Most small and medium business owners and entrepreneurs devise plans to improve their bottom line to attain their business objectives. One of the ways to do it is by choosing an ideal payment method for business expenses and vendors or suppliers. A business credit card that offers perks and rewards can help develop businesses, particularly small businesses, and startups.
While making investments in your business, choosing cash back credit cards can help boost your earnings. In other words, it is a way to make money by spending money. With such credit cards, you earn a little money for each eligible purchase or payment made on the card.
What is a cash back credit card?
With a business cash-back credit card, cardholders can receive a small percentage of purchases they made as a reward. Depending on the business credit card and the issuer, cash back accrues, which can be redeemed in several ways. However, it is generally paid back as a statement credit.
This type of credit card, also referred to as a cash rebate, aims to help you save money by giving back a certain percentage of your spending. Typically, the maximum monthly cash back you can get is capped at a certain percentage. No wonder why so many people in Malaysia are searching for a suitable cash-back credit card given that it can help you save up to hundreds of Ringgit annually.
How do cash back credit cards work?
Using your business credit card for eligible or acceptable business transactions will help you receive cash back rewards. In a way, you need to use your purchasing credit card to buy raw materials, equipment, or office supplies to earn cash back. How does a cash-back credit card work?
- Make a business purchase
The card issuer reimburses the cardholder for a small portion of each eligible purchase made with a cash-back credit card. In essence, every time you use the card, a small rebate is earned. The average business cash back ranges from 1.5 to 2 percent, sometimes even higher depending on the card issuer.
For instance, a tiered credit card may offer 1% cash back on business retail spending, 2% on dining, 1.5% on office supplies, and 0.5% on other purchases, as opposed to a flat rate cash back credit card that gives 2% on all acceptable purchases.
- Build cash back
Cash back is not available like a discount, which is applied right away. Typically, cash back gets accumulated every month and is reflected on the monthly credit card statement until it is redeemed. RHB offers unlimited cash back on business retail spending for both local and overseas to its corporate cardholders.
- Cap on cash-back rewards
The majority of programs provide unlimited cash back on all acceptable purchases. Nevertheless, some cards offer cash back you can earn on purchases up to a specific spending threshold. When you go over this limit, your benefits are scaled back. Make sure that there is no cap on your cash back if you incur a lot of expenses in business.
- Redeeming cash back
A credit card issuer, like a bank, determines the process for redeeming business cash back. For instance, some issuers may naturally apply cash back as a statement credit to your monthly balance. It may be an easy way to reduce expenses consistently every month. Some other credit card issuers allow customers to accumulate cash back over a period to apply to statement credits or particular purchases like travel or gift cards.
How to use a business cash-back credit card in the best way possible?
Here are some pointers to help companies maximize the use of cash-back credit cards.
1. Choose a suitable credit card for your business expenses
Receiving rewards for purchases you are making is one of the main advantages of business cash-back cards. That makes choosing the right business credit card very important. You may have a flat-rate card to earn cash back on all purchases equally if your business does not spend significantly in some specific spending categories.
If you are regularly paying for utilities, transportation, office supplies, and dining, it is advisable to have a credit card with bonus reward points on spending.
2. Use your credit card for all acceptable purchases
With unlimited cash-back offers, you should use business credit cards for all acceptable purchases to earn more cash back. If you can make timely payments, use a cash-back credit card for all purchases possible.
3. Pay promptly and in full
Interest increases over a period of credit card statements are not paid in full. Annual percentage rates (APRs) on credit cards are generally high, which means interest can mount up quickly. Nonetheless, you don’t pay any interest if you settle the card statement in full and before the charge-free period ends.
To conclude, you can effectively use the most suitable cash-backcredit cards every time for all eligible corporate expenditures to earn a little extra money.