I wrote a post last week about the best current sign-up bonuses for small business credit cards, which focused on the best currently available bonuses for business credit card rewards.
Reader Justin asked a great follow-up question, which I think provides an interesting example:
Timely post for me Lucky. I’ve been put in charge of revamping our credit card rewards plan. We do about $20m annual with $500k cc spend ($100k travel related.) Based in the NE between PHL and EWR and not married to any airline or hotel brand.
We have an AMEX biz account with 20 corp cards issued and a BofA cash rewards plan with 30 employee issued cards. We’d definitely want to get the most out of redeemable travel rewards (the cash back has really been 1% or less and we have those non-transferable MR points. Ugh.)
We’re doing our own research but always like to hear from the people who are in it everyday. Ink seems to make sense to replace the BofA setup and it sounds like the framework is there to make the AMEX account work harder for us in terms of redemptions for employee travel expenses. Your thoughts are definitely appreciated.
Now, I’m not exactly sure what Justin’s company is hoping to redeem points for outside of “employee travel expenses,” but it sounds like there are definitely some opportunities to improve this setup.
A 1% Rebate Isn’t Rewarding
Getting less than 1% back on purchases is just not necessary nowadays, and having non-transferable Membership Rewards points doesn’t make sense when there’s a better option. Justin noted that his business spends about $500k a year on credit cards, so for the purposes of example, let’s assume the following:
- ~$100k on travel related expenses (including flights, hotels, rental cars, etc.)
- ~$100k on business overhead (utilities, phone service, shipping, office supplies, computer equipment, etc.)
- ~$300k on items that likely don’t fall into “bonus” categories in terms of spending (of course, it’s even better if they are spending in bonused categories, but let’s err on the safe side for our example)
With their current business credit cards rewards programs, the best possible return is 1% back on business purchases. By changing their business credit cards they could potentially be receiving the equivalent of at least 2.5% back in rewards, which is obviously a huge difference.
The Right Card Makes A Difference
The first business credit card I would recommend is the Ink Business Preferred® Credit Card.
This is truly one of my favorite business credit cards with rewards, and I tend to think the value of the card speaks for itself.
The card offers 3x points on the first $150,000 spent annually on travel, shipping, phone, internet, and cable TV services.
For a company like Justin’s, it’s easy to see how quickly those points would add up!
In addition to being a more rewarding small business credit card, the Ink Business Preferred® Credit Card also offers several tools for managing small business expenses. Additional employees can be given cards for no fee, and the card administrator can set individual spending limits on each card.
The Ink Business Preferred® Credit Card also provides a service called Jot, which is an integrated app for iPhone and Android whereby card holders can snap pictures of receipts, which are then synced and uploaded to the central Ink account. According to Chase:
“Small business owners are constantly on the go and do not want to be reconciling reports with a shoebox full of receipts,” said Richard Quigley, president of Ink from Chase. “More than half of all active Jot users use the app from their smartphone while on the go. Receipt capture now allows Jot users to better and more easily organize their back office by throwing out that shoebox and taking those categorized receipts with them wherever they go. With less time spent reconciling receipts, small business owners and their employees can devote more time to growing their businesses.”
This is either an awesome or irritating feature, depending on who you ask, but I can see this being really useful for companies with lots of small transactions they need to keep track of.
In addition to receipt tracking, business owners can also create expense reports through the Chase web portal. This can be done for the entire company, or for individual employee cards:
Not only that, but you can also create quarterly and yearly breakdowns for each employee, or with all business expenses.
Larger businesses likely have accounting software to generate reports like this, but for small firms I’d think it would be helpful to be able to get a quick snapshot.
Given all these benefits, I think the Ink Business Preferred® Credit Card is a no-brainer.
