Business rewards credit cards can provide a lot of value to business owners, but it takes a little legwork to make the most of them. Regardless of what type of rewards you prefer or how you spend your money, it’s important to approach credit card rewards strategically, so you can get the biggest bang for your buck.
Here are some tips to help you get on the right track.
Improve your credit
You can qualify for rewards credit cards with fair or even bad credit.
If you have good or excellent credit, however, you’ll have a much wider selection of cards with better rewards programs. Some of the best rewards credit cards also offer sign-up bonuses worth hundreds of dollars — some go as high as $1,000 or more.
So if you want to take full advantage of the credit card rewards that are available to business owners, it pays to have great credit.
Get the right type of rewards
There are a handful of types of credit card rewards, including cash back, general points and travel rewards. It’s important to know which works best for you.
As the term suggests, cash back credit cards offer business owners a percentage of their purchases back in the form of cash. While some cards offer a flat rewards rate on every purchase — typically between 1% and 2% — some cards offer bonus rewards on certain business-related categories.
Cash back rewards are a solid choice if you want simplicity and flexibility. After all, you can use cash for just about anything you want, including driving those rewards back into your business.
General credit card points programs aren’t as common as cash back and travel, but they do exist. Instead of focusing on one type of redemption, these programs generally give you several options, such as cash back, gift cards, travel, merchandise, and charitable donations.
The catch is that you may get less value from some redemption options than from others. So you’ll need to make sure to read the fine print to avoid selling yourself short with a low-value redemption.
These rewards programs are a good option if the card’s overall benefits structure is right for you. But they’re generally not as valuable overall as other rewards options.
Travel rewards can come in the form of points or miles, depending on the type of program. General travel rewards can typically be used for just about any kind of travel, and then there are airline and hotel rewards programs, which generally restrict you to using your rewards with that loyalty program.
Travel rewards are best for business owners who travel regularly or want to plan a trip and cover some of the cost with their points or miles. Some travel rewards credit cards also offer extra travel-related benefits, which could help you save even more.
Pick a card based on your spending
Every business is different, so there’s really no single best credit card out there for everyone. As you compare different credit card rewards programs, it’s important to pick a card that aligns with your typical expenses.
For example, some cards offer bonus rewards on categories like shipping, travel, gas, office supplies or advertising. If your business spends a lot in one of these areas, it makes sense to get a card that can help you maximize the rewards you earn on those purchases.
If, however, your spending is all over the place, you may be better off with a card that offers a high rewards rate on all of your purchases. Take some time to review your expenses over the last six to 12 months and see where you should focus your search.
Weigh the annual fee
If you’re trying to cut costs, you may only be interested in rewards credit cards that don’t charge an annual fee. While that’s not necessarily a bad thing, it may still be worth considering cards that cost a little money.
At the same time, some annual-fee cards may not be worth it, depending on how you use them. Take some time to run a cost-benefit analysis to find out how much value you can get from each card you compare. If it’s ultimately best to get a card with no annual fee, go for it. But if you can get a higher net benefit from a card that charges a yearly fee, you’ll be better off with that one.
Avoid paying interest
It’s possible to get a lot of value out of business rewards credit cards, but they can ultimately cost you more than you earn if you’re not careful.
Credit cards allow you to carry a balance from month to month, which can be appealing if your cash flow is irregular. But with some business credit cards charging APRs upwards of 20%, the cost of interest charges can limit or even neutralize the value you get from credit card rewards.
As a result, it’s always a good idea to pay your balance in full each month, if possible. Not only will this help your business save money but it can also help you take full advantage of the rewards you’re earning.
The bottom line
Maximizing the rewards you get from your business credit card can give you more value without changing your habits. While it can take some time and effort to come up with and execute the right strategy, it can pay off big time for years to come.
This article was originally written on May 17, 2019 and updated on February 3, 2023.