As a business owner, you’re always looking for ways to save money and boost your bottom line. One tool that can help is a business credit card that offers cashback rewards. By earning money back on your everyday business purchases, you can offset expenses and reinvest those savings back into your company. But with so many cashback business credit cards out there, how do you choose the right one and make the most of its benefits? Let’s dive in and explore.
How Do Cashback Rewards Work?
First, it’s important to understand the basics of how cashback rewards function on business credit cards. Essentially, every time you make an eligible purchase with the card, you earn a percentage of that purchase amount back as cash. The cashback is typically applied as a statement credit on your account. Some cards offer a flat cashback rate on everything (say 1.5% back on all purchases). Others provide higher cashback in bonus categories, like 5% back at office supply stores or 3% back on gas.
The key is finding a card with cashback categories that match your biggest business expenses. For example, if you spend a lot on online advertising, a card that offers bonus cashback on digital ad purchases could be lucrative. If your expenses are more varied, a flat-rate card may be the way to go.
Choosing the Best Cashback Card for Your Business
So how do you pick the right cashback business credit card? Start by looking at where your company spends the most money. Pull up your books or credit card statements from the past few months and categorize your expenses. This will give you a clear picture of which cashback bonus categories would benefit your bottom line the most.
Next, compare the cashback rates, annual fees, and extra perks of cards you’re considering. If a card has a high annual fee, make sure your estimated cashback earnings would more than offset that cost. Some cards waive the annual fee for the first year too.
Don’t forget to check if the card has a sign-up bonus. Many will offer $500 or more in bonus cash if you spend a certain amount within the first few months. Timing a large purchase or two around a new card signup can really jumpstart your cashback rewards.
Other factors to weigh are whether the card allows free employee cards, how easy it is to redeem your rewards, and if it offers any built-in expense tracking tools. Having a card that simplifies your bookkeeping is another perk.
Tips to Earn More Cashback Rewards
Once you have your shiny new cashback card, it’s time to develop a rewards strategy. Obviously, you’ll want to use the card for as many business purchases as possible, especially in those bonus cashback categories.
It can also pay off to pair a couple of cards, like using one that earns bonus rewards on office supplies and another that offers high cashback on travel. Just make sure you’re not paying multiple annual fees unless the rewards justify the expense.
If your card has rotating bonus categories that change every quarter, set reminders to activate the new categories. Then plan any related expenses for that three-month window to max out the 5% cashback.
Finally, to really come out ahead, avoid carrying a balance on your cashback card whenever possible. Earning 1-5% back is great, but if you’re paying 15-25% in interest by not paying the card off each month, you’ll quickly erase those rewards. Treat your business credit card like a debit card, and only charge what you can afford to pay off when the bill comes due.
The Bottom Line
By wielding a well-chosen cashback business credit card strategically, you can shave a little off your expenses every month. Those savings may seem small, but they can add up to thousands of dollars back in your business over the course of a year.
Whether you’re a freelancer, startup, or established company, there’s a cashback card out there that can help you earn money on the purchases you’re already making to run your business. All it takes is a little research and planning to find and use the right one. Your business budget will thank you.