From cashback to travel rewards, credit card perks can be a great way to boost your e-commerce business. You can leverage the money you need to spend on your business to earn discounts on future purchases. It’s a win-win!
6 Ways to Maximize your Credit Card Rewards
1. Choose the Right Card
The best way to maximize your credit card rewards is to first identify your spending habits and then choose a card that rewards your most frequent purchases. For instance, if you have a small e-commerce business and you never travel, it doesn’t make much sense to put all of your expenses on a card that offers travel rewards. On the flip side, if you travel a lot for business and pleasure, a card that offers discounts on airfare and hotels would be a good fit.
Additionally, business credit cards usually offer greater rewards for certain categories of spending, such as shipping, dining, and gas stations. To maximize your rewards, you should choose a card that covers your largest spending group. If your spending covers many different groups, consider applying for a card that offers a minimum level of rewards on all purchases.
2. Everyday Business Spending
After you’ve identified your spending habits and chosen the right card, start using that card for everyday business expenses. Many cards will offer a base level of cashback on all purchases, in addition to a bonus cashback offer on specific categories of spending. Since you have to spend money on these expenses anyway, you might as well earn cashback so you can reinvest that money in your business or spend it elsewhere.
Using one card for all of your business expenses also makes it easier to stay organized. You won’t have to worry about commingling personal and business expenses if you have one card dedicated to business purchases, and you can make one lump-sum payment from your business account to pay off the balance at the end of each month.
On the other hand, if you want to maximize your rewards, you’ll want to have one card for everyday expenses and another for bonus categories.
3. Bonus Category Spending
Some cards offer extra rewards for certain categories like shipping, online ads, or phone. For example, the Amex Business Gold card currently offers 4 points per dollar spent on the top two of the following categories:
- Airfare purchased directly from airlines
- advertising in select media (online, TV, radio)
- select technology providers of computer hardware, software, and cloud solutions
- gas stations
- restaurants, including takeout and delivery
- shipping
If your business spends a significant amount in a bonus category, it often makes sense to have a separate card for those categories.
Two of my favorite everyday/bonus spending combos are from Chase and American Express. Check out Chase Ink Unlimited and Amex Blue Business Plus for everyday spending. Neither requires an annual fee. Chase Ink Preferred and Amex Business Gold are both great for bonus points on common business expenses. These cards require an annual fee, so make sure you’re taking advantage of the bonus categories to benefit after the increased cost.
4. Look for Sign-Up Bonuses
Another way to maximize credit card rewards is to take advantage of sign-up bonuses. Many credit card companies offer additional rewards for opening a new account and spending a certain amount in the first few months. Incentives can include cashback or travel points.
Just be sure to look for bonuses that match what you can afford to pay off. You don’t want to overspend in order to qualify for a bonus! However, a sign-up bonus can be a timely option if you’re already planning a large purchase, such as new equipment or a software upgrade.
5. Activate Rewards
Often, credit card companies will offer a revolving list of spending categories that are eligible for increased rewards. The catch? You have to first “activate” the reward. You can take advantage of these rotating rewards by tracking the rewards schedule and, if it makes sense, altering your spending so that you’re covering the bonus reward categories.
Be sure to check out any additional perks your card may offer. It’s become common for credit card companies to offer a host of added rewards like retail discounts, extended warranties, fraud protection, and more.
6. Don’t Carry a Balance
Last, but certainly not least: Don’t carry a balance on your rewards card. This goes for any credit card, really. While you should use your rewards card for everyday spending, you definitely shouldn’t spend beyond what your budget allows. Make sure you consistently pay off the entire balance each month. The quickest way to diminish the power of your rewards is to accrue interest on your purchases.
Making the Right Choice
With so many options to sort through, choosing the right business credit card can be overwhelming. Tree Street Advisory is here to help you make the best decision for your eCommerce business. We will help you identify your spending habits, earning limits, and credit score so that you can start maximizing your credit card rewards. Call (615) 219-9802 or schedule a free 30-minute introductory appointment today!
Allan Phillips is a Certified Financial Advisor (CFP®) and founder of Tree Street Advisory. He works with E-commerce business owners and Physicians who are concerned with issues such as cash flow management, high-earner retirement planning, debt repayment approaches, tax strategies, and business planning.