Travel, Internet/Phone/Cable are biggest expenses.
NEW YORK – Small businesses are typically using credit cards to earn rewards, not to finance debt, according to a CreditCards.com survey of 500 small business owners and senior decision makers.
Some 70% of these small businesses have business credit cards. Among them, 46% said their favorite feature is earning rewards (28% cash back and 18% travel). Twenty percent put convenience at the top of the list. A mere 7% cited a low interest rate, and just 5% referenced the ability to finance purchases over time.
“The best way to maximize rewards is to sign up for credit cards that emphasize the areas where your business spends the most money,” according to Ted Rossman, industry analyst at CreditCards.com. The top categories cited by survey respondents were travel (22% reported that as their #1 spending category), internet/phone/cable services (15%), office supplies (13%), equipment/other supplies (11%) and advertising (10%).
The best credit cards for those spending habits include:
- Chase Ink Business Cash: 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet/cable/phone bills each account anniversary year.
- Chase Ink Business Preferred: 3 points per dollar on the first $150,000 in combined spending on travel, shipping, internet/cable/phone services and social media/search engine advertising each account anniversary year.
- Bank of America Business Advantage Cash Rewards Mastercard: Cardholders can choose their 3% cash back category from a list including travel, TV/telecom/wireless, office supply stores and more. They also earn 2% cash back at restaurants (with a $50,000 combined limit on the 3% and 2% categories each calendar year).
- Capital One Spark Cash for Business: 2% cash back on all purchases, an excellent choice for small businesses that want to keep it simple.
“Small business credit cards tend to offer more generous welcome bonuses than consumer cards,” Rossman added. The Ink Business Preferred, for example, has an 80,000-point bonus worth at least $1,000 towards travel (after spending $5,000 in the first three months). The Ink Business Cash and Spark Cash for Business cards have $500 cash bonuses (after spending $3,000 and $4,500 in the first three months, respectively). The Ink Business Cash never charges an annual fee and the Spark Cash for Business charges $95 beginning in year two. The Ink Business Preferred has a $95 annual fee which is not waived the first year.
Turning to small businesses without credit cards: 34% of those respondents said a reason they don’t have one is because their business is too small, 19% are worried about debt and 11% don’t think they would qualify.
“There’s no such thing as too small. You can even qualify as a sole proprietor, freelancer or side hustler using your Social Security Number,” Rossman said. “The sign-up bonus and rewards are well worth it, and it’s a convenient way to separate work and personal expenses. The debt concern is legitimate. Since the average small business credit card has an interest rate around 15%, chasing rewards only makes sense if you’re able to pay in full.”
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
