Should you get a business cash back credit card?
Quick insights
- Business cash back credit cards allow cardmembers to earn rewards as cash back on business expenses.
- Cash back cards typically either earn a flat percentage rate on purchases or have specified spending categories that earn cash back at an accelerated rate.
- Some credit cards allow rewards to be redeemed for statement credits, direct deposits or miles.
When you're managing a business, making the most of every dollar is a priority. If you have considered applying for a business credit card to help maximize your earning potential on business expenses, understanding how business cash back cards work may help unlock ways to stretch your dollars further.
Read on to learn more about what cash back business credit cards are, how they work and some things to consider when choosing one for your business needs.
What are cash back business credit cards?
Cash back business credit cards allow business owners to earn cash back rewards when making purchases with their card. Depending on the specific credit card, rewards are either earned as a percentage of each purchase or via spending categories that earn cash back at an accelerated rate. Reward structure varies by credit card.
While these cards operate much like personal cash back cards, they usually include features specifically designed for businesses, which can include expense tracking, integration with account software and controls over employee spending.
How do cash back business credit cards work?
When applying for a business cash back credit card, you may want to consider how the card earns cash back rewards and redemption options.
Earning cash back
Many business cash back credit cards earn a percentage of your eligible purchases. For instance, your card might earn 1.5% cash back on all purchases, meaning a $100 purchase earns $1.50.
Some cards also have categories—either fixed or rotating—that earn enhanced rewards for certain types of expenses like travel, advertising or office supplies. So, your card could earn 1% cash back on most purchases but 5% cash back on travel.
Redeeming cash back rewards
It may be helpful to determine how and when you can redeem rewards when considering a business cash back card.
Some card issuers may have a rewards ecosystem that allows for multiple redemption options. So even though your card earned cash back, depending on the card, you may be able to redeem your cash back rewards in several ways, including:
- Direct deposit
- Statement credit
- Travel
- Merchandise
- Experiences
- Gift cards
Many credit card issuers allow cash back rewards to accumulate until you’re ready to redeem them, but it can be helpful to determine if there are provisions around the amount of rewards you can redeem at a time and when you may need to redeem them.
How to choose a cash back business credit card
Choosing a suitable cash back business card often means looking for features that match your business's needs and spending habits.
In addition to how your card earns cash back and how you can redeem rewards, you may want to consider the following as you compare cards:
- Employee card options: Business credit cards may provide the ability to set or monitor individual spending limits for employee cards. Some cards also have complimentary employee cards while others may charge a fee.
- Expense management tools: Some cards may provide detailed reporting or integrations with accounting platforms for simpler bookkeeping.
- Annual fees: Business credit cards may have annual fees, so it can be helpful to consider annual fees in relation to the benefits provided by the card.
- Introductory offers: Some business cards have welcome bonus offers that may include cash back bonuses or an introductory Annual Percentage Rate (APR) for eligible cardmembers. There are typically spending requirements that the cardmember must meet to earn a welcome bonus offer.
Ways to make the most of a business cash back credit card
Here are a few tips to help you make the most of your card and its rewards earning potential:
- Putting eligible business purchases on the card: Using your card for recurring business costs and utilizing employee cards may help your business accumulate rewards faster. It can also be helpful to identify purchases with the highest cash back rates and use your card for those business expenses.
- Making timely payments: Paying your statement balance in full every month may help you avoid paying interest on your purchases as well as having a positive impact on your business credit score.
- Regularly reviewing card terms: Staying informed of changes to reward rates or card benefits can help you earn the most rewards from your purchases. This may be especially true if your card has rotating rewards categories that need to be activated each quarter.
Potential considerations before applying
You might want to factor in a few considerations before applying for a business credit card.
For example, you may want to assess your eligibility for a particular card. Factors often include the legal structure of your business, its revenue, its credit history and potentially your personal credit score.
Some business cards also may require a personal guarantee, meaning you could be personally liable for charges if your business cannot repay the balance. It can be helpful to evaluate your business's financial position to help decide if this is the right time to apply for a business credit card.
In summary
Business cash back credit cards may offer a way to earn rewards on everyday company purchases. When considering a card, it may be helpful to review the card’s cash back rates and how you can redeem cash back rewards. Understanding how your spending matches the card's rewards structure may help you get more value out of your everyday business expenses.
