What you can learn from Marco Rubio's credit card mistakes
Presidential candidate U.S. Sen. Marco Rubio has found himself at the center of a political storm, but his voting record and policy positions aren鈥檛 drawing the unwanted attention. Rather, it鈥檚 something that has tripped up many people: an apparently sloppy use of credit.
Newly released American Express charge card statements from 2005 and 2006 鈥� when Rubio was serving in the Florida Legislature 鈥� combined with statements previously disclosed read like a cautionary tale. Not only did he聽use a corporate card from the Republican Party of Florida for personal expenses, but he also accrued more than $1,700 in delinquency and late fees over a four-year period,聽.
The whole controversy shows that not even the powerful are immune to problems with managing credit. It鈥檚聽also instructive, especially if you鈥檝e made a聽few slip-ups of your own and want to get back on the right track.
Here鈥檚 what you can learn from Rubio鈥檚 mistakes.
Keep business and personal separate
Rubio used his corporate card from the Florida GOP for personal expenses, the Post reported. Rubio聽says he reimbursed the party afterward for personal purchases made with the card, which included $3,756 to a tile company and $10,000 spent at a resort. Even so, the Florida GOP鈥檚 internal policies prohibit such聽personal use of corporate cards, the Post says.
The party鈥檚 position is typical with聽corporate cards. Using a corporate credit card to cover personal expenses may violate聽your employer鈥檚聽rules as well as your employer鈥檚 agreement with the card issuer. In most cases, the聽issuer will聽hold you personally liable for such charges. Misusing your聽corporate card can also raise red flags to your employer, which might view聽it as grounds for termination and sue you for any unpaid debt.
The simplest way to avoid Rubio鈥檚 mistakes is to never put personal expenses on a corporate card 鈥� period.聽If you accidentally charge a personal item, reimburse your company for the expense as soon as possible and come clean about the mistake. Doing so might help you keep your job, or at least avoid legal trouble.
Pay your bill on time
Rubio鈥檚 card was a charge card whose balance is due in full every month. But he often carried debt. For nine months in聽2006 and 2007, the Post reports, a 鈥減ast due鈥� warning appeared at the top of his statements.聽In one month alone, a $388 delinquency fee was charged to his account.
The lesson is clear: Paying late can be expensive. Late fees on consumer cards are usually around $35 a pop, and card issuers often impose higher penalty APRs that can run upward of 30%. If you鈥檙e late with a payment on a card with a 0% introductory APR, your issuer might cancel your promotional rate聽and start charging you regular interest. Payments more than聽聽are generally reported to the three major credit bureaus, Equifax, Experian and TransUnion, and can cause your scores to tumble by 100 points or more. Paying on time could save you a bundle聽in fees and interest charges.
Borrow only what you can聽repay
As聽Rubio鈥檚 income increased between 2004 and 2008, so did his debts. When he left the Florida House of Representatives in 2008 to run for the U.S. Senate, he had amassed $903,000 in home, car and student loans, according to the聽.
When your income goes up, it can be tempting to increase your expenditures too. But if you spend too freely, you can easily end up with a pile of聽you can barely afford.聽If you鈥檙e worried that you might be overspending,聽track your expenditures online or with a pencil and paper, and trim your costs聽where you can. You might save thousands of dollars聽a year聽by dining out less, or staying at more affordable hotels when traveling.
The takeaway: Good credit habits聽matter
Having a clean credit history isn鈥檛 important just for presidential hopefuls. Even if your card statements will never circulate in the national media, maintaining a good credit score can still help you secure聽, and in some states,聽听补苍诲听. And when you apply for a loan or credit card,聽it could also help you qualify for聽the best terms.
It seems as though Rubio聽knows this now.聽When discussing the spending with Fox News in 2012, Rubio聽:聽鈥淭he point is that, if I had to do it again, I鈥檇 be a lot more careful.鈥�
Claire Tsosie聽is a staff writer at NerdWallet, a personal finance website. Email:聽claire@nerdwallet.com. Twitter:聽.
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