Is a cash back business card right for you?

Learn how they work and why they can benefit your business.

Your business credit card should offer rewards that align with your company's spending habits and goals. If you want to maintain a healthy cash flow, reduce your expenses and more easily track your rewards, a business credit card with cash back rewards may be a good option.

What are cash back business credit cards?

Cash back business credit cards typically allow you to earn back a percentage of each purchase you make. Usually, cash back rewards accumulate and may be redeemed as a credit on your account, reducing your overall balance. However, some cards or issuers may allow you to redeem rewards for gift cards or even cash it out via a check.

How do cash back business cards work?

Cash back rewards are usually one of the more straightforward business credit card rewards programs, since they represent a monetary value (unlike points or miles). However, it's important to understand the various earning and redemption methods so you can maximize your rewards.

You earn cash back rewards when you make purchases with your business credit card. With each qualifying purchase, you should earn back a percentage of the cost, similar to a rebate. How much you earn and which purchases qualify may vary between business cards.

Some cash back business credit cards offer a flat cash back percentage, like 2% for all purchases. Other cards may offer tiered rewards, with higher percentages for certain vendor or product purchases, such as 5% cash back on fuel, 2% cash back on dining and 1% cash back on all other purchases. Cards with tiered rewards usually have more stringent conditions, such as caps on how much you can earn or redeem at once.

Cash back rewards aren't always immediately available. With some business credit cards, you may have to accumulate a certain amount before you can redeem cash back rewards. Each purchase should help build your cash back total, which is usually listed on your monthly statement.

While some cash back cards make your rewards available only once your statement posts, Capital One rewards are available as soon as your transaction posts. This means cardholders can redeem multiple rewards at once.

Some business credit card issuers may automatically apply your cash to your balance each month, which can be useful for minimizing your monthly expenses. However, this may not be ideal for businesses that want to save cash rewards for a large purchase or redeem them as gift cards for employees.

Once you've accumulated enough cash back rewards—if they're not automatically applied to your balance—you should be able to redeem them to reduce your account balance. Some business credit cards may also allow you to redeem cash back rewards for gift cards, specific product discounts or as a direct deposit.

Many business owners have found creative ways to redeem their cash back rewards: Antonelli's Cheese Shop's owners used cash back rewards to cover employee health insurance. And the owner of Los Angeles-based Masienda used cash back rewards to fund research and development, bringing a new product to market in the midst of the pandemic. 

How a business might use cash back rewards

Imagine that your business spends a monthly average of $10,000 on travel costs and $25,000 on dining, supplies and software. If your business card offers 2% cash back rewards on all purchases, you'd earn back $700 for your purchases every month. This equates to roughly $8,400 in rewards every year—all because you used your business card for everyday essentials.

How to make the most of a cash back business card

Adopting a strategy to manage your business credit card account and rewards may help you get more value from them. To maximize your rewards and the benefits for your business, try to keep the following tips in mind.

Take advantage of other perks. If your business credit card offers benefits beyond cash back rewards, consider using them. Some cash back business cards may have promotional partnerships with specific entities, like big-name restaurants, hotels, event centers or supply stores. Spending at these places may earn you extra cash back rewards or additional discounts, saving you even more money. Capital One also offers entertainment and dining benefits to earn back even more cash on purchases that matter to you.

Set employee limits. While employees who are authorized to use your business credit card for purchases can earn back cash on your account, it's usually wise to set limits for their cards. With multiple people using one account, the balance may quickly rise, and setting employee limits may help keep your balance manageable. Capital One makes it simple to manage authorized users on employee cards.

Make responsible payments. The more you spend on your business credit card, the more cash back rewards you'll earn. However, carrying a large balance from month to month may cost you more in interest than you'll earn in rewards. Try to pay off large purchases in full and keep your balance low. If you're anticipating several large purchases, you may want to find a business credit card that offers an introductory 0% annual percentage rate (APR), giving you time to pay off those purchases before interest begins accruing.

Get to know your card. Keep track of your business purchases across the board, and understand the available benefits and reward rates. Cash back cards offer flexibility and adaptability to fit a wide variety of situations and business needs. 

Choosing the best cash back card for your business

Choosing the business card with the highest cash back rate may not always be the best option. To find the best cash back business card, consider how the rewards fit into your business's purchasing needs. If you spend a lot in one category, like fuel, then a card that offers more cash back on fuel purchases may lead to more savings. If your spending is diverse or variable, then a flat-rate cash back business card, like the Capital One Spark Cash Plus card, may be best.

It's also wise to pay attention to card terms and conditions. Business cards with the highest cash back rates may have annual fees, higher APRs or cash back earning limits. If you can earn back enough cash to cover the annual fee or you don't plan to carry a balance, then the high cash back rate may be worth it. There also may be limitations on how you redeem cash back rewards. If you want to reduce your business expenses, then a card that applies cash back to your account automatically may suffice.

Consider creating an outline of what you want from a business credit card, such as more cash back for fuel, an introductory APR, a low annual fee and cash back rewards that are applied automatically to your account. This could make it easier to find a card that fits your business. If you're ready to start earning rewards for your business expenses, browse Capital One Spark Business cards to see which one is right for you.

Introducing Spark Cash Plus

Enjoy unlimited 2% cash back, no preset spending limit, cash bonuses and more.

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