How to Pick the Best Rewards Card for Your Business

By Elaine

Dear Your Business Credit,

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I'm shopping around for a business credit card for a new business. How can I find out which cards offer the best deals? 

- James

Dear James,

It's smart to shop around, because the rewards on business cards do vary a lot. There are a number of online resources for comparing rewards business cards, including our business credit card list, which will give you an idea of the types of rewards that some of the major cards offer. You can do a side-by-side comparison of the cards' rewards, annual fees and APRs.

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While the extra goodies you get from rewards cards can be enticing, step back and consider how much a card will cost you to use before you apply. In some cases, cards offering rewards may be more expensive to use than similar cards that don't offer them. Ideally, your card will offer you rewards that, when all is said and done, lower your overhead, whether by helping you to save the cost of a plane ticket or by covering holiday gifts for clients.

Will the rewards you earn be valuable enough to you to justify the costs? As a guideline, the points generated by programs that award 1 point per dollar are usually considered to be worth about a penny each. If you find a card that awards 2 points per dollar, the value doubles.

But you also have to consider cards' fees and the suitability of their rewards for your purposes. You're starting a new business, of course, so it may be hard to anticipate exactly what you'll spend. Drafting a budget will help guide you.

Established business owners should take a look at purchasing records for the past year. That will give you an accurate picture of what you really tend to buy (and not just the purchases that most of us tend to remember, such as plane tickets for a big business trip).

As you'll see from the cards list, rewards programs run the gamut in terms of the goodies they offer. Some cards reward one type of purchase more than others, so think about what types of things you are likely to buy before you commit. For instance, Bank of America's Cash Rewards for Business MasterCard will give you 2% cash back at restaurants, 3% at gas stations and office supply stores and 1% cash back on all other purchases. The card might be ideal for a consultant in Los Angeles who will log a lot of miles driving to lunch and dinner meetings with clients.

For someone who has to jump on a plane frequently, seek a rewards program that emphasizes air miles and waives transaction fees. The Capital One Spark Miles for Business Card gives you two miles for each dollar you spend on the card. If you spend $1,000 in the first three months, you get 10,000 bonus miles. The company says there are no blackout dates or seat restrictions, and you can fly on any airline.

If you're a solo professional who will be making a lot of trips to Staples or Office Depot, the Chase Ink Business Card might be a good bet. It awards you 5% cash back on the first $25,000 you spend at office supply stores and on phone, Internet and cable TV services.

Some small businesses mainly need credit cards for fuel purchases. Gas cards are located at the end of the list, and as you'll see, the card programs often provide a rebate on fuel purchases, as long as you shop at certain branded gas stations.

Before you choose a gas card, think carefully about where you and your employees do the most driving and what stations they are most likely to use, so you actually get the rebate. Also consider where you all fill up now. If everyone tends to use a local, unbranded gas station near your office, it may be hard to give up that convenience in order to get points.

Bear in mind that rewards cards aren't an option for every business owner. Most rewards cards require excellent credit, so if your credit history is spotty, your choices will be limited until you improve your credit score. Typically, business cards require a personal guarantee, so your personal credit history will affect your application.

Once you choose a card, make sure you manage the cash flow at your business carefully and stay current on your bill. Some cards will not award you the points you've racked up if your check arrives late -- unless you elect to buy back those points. Obviously, you'll get more value from your rewards if you don't have to do that.

See related: Small-business credit card comparison chart, Used wisely, small-business cards can keep business afloat