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Don’t travel? Opt for other business rewards

Summary

If you don’t travel much for business or pleasure, there’s no point in getting a small-business credit card that specializes in travel rewards. Instead, look for a cash-back card or one that earns rewards you can use.

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Dear Your Business Credit,
I have a small business and want to know what credit cards you’d recommend I get to pay all my business expenses to earn rewards points. Can I also use the same card for personal expenses? In short, I want to rack up redeemable points for any purchase (business or personal). I rarely fly and am not interested in cruises. Your input is appreciated. Thank you! — Ken 

Dear Ken,
If you are using a business credit card, you can use it for personal expenses. Credit card issuers don’t police your spending to see if the office paper you bought at Staples or Office Depot was for your business or your child’s school project or if the dinner you put on the card was with a friend versus a client.

But whether you should co-mingle your expenses this way is another story. For the most part, it’s better to keep your business and personal finances separate. Doing so makes doing your taxes easier. It also helps you to establish that your identity is separate from that of the business, if you have formed an LLC. And maintaining a separate card for your business helps you to establish credit for it.

I’d suggest you find one card for personal use and one for the business. Both cards should let you earn extra points on the types of purchases you make most often, and offer that rewards you can use.

In your case, cash back cards would be a good bet. I have focused on looking for business credit cards that earn you points for general business purchases. The higher your credit score, the better your options.

The Bank of America® Business Advantage Cash Rewards Mastercard® credit card is aimed at businesses with an excellent credit history. The card offers 3 percent cash back on your choice of six categories: gas stations, office supply stores, travel, TV/telecom and wireless, computer services or business consulting services (for the first $50,000 in combined purchases each calendar year). It also offers 2 percent cash back at restaurants and 1 percent cash back on all other purchases. There’s no annual fee and the APR ranges from 14.49 to 24.49 percent variable.

Capital One offers several cards that might work for you. The Capital One Spark Cash for Business card offers 2 percent cash back on every purchase, with unlimited rewards. You qualify for a one-time $500 cash bonus once you spend $4,500 on purchases within three months from account opening. If you need employee cards, you may welcome the $50 cash bonus you get by signing up for one or more employee cards. There is no annual fee the first year, but it rises to $95 after that. To get this card, you need excellent credit. The APR for this card is 19.24 percent variable.

If you want to skip the annual fee all together, you might prefer the Capital One Spark Cash Select for Business. It lets you earn 1.5 percent cash back on every purchase — again, with no limits on the cash back you can earn. Spend $3,000 on purchases within the first three months and you’ll earn a one-time bonus of $200. There’s no annual fee and a 0 percent introductory APR until February 2015. This card, too, requires excellent credit. It comes with a variable interest rate, from 15.24 to 23.24 percent.

If you happen to have fair credit, Capital One offers another option, the Capital One Spark Classic for Business. There’s no annual fee and you earn 1 percent cash back on every purchase. However, the APR is 25.24 percent variable.

If you are planning to invest in office equipment or other expensive purchases in one swoop, the Business Gold Rewards Card from American Express OPEN may be a good fit. It gives you 25,000 Membership Rewards points if you spend $5,000 within the first three months of membership.

While it offers triple points for airline tickets — which won’t be very useful in your case — you can also earn two times the points for spending on advertising in select media, shipping and purchases at gas stations, and from select computer hardware, software, and cloud computing providers. You’re allowed to earn double or triple points on the first $100,000 of spending in each category per year (computer hardware, software and cloud computing are lumped together in one category), then one point after that. For this card, there is no annual fee for the first year, then $175 after that.

You can cash in Membership Rewards points for items ranging from computers to office supplies, or for gift cards from a variety of major retailers, including Dell, Cole Haan, Brooks Brothers and Pottery Barn. You can also redeem points for statement credits. The redemption rates are not great, but the sign-up bonus and potential for double points could make this card worthwhile for you.

Racking up points can help you stretch your budget, but don’t give into the temptation to win them by spending more than you planned. Stick to whatever budget you have set for the business and treat the points you earn as a nice dividend. That way you won’t end up paying interest on bills you can’t pay in full.

See related:How to pick the best rewards card for your business, Keep things simple with a cash-back credit card

The Bank of America content of this post was last updated on April 17, 2019.

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Credit Card Rate Report Updated: April 21st, 2019
Business
15.32%
Airline
17.50%
Reward
17.56%
Cash Back
17.60%
Student
17.79%

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