Business reward credit cards

One of the reasons businesses use credit cards is for the rewards. Many card issuers offer various rewards for spending, like air miles, cashback, or reward points that can be redeemed, and if used correctly these cards can effectively subsidise your spending, because you get money back for money spent.

However, before you choose a card you should think about what type of reward it offers, and be careful that the value you get from rewards is more than what you'll pay in interest or fees.

Shopping points

These schemes will have lots of different names depending on which provider you choose, but the concept is the same — for every £1 you spend on the card, you earn a certain number of reward points which can then be redeemed for various goods.

Each card issuer will have a different range of products that are available, so you should think about what kind of things your business might benefit from. It’s also important to remember that these points don’t have any real monetary value, and the reward scheme’s T&Cs will usually say that the company can change the value of a point at any time. This is unlikely, but possible — and many firms choose cashback instead.

Air miles or frequent flyer points

If you’re planning to use the business credit card for business trips, a rewards package focused on air miles makes a lot of sense because it could get you money off company flights in the future. However, if you never go abroad on business, choosing an air miles card wouldn’t make much sense!

Cashback

Cashback rewards work the same way as shopping points, but you get cash instead. The basic idea is the same as the two points systems above, so you get a reward for every £1 spent, but instead of redeemable points you effectively get a discount on your final credit card bill.

Cashback rewards are usually quite small, perhaps 0.5% or 1% of purchases, although lots of card providers will offer double when spending on particular items or with particular retailers.

Which type of business credit card reward is right for me?

Finding the right business rewards credit card comes down to a few factors, all of which deserve some thought before you make a final decision:

How much are you likely to spend on the card?
What type of reward do you want get?
Rewards vs. potential fees and charges

Fundamentally, the best rewards in the world aren’t going to make sense if they’re cancelled out by fees and charges. You should think about how much you’re likely to spend on the card, how the rewards are calculated, and crucially how you’re planning to use the card.

Using the credit card’s grace period

If your statements restart on the 22nd of each month, everything until the 21st of the next month will be included in the statement.

In other words, your spending from the 22nd of January to the 21st of February would be named something like “period ending 21st February”.

However, your billing date (or ‘statement due’ date) is usually a bit later — for example, it might be the 15th of the next month. In this example, the statement for “period ending 21st February” would become due on the 15th of March — so you have three and a half weeks’ grace before paying the bill.

Another way to look at this is that you can pay for things in late January, but only need the money on hand by the 15th of March to avoid paying interest.

So, if a card has an interest free period of 56 days (8 weeks), it can give you considerable flexibility in terms of managing cashflow.

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Rewards vs. real-world usage

For example, if you want a business credit card for expenses management and will definitely pay the balance every month, it makes sense to go for the best rewards package available, regardless of the interest rates. On the other hand, if you’ll use the card for occasional short-term borrowing, you might be better off choosing one with no rewards but a lower interest rate, to reduce the amount you pay in interest.

The point is, rather than just focusing on the rewards available you should think about the bigger picture, to make sure you’ve got the right business credit card for your situation.