All Articles Finance Is a cash-back card right for your small business?

Is a cash-back card right for your small business?

3 min read


This Spotlight on Business Credit Cards is brought to you by American Express OPEN, the leading issuer of small-business credit cards and charge cards in the U.S. OPEN offers business owners products and services to help them run and grow their businesses.

Cash-back cards offer cardholders a rebate on a percentage of their purchases. That is a powerful incentive for small-business owners, who can use all the extra money they can get. If you maintain a low balance, cash-back cards can allow you to save money on the monthly purchases that keep your business running.

But how can you tell whether a cash-back card is right for you and your business? And if you already have one, how can you maximize the value of your card?

Should you get a cash-back card?

Consider your business needs when deciding whether you should get a cash-back card. Small-business owners that do a lot of traveling might want to consider travel rewards cards, but if your business is mostly local, cash back may be a more attractive choice, according to The Wall Street Journal.

If you carry a balance from month to month, remember that cash-back cards may have higher interest rates. Factor in a card’s APR when evaluating it, and make sure the interest payments won’t erode the benefits of the cash-back program. If you plan to use your card infrequently, then other considerations — such as whether there is an annual fee attached — may become important.

Match your cash-back card to your spending habits

Understand the terms of your cash-back card. Some cards apply their highest cash-back rates only to certain types of purchases, so make sure you use your card when you buy those items. “An above-average cash-back business credit card will offer at least 1% cash back on all purchases and additional cash back on certain important small business spending categories like office supplies, telecom services, gas, and dining,” according to the card comparison website CardHub.

Some cards operate on tiered systems that offer different cash-back rates depending on how much you spend. Consider how much you expect to charge to your card to make sure you pick one that offers the best rewards for your spending level.

Spend wisely

No matter how high a cash-back rate your card offers, it still requires spending money. Make sure you are making sound financial moves — cash back should be a bonus rather than the driving force behind purchase decisions. And if you can’t pay off your card on time, “a cash-back credit card may not be the best bet for you,” writes Kevin Fleming of CreditShout.