Business Credit Cards and Cash-Back Rewards: Pros and Cons
As we all know, small business owners have a lot to keep track of. There are budgets to develop, strategies to implement and seemingly endless payments that must be made to vendors and employees alike, among countless other things.
It’s therefore understandable that a small business owner might have neither the time nor the energy to stay on top of the minutia of a business credit card rewards program. And while this may have once meant sacrificing lucrative rewards potential, Capital One’s newest business credit card could significantly alter that dynamic.
The Card
While the Capital One Business No Hassle Cash Premier has many benefits, the reason it stands out is the impressive 2 percent cash back it provides across all purchases. There aren’t any rewards tiers, compulsory rewards program memberships, or expiration dates. Since you earn rewards in terms of cash, there’s no need to worry about rewards devaluation. Simply sign up for automatic redemption via check, statement credit or gift card, and recoup 2 percent of every purchase you and your employees make.
Oh, and as if that wasn’t enough, you can easily earn $150 in initial rewards bonuses.
Will It Fit Your Business?
Still, you must be mindful of how this card will fit into your company’s payment strategy before jumping at its on-paper benefits and submitting an application. If your business does not revolve any credit card debt and does not anticipate doing so in the future, then it's likely to be a good fit.
If your business does revolve its credit card debt, then it is important to realize that the new credit card law (the CARD Act) does not currently apply to credit cards branded for business use. As a result, business card issuers can change the interest rate on your existing debt for any reason, at any time.
Revolving a balance on a business credit card is therefore dangerous, although I can suggest two ways to help your business minimize the risk:
- A two-card strategy: This involves using a personal credit card for funding purposes and a business credit card for purchases that you will pay for in full.
- A Bank of America strategy: BofA voluntarily extended the major CARD Act protections to its business credit cards, so a Bank of America business credit card is safe to use for all purchases.
If the simplicity that comes with using a single business credit card trumps that of lucrative no-hassle rewards, then a Bank of America business credit card, and not the Capital One Business No Hassle Cash, is right for you. If not, then the Capital One Business No Hassle Cash Premier would be a good option for the business credit card with which you will make everyday purchases and vendor payments.
Why Not Just a Personal Credit Card?
Perhaps you’re wondering why using a business credit card is necessary at all. Why not just use one of the best general-consumer rewards credit cards for every business purchase? After all, most business credit card issuers hold you personally liable for card use and report usage information to your personal credit reports anyway.
For starters, Card Hub data shows that there aren’t any personal rewards credit cards currently offering 2 percent cash back on all purchases. In addition, business credit cards help you track business spending, prepare your taxes, control employee purchasing, and earn rewards on every dollar you and your employees spend.
Conclusion
Whether you wind up using the Capital One Business No Hassle Cash Premier card or not, its release will likely benefit you in some way. Since the Great Recession ended, credit card companies have been fiercely competing for customers who maintained excellent credit during the downturn.
This offer—like the trends toward long 0 percent introductory periods and high initial rewards bonuses that we have seen—is simply a manifestation of that competition. And like any good competition, it takes two to tango, so we should expect other issuers to roll out some attractive new business credit cards in the near future in order to keep pace with Cap One’s business credit card offers.
This article is from the editorial team at Card Hub, a leading credit card comparison website.
