How to pick the best rewards card for your business
Your Business Credit
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
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Dear Your Business Credit,
around for a business credit card for a new business. How can I find out which
cards offer the best deals? -- James
to shop around, because the rewards on business cards do vary a lot. There are a number of online resources for comparing rewards business cards, including our business credit card list, which will give you an idea of the types
of rewards that some of the major cards offer. You can do a side-by-side comparison
of the cards' rewards, annual fees and APRs.
extra goodies you get from rewards cards can be enticing, step back and consider
how much a card will cost you to use before you apply. In some cases, cards
offering rewards may be more expensive to use than similar cards that don't
offer them. Ideally, your card will offer you rewards that, when all is said
and done, lower your overhead, whether by helping you to save the cost of
a plane ticket or by covering holiday gifts for clients.
rewards you earn be valuable enough to you to justify the costs? As a
guideline, the points generated by programs that award 1 point per dollar are
usually considered to be worth about a penny each. If you find a card that
awards 2 points per dollar, the value doubles.
But you also
have to consider cards' fees and the suitability of their rewards for your
purposes. You're starting a new business, of course, so it may be hard to
anticipate exactly what you'll spend. Drafting a budget will help guide you.
business owners should take a look at purchasing records for the past year.
That will give you an accurate picture of what you really tend to buy (and not
just the purchases that most of us tend to remember, such as plane tickets for a
big business trip).
see from the cards list, rewards programs run the gamut in terms of the goodies
they offer. Some cards reward one type of purchase more than others, so think
about what types of things you are likely to buy before you commit. For
instance, Bank of America's Cash Rewards for Business MasterCard will give you 2
percent cash back at restaurants, 3 percent at gas stations and office supply stores
and 1 percent cash back on all other purchases. The card might be ideal for a
consultant in Los Angeles
who will log a lot of miles driving to lunch and dinner meetings with clients.
who has to jump on a plane frequently, seek a rewards program that emphasizes air
miles and waives transaction fees. The Capital One Spark Miles for
Business Card gives you two miles for
each dollar you spend on the card. If you spend $1,000 in the first three
months, you get 10,000 bonus miles. The company says there are no blackout
dates or seat restrictions, and you can fly on any airline.
If you're a
solo professional who will be making a lot of trips to Staples or Office Depot,
the Chase Ink Business Card might be a good bet. It awards you 5 percent cash
back on the first $25,000 you spend at office supply stores and on phone, Internet
and cable TV services.
businesses mainly need credit cards for fuel purchases. Gas cards are located at the end of the CreditCards.com list, and as you'll see, the card programs often
provide a rebate on fuel purchases, as long as you shop at certain branded gas
choose a gas card, think carefully about where you and your employees do the
most driving and what stations they are most likely to use, so you actually get
the rebate. Also consider where you all fill up now. If everyone tends to use a
local, unbranded gas station near your office, it may be hard to give up that
convenience in order to get points.
Bear in mind
that rewards cards aren't an option for every business owner. Most rewards cards
require excellent credit, so if your credit history is spotty, your choices
will be limited until you improve your credit score. Typically, business cards
require a personal guarantee, so your personal credit history will affect your
choose a card, make sure you manage the cash flow at your business carefully
and stay current on your bill. Some cards will not award you the points you've
racked up if your check arrives late -- unless
you elect to buy back those points. Obviously, you'll get more value from your
rewards if you don't have to do that.
See related: Small-business credit card comparison chart, Used wisely, small-business cards can keep business afloat
Elaine Pofeldt is a journalist who specializes in entrepreneurship and careers, contributing to publications such as Fortune, Money, Working Mother and many others. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals.
Elaine answers a question about small business and credit from a CreditCards.com reader each week.
Send your question to Your Business Credit.
Published: March 4, 2013