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.