What you can learn from Marco Rubio's credit card mistakes
The controversy surrounding Marco Rubio's sloppy credit card use in the mid-2000s is instructive, especially if you’ve made a few slip-ups of your own and want to get back on the right track.
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’t drawing the unwanted attention. Rather, it’s something that has tripped up many people: an apparently sloppy use of credit.
Newly released American Express charge card statements from 2005 and 2006 — when Rubio was serving in the Florida Legislature — combined with statements previously disclosed read like a cautionary tale. Not only did he 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, The Washington Post reports.
The whole controversy shows that not even the powerful are immune to problems with managing credit. It’s also instructive, especially if you’ve made a few slip-ups of your own and want to get back on the right track.
Here’s what you can learn from Rubio’s mistakes.
Keep business and personal separate
Rubio used his corporate card from the Florida GOP for personal expenses, the Post reported. Rubio 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’s internal policies prohibit such personal use of corporate cards, the Post says.
The party’s position is typical with corporate cards. Using a corporate credit card to cover personal expenses may violate your employer’s rules as well as your employer’s agreement with the card issuer. In most cases, the issuer will hold you personally liable for such charges. Misusing your corporate card can also raise red flags to your employer, which might view it as grounds for termination and sue you for any unpaid debt.
The simplest way to avoid Rubio’s mistakes is to never put personal expenses on a corporate card — period. 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’s card was a charge card whose balance is due in full every month. But he often carried debt. For nine months in 2006 and 2007, the Post reports, a “past due” warning appeared at the top of his statements. 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’re late with a payment on a card with a 0% introductory APR, your issuer might cancel your promotional rate and start charging you regular interest. Payments more than 30 days late 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 in fees and interest charges.
Borrow only what you can repay
As Rubio’s 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 Tampa Bay Times.
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 high-interest consumer debtyou can barely afford. If you’re worried that you might be overspending, track your expenditures online or with a pencil and paper, and trim your costs where you can. You might save thousands of dollars a year by dining out less, or staying at more affordable hotels when traveling.
The takeaway: Good credit habits matter
Having a clean credit history isn’t 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 an apartment, and in some states, a job and more affordable car insurance. And when you apply for a loan or credit card, it could also help you qualify for the best terms.
It seems as though Rubio knows this now. When discussing the spending with Fox News in 2012, Rubio acknowledged his mistakes: “The point is that, if I had to do it again, I’d be a lot more careful.”
This article first appeared in NerdWallet.