Regardless of industry or size, businesses need an infusion of capital every now and again. There are a number of ways business owners and managers can access cash when it is needed, including loans, lines of credit and credit cards. For some companies, having revolving access to credit in the form of a business credit card is the best solution for ongoing cash flow needs. Fortunately, business credit cards come in all shapes and sizes, with a wide variety of benefits to boot, so here’s our post on the best business rewards credit card perks.
Whether you are a freelancer with steadily contracted gigs, a consultant who travels around the world, or an entrepreneur working on the latest and greatest product or service, finding the right business credit card is no small feat. Understanding the benefits that come with each type of business credit card is an important first step in selecting the right account. Here we’ve broken down some of the best advantages specific to business credit cards that help protect – and increase – your company’s bottom line.
Authorized users are not a new concept in the credit card world. In fact, the majority of credit card issuers allow the primary cardmember an option to add one (or two) authorized users to an account at any time during the lifetime of the card. Authorized users have access to the available credit limit for making purchases at any time, and any purchases made apply toward active rewards programs. With business credit cards, the ability to add employees as authorized users comes with substantial benefits.
First and foremost, spending is easily tracked when employee cards are used consistently. Want to see what Bill in accounting or Megan in HR is buying each month with company dollars? Simply add each as an authorized user to the credit account and track your heart out. But not to worry, most employee cards come with set limits so the company’s budget is protected from overspending.
Adding employees as authorized users to the company credit card may be most beneficial in rewards accumulation, though. Instead of using petty cash or other forms of payment for business-related expenses, employees have the option to use their respective credit cards and earn points toward statement credits, travel discounts or purchases, cash back or online shopping. For most business credit card issuers, employee cards can be added at no additional cost.
By far the aspect of business credit cards that makes the financing option stand out more than loans or traditional lines of credit is the rewards potential. As with individual consumer credit cards, business owners have the ability to earn points (or miles) that equate to a variety of handsome rewards. Let’s take a look at a few examples.
The Ink Cash Business credit card, offered by Chase, gives business owners the ability to earn 5% cash back rewards on all purchases made at office supply stores, cellular and landline phone providers, cable television and internet providers. While the bonus rewards categories are limited to the first $25,000 in spending each year, spending in these categories has the potential to result in substantial rewards over time. In addition, Ink Cash Business card members earn 2% cash back on gas station and restaurant purchases up to the same $25,000 limit each year, and all other purchases receive 1% cash back with no limit.
Similar to the Ink Cash Business card, American Express offers a business credit card with attractive rewards potential. With the SimplyCash® Plus Business Credit Card from American Express, account owners earn the same 5% cash back on office supply store purchases and wireless phone services up to a $50,000 limit each year. What makes the SimplyCash Plus Business credit card stand out from Chase is the ability to select an additional bonus category that earns 3% cash back. Cardmembers can opt for the spending category that best suits their purchase habits, such as hotel rooms or car rentals, restaurants, shipping purchases or computer hardware purchases. The 3% bonus category selected is subject to the same $50,000 spending limit as the 5% categories.
Chase and American Express are not the only business credit card issues. Discover, Citi, Bank of America and Capital One all offer business credit cards with rewards programs, although each differs slightly from the next. Earning rewards can result in substantial savings for the business which has a direct positive effect on cash flow over time.
Although the thought of earning rewards on everyday spending is appealing, the redemption of those rewards must make sense for the business in real life. Some business credit cards allow account holders to redeem accumulated rewards as cash back (like the Chase and American Express options listed above). Other rewards programs are redeemable for statement credits, airfare and hotel purchases, gift cards or purchases made through partner retailers. The best business credit cards have a strong mix of redemption possibilities with few or no restrictions.
The Fine Print on Best Business Card Perks
Business credit cards are a smart way to manage money flowing out of a company, but it is necessary to understand not only the rewards programs and redemption options available but also the applicable fees. Some business credit cards carry an annual fee, ranging from $89 up to $450; if your business does not spend enough in specific categories to earn enough rewards to cover the annual fee, finding a card without a charge each year is your best bet. In addition to annual fees, business credit cards may also charge interest on any balances carried over from month to month. In some cases, business credit cards are actually charge cards which require the full balance to be paid at the end of each billing cycle. It is important to understand these aspects of the credit card of your choice as to avoid spending unnecessarily on fees or large balances each month.
Utilizing a business credit card is a sound method to spread out cash flow needs over time while maintaining a record of purchases for the company. Rewards programs linked to business credit cards make the financing solution even more attractive, but only when those rewards are in line with how your business spends on a regular basis. Be aware of the fees associated with business credit cards, and plan to spend wisely to reduce the cost burden to your business.
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Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities.