Choosing The Right Business Credit Card

With so many credit card reward programs on the market, it can be challenging to keep up with the best deals being offered. Whether you'll save more with a point-based reward card or one that offers cash back depends on how much you spend and where you spend it. Do your research and choose a card that best matches the needs of your business.

Points Earn Best Value On Travel Dollars

Credit cards offering points or miles for each dollar spent typically provide the most value for businesses that are highly travel dependent. Miles may be redeemed for big-ticket items such as airline seats, hotel rooms, rental cars or gas, saving you potentially thousands of dollars in travel costs each year. Purchases made in these categories are also awarded higher reward values by travel-focused cards. This is especially true for co-branded credit cards linked to major airlines and hotel chains. Co-branded cards may also offer added perks like free checked bags or discounted companion fares that yield even more savings.

While the rewards for credit card miles may be great, you run the risk of missing out on their value if you fail to redeem before they expire. And cashing in miles is not always as easy as you think. First, you need to accumulate enough miles to qualify for a reward. Then you may run into blackout dates or other time use restrictions. If you're using a co-branded credit card, you could potentially be limited to flying on certain airlines or staying in a specific hotel if you want to redeem rewards—regardless of whether this is the less expensive or most convenient option for your business.

Many travel cards also charge an annual fee of several hundred dollars to help them offset the money they lose on big-ticket rewards. Yet, if you don't redeem your miles, you'll be the one losing out.

Cash Back Cards Offer Simplicity

With a cash back card, rewards come in one form—cash. You still accrue points with every purchase, but may only redeem them for cash equivalents. Few cash back cards charge an annual fee, so you pay $0 to use your card. This also applies to employees with company credit cards who accrue cash back with each business purchase.

Some credit cards, like the BECU Business Cash Back Credit Card, which offers 1.5% cash back, automatically credits the percentage of your purchases back to your statement balance each month. This offers the most hassle-free option for busy entrepreneurs. No point tracking needed. No redemption required.

Calculate Your Reward Percentage

Because cash back and points-based cards operate so differently, it is challenging to make an apples-to-apples comparison between programs. Use the formula below to calculate your point reward percentage and compare that to your cash-back rate to determine the better deal.

Prize value / points needed = (Dollars per point) x (points earned per dollar) x 100 = Point-based reward percentage

Below is an example of how to calculate the reward percentage for the purchase of a $300 airline ticket requiring 30,000 points to redeem. At a 1% reward percentage, this card is providing less value than a card offering 1.5% cash back.

$300 / 30,000 points = 0.01 dollars per point x 1 point earned per dollar x 100 = 1.0%

Unless you travel frequently for your business, cash back is often a better value than point-based rewards.

To learn more about the BECU Business Cash Back Credit Card visit: www.becu.org/cashrewards.