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Using a credit card to fund your business expenses is not all one-way traffic – use it right, and you can earn generous rewards. Here we explain how to use a business credit card to claw back some of your operation’s spending.

What is a business credit card?

A business credit card is just like any other in that you can use it for purchases up to a set limit. However, it differs from a personal credit card because it’s strictly for work-related spending. 

While the annual percentage rate (APR) of interest is essential for many companies when choosing a business credit card, rewards are the deciding factor for others. This is especially true for businesses that clear their credit card balances each month, as it makes the APR on outstanding balances irrelevant. 

If this is the case for your business, you may be interested in a credit card with rewards that can offset future spending, reducing the cost of running your business.

What rewards can you get with a business credit card?

The range of rewards you can get on business credit cards is vast, making it important to select a card that offers rewards that would benefit your firm. For example, if you regularly fly overseas on business, a card earning air miles could be attractive, but less so if you work locally. 

Here’s a rundown of the main types of rewards currently attached to business credit cards:

• Cashback – typically tiered, so you may earn 0.5% to 1% on everyday spending, but perhaps up to 3% at specific outlets. Introductory deals may offer higher returns, or there could be a cap on the amount of cashback you can earn each month

• Avios points – you can use these as air miles to pay for flights, hotel rooms and other travel-related perks 

• Card provider points – you can put these towards purchases at specific outlets

• Exclusive savings – money off goods at particular outlets, such as Amazon, Dropbox, Slack and trade retailers

• Gift cards and e-cards – points exchanged for gift cards to purchase work or non-work products and experiences

• Bonus points – typically offered if you spend over a certain limit on your card within a set timeframe. For example, you may earn 10,000 extra Avios points if you spend £5,000 on your card in the first three months

What spending won’t earn credit card rewards?

You can’t earn points for paying fees, balance transfers, cash advances, foreign currency or gambling. You also won’t get any rewards if your card provider suspects your spending infringes the law.  

On the other hand, you can earn points or cashback on most other purchases linked to your business. The list is long but includes equipment, office supplies, transport, utility bills, fuel, corporate entertaining, travel for work and employee benefits. 

How do you redeem rewards with a business credit card?

You can claim rewards in several ways, depending on the type of benefit and individual card provider’s policies. 

The main ways to convert rewards are:

Redeeming points

Typically, the provider debits points to your account, with the credits appearing on your card balance within around three days. 

You can search the list of affiliated retailers and other outlets, selecting which you want to purchase from via the credit card point checkout. You can use your credit card to make up the balance if you don’t have enough points to cover the total cost.

Gift cards and e-codes

You can claim gift cards and e-codes for online purchases from retailers like Amazon by selecting the relevant gift option.

Travel bookings 

You can reserve flights, hotels or hire cars by selecting the corresponding option in the rewards portal. If the card provider is part of the same corporate group, you typically follow a link to the affiliate company or department.

It’s worth noting that your reward doesn’t cover everything. Companies typically exclude booking fees, insurance, taxes and other service fees.

Transfers to other loyalty programmes

Where available, you can move some or all of your points to another account if it’s with the same card provider or a programme partner. This is a good option if your company holds different cards, such as one that offers Avios points and another that supplies retailer discounts.

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You can’t redeem any cashback you earn on purchases as currency. Instead, the card provider adds a cash equivalent to your credit card account annually. 

Add to balance

Points earned typically have a cash value, so you could put them towards your next purchase or transfer their value to your credit card.

Are business credit card rewards worth having?

If you choose the right card for your business, the rewards you earn can prove beneficial, even if they come with an annual fee. 

Fees aside, although you can only use a business credit card to make work-related purchases, you can spend them on your business or yourself. 

Are rewards earned on business credit cards taxable?

Most credit card rewards are tax-free, so you don’t have to declare them. That said, cashback on business credit cards may be taxable – speak to your accountant about this as it’s a complicated area, with VAT and income among the issues to consider.