If you're a business owner or entrepreneur, you may already be interested in business credit cards. While these cards may provide ways to separate personal and business expenses and build up your business credit, there are other exciting benefits of business credit cards you may not have considered.
How do rewards credit cards work for businesses?
Similarly to personal credit cards, business credit cards can have rewards programs. While business credit card benefits will differ among cards, the concept is generally the same — use your card and earn rewards.
Rewards can come in different forms and can often be used in a variety of ways. You may be able to use them for cash back for reduced costs or extra perks when traveling, or for discounts with specific vendors. You may also be able to redeem them for gift cards to help with everyday expenses.
Types of business credit cards rewards
There are generally two types of business card rewards systems.
- Points: Points are credits earned by using your credit card for purchases. Depending on the card, points may be redeemable in multiple ways. This could range from gift cards to discounts at vendors.
- Travel: Travel rewards are also popular among business credit cards with reward programs. You still earn points, but they often have different names like miles instead. These can also often be redeemed in multiple ways. This may include discounts on airfare, rental cars, hotels or other related perks. There are also some business credit cards that are affiliated with airlines, such as the Chase United Club Business Card, that earn extra rewards with an airline and potentially offer other perks such as lounge access.
The pros and cons of business credit cards
Like when you make any business decision, you may want to weigh some of the benefits and potential drawbacks before applying for a business credit card.
- Credit history: Opening a business credit card can help establish your business' credit score, which may help your business in the future by potentially opening it up to more financing options.
- Separate finances: If you're a small business owner or entrepreneur, a business credit card may make it easier for you to keep your personal and business expenses separate.
- Expense tools: Some business credit cards may provide cardmembers with access to expense management tools.
- Interest charges: If you aren't able to pay your balance in full each month, you may face steep interest charges on a business credit card. This is a drawback of any credit card that you can't pay in full each month.
- Annual fees: Not all business cards have annual fees, but many do. Cards with more lucrative rewards programs may charge higher annual fees.
How to choose the right card for your business
Having a business credit card that earns points, miles or cash back may be beneficial by rewarding your business for making purchases that it needs to make anyway. The "best" business credit card for you will depend on how much money your business spends and where.
- Business trips: If your business requires a lot of travel, a business card that offers rewards that can be redeemed for travel may be the right choice for you. You may be able to earn things such as discounted flights, complimentary hotel rooms or lower rental car rates.
- Assorted expenses: If you spend money at major vendors, you may want to consider a business credit card with a points program that allows you to redeem those rewards for gift cards. Before applying for a specific business card, make sure the vendors they work with coincide with your business' needs.
- Offset costs: Cash back may be the right type of business card rewards program if you're looking to offset your business expenses. You may be able to use your earned cash back to reduce your credit card balance or reinvest in your business.
The benefits of business credit cards vary depending on your business and the type of rewards you're looking for. Whether your business requires regular travel or you're looking to earn cash back, there is likely a credit card out there that's right for your business.