Looking for a way to cut costs for your small business? Opting for a
business rewards credit card could be a good solution.
In addition to earning rewards for
everyday business expenses like travel, gas, and office supplies, business credit cards come with expense-tracking tools that
make it easier to keep tabs on your company's finances.
About 37 percent of business owners
are using credit to cover some of their costs, reports the National Small Business Association.
As of August 1, the average interest rate on a business rewards credit card was
15.74 percent, slightly lower than the average consumer rewards credit card
rate of 17.64 percent. However, if you're planning to get a business rewards
credit card, be aware that these cards aren't covered by the Credit
CARD Act of 2009, which protects consumers from arbitrary rate increases.
That isn't a concern if you won't be
carrying a balance from month to month, says Beverly
Harzog, an independent credit-card expert and consumer advocate.
Since interest rates can fluctuate substantially on these cards, you should
probably only get one if you can pay off the balance each month.
Also keep in mind that the credit card
company will look at your personal
credit score when you
apply for the card. "If your FICO score is not in the 700s, you might not
get the lowest rate offered," says Gerri
Detweiler, director of consumer education at Credit.com.
Competition for these cards has
slightly declined, says Anisha Sekar, vice president of credit and debit
products at NerdWallet, a credit card comparison site.
"I think vendors are pulling back in the small-business realm. They aren't
working as hard to court small businesses these days," she says.
"It's not exactly an ideal climate to snag that amazing sign-up bonus."
With that in mind, make sure you
choose the right business
rewards credit card
for your company.U.S. News spoke to credit card experts for their
recommendations:
Starwood Preferred
Guest Business Credit Card. This
card, from American Express, is a good bet if you stay at Starwood hotels,
Harzog says. Starwood's umbrella includes Sheraton, Westin, and St. Regis
hotels, among others. You'll earn four Starpoints for every stay at
participating Starwood hotels and resorts, and one point for all other hotels.
But the real benefit is the Starpoints you can earn after enrolling: You get
10,000 Starpoints automatically after your first purchase, and you can earn an
additional 15,000 Starpoints when you spend $5,000 in the first six months. The
card's $65 annual fee is waived during the first year.
You'll also be automatically enrolled
in Amex's OPEN savings program, which gets you discounts of 3 to 10 percent
with purchases at businesses like Hertz, FedEx, and OfficeMax.
Chase Ink Cash
Credit Card. Harzog
likes this card's cash-back bonus. You'll earn $100 cash back after your first
purchase, plus an additional $150 cash back after you spend $5,000 in the first
three months. As for the rewards, this card is on a tier system, which can make
things a little complicated. "Don't be put off by the fact that it can't
be laid out neatly on one page," Harzog says. It comes with 5 percent cash
back on the first $25,000 spent annually at office-supply stores and on cellular
phone, landline, Internet, and cable services. You'll also get 2
percent cash back on the first $25,000 spent annually at gas stations and
restaurants; then it's 1 percent cash back on all other purchases. The card
comes with no annual fee.
Capital One Spark
Cash Credit Card. You'll
get 2 percent cash back on every purchase, which adds up. You can also earn a
one-time $100 bonus if you spend $1,000 within the first three months. The card
charges a $59 annual fee (waived the first year), but that expense could be
worth it, says Brian Kelly, founder of ThePointsGuy.com, a credit card
comparison site. "If you're spending a lot, you make up for the small
annual fee by raking in higher rewards," he says.
Citi Platinum
Select/AAdvantage Card. Experts
recommend this card if you
frequently fly American Airlines. Currently, the card is
offering 50,000 American Airlines AAdvantage miles if you spend $3,000 within
the first four months--enough for two domestic round-trip flights. Citi will
also reimburse 10 percent of the miles you redeem each year up to 10,000 miles.
"That right there pays for the $95 annual fee," Kelly says. The
annual fee is also waived the first year.
Gold Delta SkyMiles
Credit Card. This
is one of the best cards for an individual airline, says Detweiler. You and up
to eight people can check your first bag for free on any Delta flight.
"That alone can save you the price of your $95 annual fee, which is waived
the first year," Detweiler says. You can also earn 30,000 bonus miles if
you spend just $500 within the first three months.
Each rewards card offers incentives
for different business expenses, so be sure to pick the best match for your
company.
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