to process that day) who processes the check is going to give it a second thought. They're certainly not a credit analyst. They might not even look at who wrote the check, only making sure they got the account number right and that the check is a real check and is signed and not post-dated. They'll then scan it (no manual checks are taken to the bank anymore), make sure the payment goes through, and put the hard copy of the check in a big folder(which will probably never see the light of day again) with the rest of the checks they process that day. Now if your friend's check bounces, then the check could get extra scrutiny....
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benhollberg
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Postby benhollberg » Tue Sep 24, 2013 9:04 pm

Totally understand you guys, I have only done with with a few people, my father and a few friends. These are people I trust and know they have money, I would never do it with somebody I have just met or didn't trust. To be honest, I've never done it with splitting dinner check but I just thought it would be a good example to explain. Sometimes these are big purchases that I do, for example that last time was over $5k, did it for a friend has he was trying to buy something that had a limit and needed different addresses for more. I would rather not have $5k going through my checking account. Thanks for the advice, it just seemed easier on my part but I may have to rethink this.
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SuperKirby
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Postby SuperKirby » Tue Oct 01, 2013 3:40 am

OP, I do the same thing as you do but I let their checks go into my bank account first, then pay the CC only from me. Doesn't that seem more simple?

On another note, I do this to earn points since some of my friends aren't into using CCs. =)

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Postby DoingHomework » Tue Oct 01, 2013 1:30 pm

In some cases the source of funds is tracked although I don't think credit card companies routinely do that. So to that extent I don't think it will hurt you because they don't even record that the payments are coming from a third party.

But, I would never do what you are doing. You are taking all the risk. If one of your friends' checks is returned it could harm you a great deal. A check could be returned because of a mistake even if they have money. That's not a risk I am willing to take.

Another issue is that the money you receive from them could be reported as income to the IRS and you could get charged with tax evasion for failing to report it. In reality that money might actually be income because you are basically running a payment processing service. A few years ago I would have said that it is ridiculous to look at things that way but the IRS has changed reporting requirements and begun cracking down on that sort of thing just in the last couple of years. There is nothing wrong with what you are doing. I'm just saying that if you do not properly document it you could find yourself having to explain what you are doing to teh tax man.

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Postby beef.stu » Tue Oct 01, 2013 1:44 pm

In addition to the risk of bounced checks, I would be concerned about your spending exceeding what the credit card company would consider normal for your income that you reported to them. Im pretty sure that could trigger a financial review, which would not be too fun
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realized
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Postby realized » Thu Oct 10, 2013 5:27 pm

Having "somebody else" pay your bill isn't bad in iteself, i do it all the time (business pay personal credit card etc for Reimbursements ) etc.

but trusting a "friend" to do it might leave a little more liability then you want.. like people have mentioned earlier... bounced checks, late checks, etc



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