Why Your Small Business Should Use a Cash Back Card

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Whether you are having a good year or missing your income goals, all entrepreneurs and small business owners want to increase their bottom line. An easy way to do this is to change the payment method you use for business expenses.

Choosing a credit card that earns rewards is essential for moving startups and small businesses forward. Selecting a card with cash back rewards can increase your bottom line when investing in your business. It is literally a way of “spending money to make money”.

Related: How entrepreneurs can scale and save money without start-up capital

How Refund Cards Can Help Your Business

As a consumer, you are probably familiar with the many cash back credit card options on the market today. Companies like Capital One, American Express, Chase, and others aggressively advertise on television, direct mail, and other media.

You might see these ads and recognize the value of a cash back credit card. You could even use one in your personal life. However, many entrepreneurs and small business owners do not associate the benefits of a cash back card with their business.

Cash back credit cards for business reimburse you for a percentage of the money you spend on business expenses. This includes expenses for office supplies, gasoline and accommodations for business travel, supplier services and more.

The amount of cashback varies depending on the card. Most companies offer a cash back rate ranging from 1.5% to 5%. Such a reimbursement may not seem like a small amount, but the money you receive adds up when you consider how much you spend on your business.

Related: How to choose a business credit card?

Collecting money from a cash back program directly offsets some of the money you spend on your business. It’s money that goes directly to your bottom line without requiring additional work or expense on your part.

For example, our agency uses the Capital One Spark Pro credit card, which offers 2% cash back. This can increase our income up to $ 100,000 without adding to the payroll or forcing us to undertake more projects.

What to look for in a cash back credit card for your business

Entrepreneurs have a number of choices for credit cards with cash back programs designed specifically for business owners. When considering a cash back credit card, consider the following:

Cash Back Rate: The amount of money you receive for your business expenses is not just a matter of more. While you want to maximize your cash back, it’s also important to evaluate the other features of the card before you apply.

Minimum purchases: Some programs require you to spend a minimum amount before you are eligible for cash back. For entrepreneurs and small business owners with a high volume of business spending, this is usually not a problem. However, if the monthly minimum is more than what you usually spend, it may be best to look for another card.

Categories of expenses: Rewards on purchases vary depending on the cash back program. Some cash back cards offer full reimbursement of all expenses related to your business, while others offer different levels of cash back for different types of purchases. Be aware of the different cash back levels when signing up for a credit card, and review the terms and conditions carefully so you won’t be confused by your rewards.

Capped rewards: The majority of programs offer cash back rewards on all qualifying purchases with no spending limits. However, some cards only provide the maximum cash back on purchases up to a certain spend amount. Once you exceed this amount, your benefits are reduced. If you’re spending a lot on your business, you’ll want to make sure your cash back isn’t capped.

Bonus: The allure of cash back credit cards isn’t limited to the extra money you earn on your purchases. Programs vary in their incentives, but you might be able to enjoy a cash bonus once your spending hits a certain level, $ 0 annual fee, and more.

As with any credit card, it’s also important to budget for the annual fee, APR, and other costs. Cash back programs can help cover some of the expenses associated with the card, but you need to be aware of the fees and interest rates that offset the money added to your bottom line.

Related: What 6 money professionals wish they had known about credit cards

Add it all up

Many entrepreneurs have used up their credit cards and even taken on debt to start a business. With the expense of starting and running a small business, credit cards can come across as both an indispensable ally and, when balances are high, a steadfast adversary.

Cash back credit cards allow entrepreneurs and small business owners to invest in the business while getting something back. The rewards might seem small in terms of percentages, but the money you are refunded on purchases can be a big chunk of the change.

Ultimately, companies with a lot of buys can add hundreds of thousands of dollars to their bottom line without having to work harder or hire more people.


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