cash back rewards<\/a> credit card for business.
<\/p>\n\n\n\nFor the same reason that cash back rewards are commonly utilized by non-business individuals, cash back rewards can be one of the smartest perk schemes you can utilize with credit as the cash back is not limited to one type of purchase. This gives you greater flexibility and more opportunity to actually use your rewards (a large percentage of rewards from credit cards actually go unused).
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If you\u2019re shopping for a cash back business credit card, know that there are a number of perks that are particularly great for small business. Below are some of the main features you should look out for when searching for a cash back small business credit card.
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Initial spending bonuses <\/strong>are offers that stipulate that if you spend $X within the first Y months in which you\u2019ve had the credit card, that you will get a bonus. These bonuses can range from $500 to several $1,000\u2019s. With typical stipulations that you must spend several $1,000\u2019s of dollars on the card in the first 3-5 months. The key to properly utilizing this feature is to utilize your credit card for the amount required while also paying the credit card 100%. This ensures you don\u2019t cancel out the bonus bucks with interest or fees over time.
<\/p>\n\n\n\nLack of an annual fee <\/strong>is an important benefit to weigh the pros and cons of. Sometimes cards with annual fees can provide lower interest rates or additional perks. If you expect to regularly maintain a regular balance, a lower APR with the inclusion of a $100 annual fee may actually save you money. If you expect to rarely use your card at all, a substantial annual fee is wasted money over the long run.
<\/p>\n\n\n\nFree employee cards <\/strong>are one way to both segment spending, reduce communication errors (such as trying to find out \u201cwho had the card last\u201d) and save you a few dollars. Additional employee cards are available from most major carriers but sometimes do require a nominal fee (or even additional annual fees).
<\/p>\n\n\n\nPrimary car rental insurance<\/strong> for all corporate users of the credit card can be a great money saver. It\u2019s easy to add $100\u2019s to any rental car purchase by buying the insurance offered at the rental center. If your business routinely utilizes rental cars this can be the one major perk that makes the whole card worth it. Make sure that the primary car rental insurance extends to any member of the business utilizing the card for business travel.
<\/p>\n\n\n\nIntroductory APR <\/strong>refers to offers that provide lower than normal interest rates for a set period of time. Common introductory APR offers include 0% APR for the first year of the credit card. Occasionally, credit cards may offer lengthier introductory APR. More commonly, there\u2019s fine print that limits your introductory APR, so make sure to read all the details of what exactly you\u2019re signing up for.
<\/p>\n\n\n\nWhat you get cash back for <\/strong>is one of the most important aspects to consider with a cash back business credit card. This may involve you coming up with a plan for exactly what the credit card will be used for. While cash back on all purchases is common, the percentage of cash back is commonly lower in these scenarios. Common business purchase categories eligible for higher cash back percentages include internet purchases, telecommunications purchases, travel purchases, equipment purchases over a certain amount, office supply purchases, dining purchases, and gas purchases.
<\/p>\n\n\n\nThe ability to choose cash back categories <\/strong>is offered by some cards. If you find a card that you like many of the features of but the cash back rewards don\u2019t line up with what your business spends money on, see if the card carrier offers a similar card that allows you to choose between major categories. Commonly these cards offer a lower cash back rate on all purchases, and then one category of purchase where you\u2019re receiving additional rewards.
<\/p>\n\n\n\nForeign transaction fees <\/strong>may or may not apply to your business. But if you\u2019ve ever been stung by unexpected foreign transaction fees, they can quickly add up. The most common foreign transaction fee rate is 3% on all purchases made in an international nation. But rates at ATMs — and depending on the nation you\u2019re in — can jump to double that.
<\/p>\n\n\n\nCard carrier-specific benefits <\/strong>are benefits available to all card holders (often tiered by the type of card they hold). These can include concierge services, free roadside assistance, access to exclusive food, dining, and sporting events, access to events with restricted entrance, and access to locations that may say they have no more rental properties available to the general public. All major credit card carriers typically offer their own set of benefits including Visa, Mastercard, and American Express.
<\/p>\n\n\n\nThe ability to upgrade or downgrade between tiers <\/strong>can be used to strategically gain benefits when you need them and then avoid unnecessary fees when you don\u2019t. Some carriers allow you to enter new tiers of cards once you\u2019ve spent a certain amount within a year. Others will base the tier you\u2019re allowed to gain based on your history with the card carrier or credit score. But the important aspect here is that you make sure you have the ability to elect to upgrade or downgrade tiers when they\u2019re available.
