A guide to business credit card rewards
Along with potential benefits like simplifying expense management and improving cash flow, business credit cards may let you earn rewards on all of your expenses. From cash back that could help offset everyday purchases to travel rewards that can benefit your business trips, credit cards with rewards incentivize your spending.
From choosing the right rewards to getting the most value, here’s what to know about business credit card rewards.
Key takeaways
- Business credit cards with rewards can help you optimize your spending when you use your card on eligible purchases.
- Depending on the type of business reward card you choose, you may be able to earn at a flat rate or within different tiered categories.
- The best business credit card rewards program should complement your spending and let you maximize the value of your rewards.
How do business credit cards with rewards work?
Business credit cards with rewards can help you earn cash back, miles or points each time you make a purchase. You can earn rewards on everyday business purchases and essentials, including travel. As your rewards accrue, you may be able to redeem them as statement credits or gift cards or put them toward travel expenses.
Business credit card rewards are either a flat-rate or tiered program. With flat-rate rewards, you earn the same amount no matter what you’re purchasing. But with a tiered rewards program, you earn different amounts for different bonus categories. For example, the Capital One Venture X Business card offers 10X miles on hotels and rental cars, 5X miles on flights and 2X miles on all other purchases.
Types of business credit card rewards
In general, there are three types of business card rewards:
- Cash back rewards: With a cash back business credit card, you earn back a percentage of each purchase. You could redeem cash back as a statement credit to lower your balance. And depending on the credit card company, you could cash out rewards via check or bank deposit.
- Travel rewards: Some business credit cards earn miles for each dollar spent, not just for what you spend on business travel. So what you purchase for your business can contribute directly to eligible travel expenses like airfare, hotels or rental cars. Many business credit cards also allow you to transfer miles to certain airlines or hotel loyalty programs.
- Points: Rewards points are credits you earn with each qualifying dollar spent on your business credit card. They can be redeemed for discounts on eligible expenses, such as meals, fuel or office supplies.
Keep in mind that the types of rewards you can earn, as well as how and when you earn and redeem them, depend on the terms and conditions of your credit card.
How to choose the best business credit card rewards for you
The best business credit card rewards program for you and your company usually depends on your business spending habits. In other words, the vendors you rely on and how much you spend between billing cycles can help determine which business rewards credit card suits your needs.
If you’re unsure which reward type is right for your business needs, consider the following steps:
1. Consider credit card annual fees
Some business rewards credit cards have an annual fee, and some don’t. In general, cards with higher fees may have better rewards and benefits. But you can still earn rewards with business cards without an annual fee.
If you don’t mind paying an annual fee, consider a card that comes with benefits that can help offset the fee.
2. Compare flat-rate and tiered rewards programs
To take full advantage of the rewards your credit card offers, you might consider the difference between flat-rate and tiered rewards programs:
- Flat rate: You earn rewards at one fixed rate. So if you have a card with 1.5% cash back, you will get $1.50 back for a $100 purchase, regardless of the type of purchase.
- Tiered: You earn rewards at a variable rate depending on the type of purchase. So you may earn 1.5% cash back on gas but 2.5% cash back on office supplies because that falls into a different spending category.
Consider your company’s spending habits. If your spending falls into common categories, a tiered program may be best. If you spend across multiple categories, a flat-rate program could put more money back in your pocket.
3. Weigh your business travel needs
If you travel frequently, you’ll likely get the most value out of a travel rewards business card. Many travel rewards programs incentivize travel-related spending, so you could earn and redeem miles at a higher rate for travel compared to other redemption options. Travel rewards cards often offer additional perks for business travel too, like airport lounge access.
Even if you don’t travel often now, you may still earn miles for everyday purchases. So if you see more frequent travel in your business’s future, a travel rewards card may still be a good choice.
4. Factor in how much you may want to offset your expenses
Cash back rewards are generally easier to redeem toward purchases. If you’d prefer to use rewards to offset expenses, keep your credit card balance low or reinvest in your business, a cash back rewards card could be for you. And unlike points and miles, there’s usually no need to calculate how much your cash rewards are worth.
How to maximize credit card rewards for your business
Regardless of the reward type, there are other aspects to consider when creating a rewards and spending strategy. To maximize your business credit card rewards, consider the following:
- Take advantage of introductory offers. Business credit cards sometimes offer an introductory rewards bonus to entice new customers. For example, Capital One business cards often have special offers like one-time cash bonuses or bonus miles when you spend a certain amount within the first months of opening your card.
- Compare your redemption options. Consider what rewards will have the biggest impact on your business spending. For example, fixed cash back percentages can help you save on large expenses. But the ability to redeem miles may be best if business travel is a priority for your company.
- Use additional card benefits to the fullest. Cash back, miles and points aren’t the only benefits a business credit card offers. Some provide perks like access to exclusive events, premium travel lounges and extended warranty protection. For example, the Capital One Venture X Business card offers a $300 travel credit, a complimentary Priority Pass™ membership and up to $100 toward Global Entry or TSA PreCheck®.
Business rewards credit cards from Capital One
Capital One offers a range of rewards cards that cater to the needs of your business. Explore options that focus on cash back, travel rewards, high spending and more.
As a Capital One business cardholder, you also have access to additional benefits, such as:
- Free employee cards
- Extended warranty protection
- No foreign exchange fees
- Pre-negotiated discounts on business essentials
Business rewards FAQ
Learn more about business credit card rewards with these frequently asked questions:
Are business credit card rewards taxable?
Because the IRS doesn’t consider rewards to be income, business card rewards aren’t taxable. But you won’t be able to deduct business expenses you paid for using rewards, even if your rewards covered only a portion of the expense.
For example, say you paid $500 for a rental car and applied $150 worth of rewards to the expense. Although you’re not required to pay taxes on the $150, you may only deduct $350.
Can you use business credit card rewards for personal use?
It’s best to keep in mind that business rewards programs are typically designed to help you manage and grow your business.
Can employees earn and redeem rewards with their company credit card?
In general, employees with company credit cards can earn rewards. But it’s up to their employer whether they may redeem the rewards.
With Capital One, you can add employees to your business credit card account as authorized users or account managers for free. They’ll receive their own cards but aren’t responsible for making payments. Employee cards can help your business earn rewards faster, simplify expense reporting and eliminate reimbursement paperwork. Learn how Capital One can help you manage employee credit cards.
Business credit card rewards in a nutshell
Choosing the right business rewards credit card should help you earn valuable rewards that can reduce your overall costs. Whether you travel frequently or have miscellaneous expenses, how you spend and redeem rewards may influence the program you choose.
If you’re ready to start getting rewarded for the purchases your company makes, compare Capital One business cards today.