How to Select a Cash Back Business Credit Card
By Jake Everett
Many business credit cards offer rewards tailored to general business needs. However, some of these rewards can be tricky and only give the appearance of savings, or can have rewards so inconvenient, such as airlines with blackout dates, that they are not worth it. In some cases, the best reward can be simple cash back.
Let's look at the ever-popular frequent flyer miles. You may assume that since you'll be using your credit card anyway, you might as well begin accumulating airline miles and getting free tickets. But not so fast...
There have been attempts by some credit card "gurus" to determine the value of frequent flyer miles. Almost without question, the general agreed-upon value is about 2 cents per mile. One of the reasons behind this is the fact that most airlines won't let you redeem any miles until you've accumulated at least 25,000 of them, and a typical domestic ticket costs around $250.
Did you get that?
You'll typically have to charge $25,000 worth on your business credit card to get one measly airline ticket. Maybe.
Now, if you will regularly charge that much, AND if you will be able to pay off your balance in full so as not to incur interest charges, as well as picking a card that doesn't have an annual fee, you may want to consider a card that rewards frequent flyer miles.
If this just doesn't seem worth it to you, consider a business card with a cash back rewards system.
Cash back is simply another way for the credit companies to give you incentive to use your card. They give you a percentage of the purchase price of participating services back, sometimes in the form of a check, sometimes as a deduction from your balance, and sometimes all at once at the end of the year.
Some cards offer pretty good cash back savings. For instance, American Express's OPEN network offers 3% cash back on Delta and JetBlue tickets, as long as they are purchased directly from the airline's websites. After you buy 34 tickets this way, assuming our $250 domestic flight example, you will have saved enough for a "free" ticket. Other cards offer even better savings, depending on the participating vendor. Some offer savings on shipping, dining, and other frequently used business services.
It's always worth it to fully investigate cash back options on business cards, especially as these cards usually cater to business interests and merchants. Decide what services and products your business uses most frequently, and shop around for cards that work with vendors matching your needs. You might find some unexpected, and in some cases quite high, savings.
Which Business Credit Card Is Best for You?
By Richard Gilliland
If you have been a customer for long enough with a particular bank, they may offer business credit card facilities to you. That would be convenient, and the processing and approval of your business credit card application is likely to receive the fast-track treatment. But it may not necessarily be the best business credit card for your needs, so it won’t hurt to look around at what’s available before making your final decision.
There is intense competition these days in the business credit card market. This certainly is to your advantage. Here are some things for you to consider before choosing a business credit card provider:
Paying Off Your Balance: The Business credit card packages on offer from the various credit card issuers differ, as do the terms and conditions of use. You should determine whether you will be paying the full outstanding balance when it falls due or whether you intend making part payments towards this balance. If it is you intention to pay the full amount, you will probably be better off with a charge card, where all charges made are payable within 30 days. Charge cards set no spending limits. If it is you intention to make part payments, a business credit card would be appropriate as it affords you the opportunity to pay off the balance over time. Credit cards normally have set spending limits.
Getting Your Rewards: If you are a frequent traveler, you can get business credit cards that offer you the opportunity to earn miles. Check for mile earnings ceilings and the amount of miles earned per $100 spent, when making your comparison. Beyond these travel points, you can also qualify for discounts or accumulate points for purchases made on your business credit card at participating merchants. The rewards system on most business credit cards are often designed to benefit small business owners. Be sure to read the fine print. It may be that some cards include fees and interest rates that negate any value you may receive from their rewards system.
Picking the Business Credit Card Issuer: One is really spoilt for choice when it comes to selecting credit card issuers. Naturally the biggest players are the huge national banks. Often the regional bank or local bank where you already keep your business accounts, may provide their business customers with attractively packaged business credit card offers, in order to retain their custom.
What is important to note is that whilst there are many companies that issue business credit cards, there are only a few card brands worth considering: Visa, MasterCard, Amex, and
Discover. While you are shopping for a business credit card, it you should make a point of obtaining information from these card companies directly. They have business divisions - including one for small businesses - that can provide you with details on the business credit card options that would best suit your needs.
Monitoring Employee Spending: You can arrange for business credit cards to be issued to your key people. This will give you an effective means to monitor representation and business expenses. If you feel that a particular employee has abused the privilege, you should be able to call the bank and they should be able to give you a solution. You would not want to get stuck with having to pay unnecessary bills. You may want to reduce the charge ceilings for your employees in addition to them signing a legal undertaking to cover you should they end up abusing the cards.
Finding a business credit card that closely matches your business’ specific requirements has never been easier. Thanks to the competition between issuers, you also have the opportunity to pay reasonable fees and receive preferential treatment. For business owners, this is a fortuitous set of circumstances indeed.
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