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Many business credit cards feature rewards and perks designed specifically for business owners, such as travel rewards or the ability to earn cash back in the areas where they spend the most.
Here's what to know about how business owners can benefit from using a business credit card, types of business credit card rewards, and strategies for maximizing business card rewards.
The best business credit cards offer several advantages.
Business owners keep their business finances separate from personal for several reasons.
According to Experian, the average total credit limit for business owners is about $56,000, while the average total credit limit for consumers is about $30,000. Charge cards are also an option for businesses and often have no credit limit at all.
The limit you get will depend on your financial details and credit profile.
What draws many business owners to get a business card are the perks and features -- including travel rewards, cash back, and financial reporting tools -- the cards often provide. The ways to earn perks tend to be aligned with the way businesses operate.
For instance, instead of offering higher rewards for grocery shopping, a business credit card might offer bonus points for office supply purchases.
Business credit cards can often sync to your business accounting software so you can manage the account from within your own financial ecosystem. You'll also get perks related to employee credit cards, such as the ability to set individual spending limits.
Business credit card rewards can help you save big on business expenses. The extent of savings depends on how much you spend, the rewards rates, and the types of rewards your card offers.
Business credit cards commonly offer the following types of rewards.
Travel rewards come in the form of points or miles, as well as freebies and discounts when you use the card. Perks could include free lounge access, free checked bags, free or upgraded hotel rooms or flights, or statement credits that can be used for Global Entry or CLEAR Plus memberships.
Business owners who don't do a lot of traveling may prefer cash back business credit cards. Some business credit cards offer cash back on all purchases, while others feature increased cash back in specific spending categories, like advertising or internet service.
You can use a business credit card to accumulate points, which can then be redeemed for travel, statement credits, cash back, online shopping, or gift cards, or transferred to airline or hotel partners, depending on the credit card rewards program.
Some business credit cards offer a 0% introductory APR during the card's introductory period, which is typically six to 12 months, but could be longer. A zero or low-interest introductory APR could be a good tool when you know you need to make a large purchase and you want to pay for it over time.
You can earn business credit card reward points by using your rewards card. In most cases, only purchases count. You don't get points for cash advances, interest charges, balance transfers, or other non-purchase transactions. The way you earn points depends on the card, but it typically falls into these categories:
Rewards points can be redeemed in a variety of ways, including using them for travel, exchanging them for statement credits or cash back, or using them to buy gift cards.
The most valuable business rewards depend on your specific business needs. For instance, if you fly often, using a business card that offers miles or points that can be used toward travel can help you save on travel-related business expenses.
On the other hand, if your business doesn't require a lot of travel, taking advantage of a card that offers unlimited cash back or cash back in a spending category where you have substantial business expenses can help you cut costs and maximize rewards.
Ultimately, no matter what kind of rewards you earn, they are only valuable if you use them. Be sure you don't let them languish, as they can lose value over time -- credit card issuers sometimes retool their rewards programs and could make points worth less or lower the number of travel partners they work with.
Use your card strategically and pay your bill in full and on time every month to minimize or even eliminate interest charges. You might also be building a strong credit profile for your business. (Note that having a business credit card doesn't guarantee that you'll also have a business credit file.)
Follow these tips.
Paying for business expenses with your credit card is how you earn rewards. Use your card instead of cash or a debit card to take full advantage of your rewards.
Spending money just to earn rewards doesn't make good financial sense. Stick to your budget and only purchase what you need for your business to avoid unnecessary credit card debt.
Carrying a balance on a credit card can cancel any gains from credit card rewards. Paying your bill in full and on time each month is the best way to avoid credit card interest, which averages over 20%.
Credit card rewards can lose value over time. Using your credit card rewards as you earn them can help you maximize their value.
As long as you can pay off the balance each month, carrying multiple cards to use for different types of purchases can be an effective strategy for maximizing rewards. For example, you can use a travel rewards card for travel-related business expenses and a cash back card for office supplies or phone services.
Many cards offer considerable cash back or statement credits if you make a minimum amount of purchases within a few months of getting your card. If you're after a sign-up bonus, make a plan for meeting the requirements before you apply for the card.
Used strategically, business credit card rewards can make your money work a little harder for you. Enjoying credit card perks is a benefit you get to enjoy as a business owner. By making informed choices about which cards best match your business needs and following sound financial practices, you're not just managing expenses -- you're investing in your company's future.
The key is to start small, stay focused on your goals, and let the rewards enhance your business rather than drive your decisions.
You can use your business credit card for pretty much any transaction of your choice, but it's a better idea to keep business and personal finances separate. Business cards are designed for business use.
Some credit card issuers have policies against using their business credit cards for personal purchases. If an issuer finds out that you have been using your business card for personal purchases, it might decide to close your account.
Every rewards program has its own rules and reward program partners, so ask the credit card issuer about the specific transfer you want to make. Many business credit cards do allow you to transfer your points.
Credit card reward points generally don't expire as long as your account is active and in good standing. However, points or miles accrued through some airline credit cards may have an expiration date. This is a good reason to use your points regularly and not let them sit dormant in your account. An unused reward point has no value at all.
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