Question: PTO credit card—good idea or bad?

Our group is trying to decide whether obtaining a credit card would be a good idea. We would use it for everyday purchases, including copy and office supplies, food and prizes at our family fun nights, and even paying our fundraising vendors. What do you think about PTOs having credit cards?

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Advice from PTO Today

Elly writes:

It depends. For parent groups whose members make many and frequent purchases, including the reasons you have outlined, using a credit card certainly has its advantages:

  • The ability to limit out-of-pocket expenses for your volunteers. Let's not forget, in some cases, a cash layout of even $10 can be a hardship for a struggling parent. Having a credit card available can save a volunteer from this embarrassing scenario.
  • Fewer checks to write. This factor can make balancing your checkbook much easier. But read on for reasons your treasurer might not be thrilled about a credit card.
  • Possible cash incentives or rewards for your PTO from credit card purchases. Many credit card merchants waive their annual fee and offer discounts and cash-back rebates for loyal customers. (Elly says shop around before you sign on the dotted line.)

Elly recommends limiting the card's authorized users to no more than two people (a trusted board member and a committee chair). With that in mind, you must decide whether having a credit card really gives you the kind of flexibility you're looking for. It means that one of these two people will have to make all credit card purchases. But take Elly's advice; it's much harder to track purchases and you're at great risk of loss with more than two authorized users.

And while Elly loves using plastic, doing so does comes with inherent risks, such as theft and overspending. Elly recommends taking precautions to reduce the chances of credit card theft or misuse.

  • Insist that the card be used only for expenditures that have been voted on and approved by board members. For example, the carnival chairperson should not use the credit card to buy a popcorn machine simply because she and her committee members brought it up in passing in the parking lot last week.
  • Have a preset spending limit. A max of, say, $500 can cap your vulnerability if the card is stolen. Setting a limit high enough to pay thousands of dollars to fundraising vendors carries tremendous risk. Don't do it.
  • Block any cash-advance options. Elly cannot think of one reason why a parent group would need this function.
  • Write "Please Request Picture ID" in permanent marker above the signature line on the back of the credit card. This will, in most cases, alert store cashiers to ask the cardholder for an ID. (Elly actually does this with her own personal credit cards.)
  • Have the billing statement mailed to a board member who's not on the card. Instruct this member to present the statement at monthly meetings. Your leaders can then review the statement to see whether there has been any questionable activity in the way of purchases or credit line increases.
  • Pay off the balance on time and in full every month. You will avoid interest charges and penalties associated with late payments.
  • Collect all receipts from authorized users. Be sure you can match expenditures against the statement each month.

This last item is also one of the drawbacks of having a credit card—it can create a lot more work for your treasurer. People who use the card don't have a lot of incentive to turn in the receipts, so the treasurer ends up trying to track them down, figure out what the purchases were, and classify them appropriately. In addition, with a low limit, you run the risk that the card will be maxed out at times.

If you feel the risks of owning a credit card probably outweigh the benefits, a relatively new alternative is a prepaid, refillable bank card. This gives appointed shoppers a predetermined amount of credit to purchase items and supplies. The advantage is that you can limit your exposure by putting a specific amount on the card. But tracking purchases and obtaining receipts can still be a problem.

Community Advice

badpants writes:
Another option would be purchasing gift cards for vendors you frequent. Our school offers scrip cards in the office and we often purchase these, which helps the school and is easily tracked, as our treasurer writes the check. We also have accounts set up as some local (non-chain) vendors. One is a party supply store and the other is restaraunt supply, both also happen to be within blocks our school, which makes it even more convenient.

Community Advice

CMay2CK writes:
While I like the idea of a credit card, I also see way too many cons in having one. One primary being the board positions change, requiring you to cancel and reissue cards often. Also, I prefer not to offer up any form of temptation to misuse or simply misunderstand the proper use of the card. While I personally do not enjoy paying for things up front, I use my credit card, which will not directly affect my cash available, and wait for my reimbursement check. If a purchase is discussed and researched ahead of time, often a check can be cut prior to placing the order/shopping.

Community Advice

helenbetty30 writes:
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Community Advice

Porton writes:
If your credit card verification code isn't showing up for a pending transaction, it could be due to various reasons ranging from technical issues to incorrect information input. Here are some steps you can take to resolve the issue, inspired by general advice found on PressLoaded regarding how to open bank account and financial transactions with verify your Information: Double-check the credit card details you've entered, including the card number, expiration date, and CVV code. Sometimes, a simple typo can cause the transaction to fail.

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