When it comes time to redeem the points, Ultimate Rewards can be transferred at a 1:1 ratio to the following transfer partners:
|Aer Lingus Aer Club||IHG Rewards Club|
|Air France/KLM Flying Blue||Marriott Bonvoy|
|British Airways Executive Club||World Of Hyatt|
|Southwest Airlines Rapid Rewards|
|Virgin Atlantic Flying Club|
Some of these programs offer better values than others, in my opinion, but the versatility of Ultimate Rewards is going to be a huge benefit overall.
It’s also worth noting that you’re looking for more of a rebate towards travel, you can always redeem your points towards travel through the Ultimate Rewards mall. It’s typically not as great a value as you’d get by transferring points to travel partners, but even when redeeming through the Ultimate Rewards mall you’re still getting a 20% discount on travel, which is better than Justin’s company is doing at present.
Two Cards Can Be Better Than One
The American Express® Business Gold Card offers 4X on the two categories with which you spent the most, on the first $150,000 in combined purchases from the two categories each year. The bonus categories are as follows:
- Airfare purchased directly from airlines
- U.S. purchases for advertising in select media
- U.S. purchases at gas stations
- U.S. purchases at restaurants
- U.S. purchases for shipping
- U.S. computer hardware, software, and cloud computing purchases made directly from select providers
There’s a $295 annual fee on this card, which is worth being aware of. Amex charges $50 for the first Additional Business Gold Card and no annual membership fee for each Additional Business Gold Card thereafter. The maximum number of Additional Cards on an Account is 99.
You can also create quarterly reports by employee and by category through the American Express interface, which is again a helpful tool.
The American Express® Business Gold Card accrues Membership Rewards points, which are incredibly versatile. Membership Rewards points can be transferred to the following airline programs:
|Aer Lingus Aer Club||Choice Privileges|
|Aeroméxico Club Premier||Hilton Honors|
|Air Canada Aeroplan||Marriott Bonvoy|
|Air France/KLM Flying Blue|
|ANA Mileage Club|
|British Airways Executive Club|
|Cathay Pacific Asia Miles|
|El Al Matmid|
|Hawaiian Airlines HawaiianMiles|
|Qantas Frequent Flyer|
|Singapore Airlines KrisFlyer|
|Virgin Atlantic Flying Club|
There are tons of amazing ways to use Membership Rewards points for travel, so there’s huge potential for value here as well.
American Express also allows small business owners to redeem points towards a statement credit. It’s not a tremendous value in comparison to the other transfer options, but in certain cases it might make sense for some.
Maximize Bonus Categories
While the Ink Business Preferred® Credit Card is a credit card, the American Express® Business Gold Card is a charge card, so there isn’t a pre-set spending limit. Having both options can come in handy for small businesses, and by leveraging your spending you can really maximize the points earned.
Beyond that, by strategically dividing your small business spending between the two cards, you can really accelerate your points earning. As an example, let’s look at the $200k of business expenses we were discussing earlier, and assume that spend is divided between airfare, hotels, rental cars, fuel, phone service, internet, office supplies, and computer equipment.
With the current setup, Justin’s company is earning ~200,000 points on that $200,000 of spend – just 1% back, in what sounds like fairly unrewarding programs.
By splitting that same $200,000 of spend between the Ink Business Preferred® Credit Card and the American Express® Business Gold Card, his small business could be earning exponentially more points on their purchases!
Because of the bonus categories on the Ink Business Preferred® Credit Card and the American Express® Business Gold Card, you can spend the same amount of money in a given category, but receive two, three, or even five times as many points for money you’d be spending anyways! This means that 200,000 points could easily be well over 500,000 – depending on the exact spending breakdown.
That’s a dramatic difference, and doesn’t even account for Ultimate Rewards and Membership Rewards points being more valuable than the points he’s currently earning.
Making minor changes to your credit card strategy can really accelerate your rewards earning.
While this business credit card comparison is geared towards small businesses, I think the same ideas can be applied to personal cards, as there are great ways to bolster your mileage balances through strategic use of the right cards.
What do you think? Which cards would you recommend?
The following links will direct you to the rates and fees for mentioned American Express Cards. These include: American Express® Business Gold Card .