While many people utilize their business credit card to make payments and access capital, smart business owners use their credit cards to extract value. Maximizing the value of business credit card rewards can result in a business having lower than expected cash outlays for expenses and more satisfied employees, and developing a mindset that focuses on efficiency.
In most cases, rewards accrue to the company when authorized employees spend money with the business credit card. However, it is up to the employer to ensure that their business credit card users understand the rewards, and how both the individual and company benefits. Here are several strategies to help you maximize the benefits for your company.
1. Know the rewards and perks that benefit your business.
Knowledge is power. Similar to personal credit card reward programs, business reward programs allow business owners to receive cash back, earn miles or points or get discounts for the dollars they spend though their business credit card activity. As such, the first step to maximizing your rewards is becoming familiar with the reward program for your small business credit card.
Some business rewards credit cards yield the same amount of benefit on all purchases, while others provide more rewards depending on the category of spend. If your employees are frequent fliers who travel often for business purposes, you may want to consider getting a card where you can receive significant rewards for traveling. If your business does not require a lot of travel, then consider getting a business credit card that provides rewards based on what your company values.
2. Check out bonus offers.
Many business credit cards have bonus offers for signing up for the card or spending a certain amount of money on the card within a certain amount of time. As a result, it's important to read the fine print on what bonuses your credit card offers.
Savvy business owners will time their expenses appropriately to match bonus periods offered by the card issuer...
One card issuer may give 50,000 in membership points immediately after signing up for the credit card. Another card issuer may offer 100,000 in membership points after spending $25,000 over the course of three months since signing the contract. Other credit cards may offer bonus points if you spend within certain categories. (Bonus categories may include: advertising, office supply stores, and utilities, to name a few.)
3. Look into insurance and purchase protection.
Small business credit cards may offer another valuable benefit: protections. For instance, the card may offer travel protections, including travel insurance, lost luggage reimbursement and auto rental collision damage waivers. Some cards will also provide coverage for losses in shipments, product protections and coverage for employee cell phones.
For employees who desire peace of mind when traveling, and owners who want to ensure that specific protections are in place, make sure you have a thorough understanding of what each card offers. Then, compare all the card offers, and decide which one provides the protections that meet the needs of your business.
4. Pace your spending to maximize your rewards.
Savvy business owners will time their expenses appropriately to match bonus periods offered by the card issuer, or focus their spending heavily in one or two categories in order to reap bigger benefits. Either way, these business owners recognize that they can extract more value from these credit cards if utilized with intentionality.
Let's say your business has its annual holiday party and offsite in December. You can actively plan to use the card for those events in months where you will receive additional rewards due to a bonus period.
5. Find introductory 0% APR offers for balance transfers.
You can reduce your credit card debt and monthly cash outlay by taking advantage of business credit cards with 0 percent APR introductory offers. In these scenarios, you can often transfer an existing credit card balance on a current business card to a new card, and not be charged interest on the new balance given the 0 percent rate. Even if you do not have an existing balance to transfer, any new charges on this new 0 percent APR card will not accrue interest charges.
Now, most 0 percent APR introductory offers usually only last for a limited amount of time. As such, you can avoid a sudden increase in your credit card balance from additional interest accrual if you pay off the entire credit card balance before the 0 percent APR timeframe ends. Finding cards with 0 percent APR offers is a way to manage cash flow: You allow yourself time to pay off your credit card balance without the additional interest cost that comes with carrying a balance on your credit card.
Read more articles on credit-card financing.
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