A closer look at commercial credit card rewards

March 16, 2021
Hands at a computer with a credit card

You already know your business credit card can be a practical way to pay for things your business needs — and an easy way to track your purchases. With customizable merchant codes and spending limits for each employee, you have built-in controls while affording them the flexibility they need. But one of the most often overlooked perks of using your credit card is… well, credit card perks! Most cards offer benefits like accruing reward points or earning cash back. But which perk is best for your business needs? Here, we’ll walk through the differences, the benefits of each, and scenarios in which they may come in handy.

Types of rewards
Credit card rewards are earned when you make a purchase with your credit card, thanks to a collaboration between the issuing bank and the merchant. Depending on the card, these rewards can be in the form of cash back, specific points such as airline miles or hotel rewards, or flexible reward points that could be redeemed for gift cards, merchandise, and other goodies (often including cash back as an option).

Some credit cards offer additional rewards periodically when you patronize certain categories of merchants, like gas stations or restaurants, to encourage you to use the card at these businesses. Cash back and reward points may be redeemed as a statement credit for your monthly bill, through online purchases, or by check. Miles and travel-specific points may be redeemed through travel booking portals for discounted flights and hotel rooms.

The skinny on reward points
Cards that offer flexible reward point options are a simple and versatile choice to consider: simple because redemption is often as easy as visiting your card’s site or portal, and versatile because of the varied options from which to choose.

The beauty of this type of card is its flexibility. If, after consulting your budget, you find that you’re a bit short in the “employee recognition” or “customer appreciation” category one month, a gift card purchased using your reward points may be the perfect surprise and doesn’t cost you a thing outright. Redeeming your points for travel for a hard-earned team retreat is another popular option, as is the merchandise mall — this might be the perfect way to “buy” that new coffeemaker for your office space. And as we mentioned above, with many flexible reward programs, cash back is also one of the options available.

Let’s talk cash back
Cash back credit card programs allow you to “earn back” a portion of your spending, either with a tiered reward program or a flat rate. While all cash reward credit cards let you redeem your purchase points (or miles in some cases) for cash back or statement credits, not all of them offer the option to cash in rewards for gift cards, merchandise, travel, and other options; likewise, many reward credit cards offer cash back as an option, but not all. For this reason, it’s important to consider which rewards matter most to you as you weigh your card choices carefully.

Cash back is straightforward and convenient: straightforward because you can redeem your rewards as statement credits, a check, or a direct deposit, and convenient because you can use your cash however it makes sense.

Cash back options are a nice way to sneak in some extra savings or offset expenses. Say, for example, that your operating costs — or even incidentals — are higher than usual. If you’ve not yet used your credit card rewards, this would be a practical use!

Choosing your path
Your business size and type, spending habits, and goals determine which type of commercial card or reward program works best for you and your employees (and when). And don’t forget, for many cards, there may also be opportunities to earn extra points by making common purchases using a rewards card — not to mention bonus promotions, which could offer new users generous point boosts.

In summary, reward programs and cash back each have their own advantages: Reward points offer the ability to redeem your points for the rewards you want most, while cash back cards give you direct, convenient cash rewards you can use any way you please. It’s best to base your card choice on your spending habits, business needs, and goals (like a company-sponsored trip), then use your card regularly to earn and redeem rewards. Just make sure you have a good understanding of your redemption options, reward accrual rates, and other important info.

Still have questions (or ready to sign up)? We’re here to help! Contact us at 402-323-1777 or visit our credit card page for more info.

  • Business
  • Running a Business
  • Business Credit

Learning Center articles, guides, blogs, podcasts, and videos are for informational purposes only and are not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.