You probably have a rewards credit card or two in your wallet for personal use; maybe your purchases earn you free lattes or airline miles. But is your business credit card earning you any perks? If not, it’s time to explore the possible benefits of using a rewards credit card for your business.
A boggling array of rewards cards exist, offering everything from music downloads to discounts at Graceland. Some of these rewards programs are clearly visible on the card, while others are known only to the cardholder. Choose reward partners that won’t carry any negative baggage, no matter where the card is presented. You might not want one that’s cobranded to a local sports team, for example. What if your vendor likes the other team? Consider getting a reward card that doesn’t broadcast what goodies you’re getting. Or get one that awards points that are redeemable in a wide variety of ways.
Decide Who Gets the Rewards
Before you hand out new credit cards to your employees, decide who gets the perks your rewards card grants. Generally the beneficiary is the person whose name is on the card; so if you’ve issued credit cards to employees, the rewards are theirs to spend as they see fit. This could pay some real dividends in employee goodwill. For example, allowing frequent-flying employees to earn free plane tickets they can use for vacation might be a great way to build employee loyalty, at little cost to you.
If you want to control how the rewards are spent, for instance, if you only want those free plane tickets used for company trips, talk with your card provider to make sure your rewards program is structured so the business retains the rewards.
Pick an Appropriate Perk
Rewards cards can help your business if chosen wisely. Do you need professional clothing? Maybe your rewards card could earn you a suit at an upscale department store. Do you buy a lot of bulk supplies for your business? Maybe you’d like to earn discounts on your Costco bill.
If employees use your company credit card, consider whether they should all have the same rewards program. Having more than one partner may confuse the message you give the public about your company or may create hostility among employees who feel others are getting better rewards.
Alternately, if some employees travel and others don’t, perhaps one group would best benefit from a mileage card, while others from one with clothing rewards. Bottom line: Make sure if some cardholders at your company get a card with perks, they all do, so there aren’t any hard feelings.
Consider Use Patterns
A rewards card may not be a good deal, depending on how you run your business. Do you pay the card off each month, or do you tend to carry a balance? If you don’t keep a zero balance, your business could end up paying interest that wipes out any perks you receive from the card.
Don’t Get Ripped Off
Carefully scrutinize the fees and interest rates charged by any rewards card you’re considering. Some charge substantial fees, while others offer low introductory interest rates that then spike much higher after a short time or if you are late with a payment. In general, rewards cards tend to be expensive.
The best way to think of it is that the freebies that come with rewards cards aren’t really free. The credit card company pays for them through higher fees and interest rates. Weigh the pros and cons carefully to see whether a rewards card makes sense for your business.
Business reporter Carol Tice contributes to several national and regional business publications.