Debit and credit cards

Debit cards pull money instantly, with no review window

A debit card is linked directly to the association's bank account. Swipe it and the money is gone that day, there is no statement to review before the charge clears the way a credit card gives you before the bill is due. That gap, the delay between a charge happening and someone noticing it, is exactly the window that catches mistakes and misuse before they become a real loss.

"The best way to protect the association is not to have them in the first place."

Source: Condo and HOA Debit, Credit Card and Petty Cash Best Practices, Community Financials

Some states go further than recommending against debit cards. Florida bars an association debit card from being used for any expense, and treats misuse as theft under state law, regardless of board approval. Check your own state's statute and your governing documents, since not every state legislates this directly.

"An association and its officers, directors, employees, and agents may not use a debit card issued in the name of the association, or billed directly to the association, for the payment of any association expenses."

Source: Florida Statutes section 720.303(13), State of Florida

If the board uses a card, put boundaries around it

A credit card gives you what a debit card does not: a statement period where someone can catch a bad charge before money actually leaves the account. That only works if the card carries a real limit and someone besides the cardholder is the one checking the bill. Reconcile the card account every month, the same as you would a bank statement, and route the statement to a manager or another board member first.

"be responsible and reconcile these accounts monthly," ... "Make sure the statements are sent to your financial management company or someone other than one of the card holders."

Source: Condo and HOA Debit, Credit Card and Petty Cash Best Practices, Community Financials

Close the door the moment someone leaves

A card left active after a board member retires or an employee moves on is an open account with nobody watching it. Cutting off access should happen the same day, not at the next board meeting. This is the same logic behind separating duties elsewhere in the association's finances: control comes from removing opportunity, not from trusting whoever happens to hold the card.

"Make someone in charge of the cards so if a board member retires or an employee leaves, notify the bank immediately, and destroy the card."

Source: Condo and HOA Debit, Credit Card and Petty Cash Best Practices, Community Financials