<\/p>\n\n\n\nThe card has \u201ctiers\u201d <\/strong>is a similar point to the last. But it is an important aspect of strategically using your cash back reward credit card. While the benefits of different credit card tiers vary greatly, higher tiers will commonly come with higher credit limits, additional stipulations that can boost cash back, and additional concierge or card carrier-specific benefits.
<\/p>\n\n\n\nYou choose where you cash goes <\/strong>when you recieve cash back. Some cash back cards only allow you to apply your cash back to your balance. Some only allow you to use cash back with specific merchants. Some cash back cards offer both of those options as well as the ability to deposit cash back rewards directly to your checking account. While this may not be the most important aspect of your card, if you\u2019re heavily and strategically using your cash back categories this is important.
<\/p>\n\n\n\nThe ability to buy above your credit limit <\/strong>can be a useful benefit. While presumably you\u2019ve been assigned your credit limit for a reason, there are times when spending beyond your official credit limit may not be a bad idea. Keep in mind that money above and beyond your credit limit (including cash advances) will often come with a higher interest rate. But in specific or exceptional circumstances this benefit can be a game changer (just pay it off!).
<\/p>\n\n\n\nAdditional boosts <\/strong>can include lump sum rewards that aren\u2019t part of an introductory offer and that are triggered when you spend a certain amount on the card. For example, some cash back business cards offer $1,000-$2,500 in automatic cash back (beyond your normal percentage cash back) once businesses utilize $50,000 on their credit card within a given year.
<\/p>\n\n\n\nA grace period <\/strong>is commonly present on nearly every business or non-business credit card. But it\u2019s not always included. By grace period we mean that you can utilize a credit card and then pay off your balance within (most commonly) 21 days and purchases within that period that were paid off won\u2019t be charged interest. Cards that don\u2019t offer grade periods are essentially charging you interest the second you purchase on the card. If this is the case there better be some serious rewards or other perks to make the card worth it.
<\/p>\n\n\n\nA balance transfer option<\/strong> is important to pay attention to if you already have one credit card and want to essentially refinance that debt. Though not exceedingly common among business cash back reward cards, balance transfer cards are to some extent available for cash back reward business cards. These cards offer you the ability to transfer the balance of another card (presumably with a higher interest rate) and often include an introductory low or 0% interest rate.
<\/p>\n\n\n\nA fixed rate card <\/strong>can be hard to find today, but many smaller banks and local credit unions do offer them. The difference, with a variable rate APR credit card your interest will fluctuate throughout the year depending on the rates that the Federal Reserve sets. Sometimes rates can fluctuate by as much as 10%. If you\u2019re looking for something a bit more dependable, search out a fixed rate card that also offers cash back rewards (they are out there!).
<\/p>\n\n\n\nNo or low fees <\/strong>can be a consideration for a credit card. Although if you\u2019re opening an account already worried about fees you may want to take some time to assess whether your credit utilization plan is actually responsible. Areas where fees can quickly add up include cash advance fees, late fees, international use fees, annual fees, and balance transfer fees. <\/p>\n\n\n\n<\/p>\n\n\n\n
Summing it all up<\/h3>\n\n\n\n
We\u2019ve worked through a number of reasons why a business credit card — and particularly a cash back rewards business credit card — can be a great acquisition for your small business. To name the most prominent of these reasons, they help you establish business-specific credit quickly, can help you avoid running out of capital (one of the most common reasons small businesses fail), and can help you recoup some of the money you would have spent anyway.
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It almost goes without saying, but the key aspect to utilizing credit well is to use it responsibly.
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The best cash back business credit card rewards in the world won\u2019t make up for a card that\u2019s routinely not paid on time or that holds high balances over a long period of time. That\u2019s how credit card carriers stay in business. So don\u2019t be \u201cthat guy\u201d and find a way to use the many, many unique perks of available cash back business credit cards to your advantage.
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This brings us to our final point. Come up with a plan for exactly what you want to use your credit card for. As seen in the previous section of this guide, there are tons of potential strategies that can net you 1%,2%, even 5-6% cash back on routine purchases. There are ways to boost cash back by several $1,000\u2019s a year without incurring interest payments or annual fees. This requires discipline and a clear game plan. But it\u2019s money sitting on the table that many smart small businesses can\u2019t avoid using. <\/p>\n\n\n\n
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