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A typical small business needs to watch every penny. To last in the competitive business world, you need to maximize profits and just as importantly, reduce expenses. Many businesses don't realize that they could easily be saving a percentage of their purchases with a cash back business credit card. Instead of letting bank fees eat away at your profits, your credit card can work for you.
How can banks be able to offer cash back for your business?
For a long time the banks have been charging their customers very high interest rates and taking away at business profits. Business owner would just wait and hope that the bank would eventually give them a lower interest rate. Times are changing though. Nowadays the credit card market is quite competitive. Business owner can now choose between credit cards from a large range of financial institution.
As the banks compete, they are offering their customers credit cards with better perks and more rewards. If you need to travel a lot on your business, you can get airline points. If you need to drive a lot in your business, there are gas station rebate credit cards for you. Most of the larger stores even issue their own credit cards with special in store rebates. However, these credit cards lacked flexibility. Because of the increased competition in the credit card market, credit card issuers resorted to offering cash back credit cards.
The banks can easily afford this to attain a new customer. The cash back is balanced out by interest charges and other fees. So for many people the cash back is just used as a savings on their bank fees. Also, these same customers might require additional financial services. The banks definitely are not losing money by offering cash back.
Are cash back card a scam?
No, they are absolutely not a scam. Cash back credit cards actually do give your business some money back, but you have to be familiar with any restrictions. Most of the available cash back business credit cards have a maximum annual cash back limit. Some cards have various cash back terms based on the credit card purchase type. For example, you might get a different cash back percentage at a grocery store compared to a gas station or office supply store. Some cash back credit cards have a minimum spending amount before points can be redeemed.
To maximize the benefits of cash back credit cards, you need to be disciplined. Cash back credit cards can be very tempting to make extra purchases just to get more money back. Only do this if you can pay off the card at the end of the month. Otherwise you would just be creating more interest charges. If you are able to pay the card off every month, try to use your credit card more often instead of cash.
For some businesses the cash back maximum can also be a problem. A business with high operating expenses could easily reach the annual cash back limit in a very short time. If this is the case, consider getting a different credit card to use once the limit has been reached. Some newer cash back business credit cards offer no limit on the amount of cash back you can earn.
Take your time to read the terms and conditions of the credit card before applying. Many cash back credit cards use tricky phrases like "up to 5% cash back". This normally means that you can only get that cash back percentage for only one type of purchase or there is some other catch.
Despite certain card restrictions, a cash back credit card is a very good idea for your business. Your business could be saving thousands of dollars on your business expenses. Just take the time to compare different cash back business credit card offers before you apply.
How can banks be able to offer cash back for your business?
For a long time the banks have been charging their customers very high interest rates and taking away at business profits. Business owner would just wait and hope that the bank would eventually give them a lower interest rate. Times are changing though. Nowadays the credit card market is quite competitive. Business owner can now choose between credit cards from a large range of financial institution.
As the banks compete, they are offering their customers credit cards with better perks and more rewards. If you need to travel a lot on your business, you can get airline points. If you need to drive a lot in your business, there are gas station rebate credit cards for you. Most of the larger stores even issue their own credit cards with special in store rebates. However, these credit cards lacked flexibility. Because of the increased competition in the credit card market, credit card issuers resorted to offering cash back credit cards.
The banks can easily afford this to attain a new customer. The cash back is balanced out by interest charges and other fees. So for many people the cash back is just used as a savings on their bank fees. Also, these same customers might require additional financial services. The banks definitely are not losing money by offering cash back.
Are cash back card a scam?
No, they are absolutely not a scam. Cash back credit cards actually do give your business some money back, but you have to be familiar with any restrictions. Most of the available cash back business credit cards have a maximum annual cash back limit. Some cards have various cash back terms based on the credit card purchase type. For example, you might get a different cash back percentage at a grocery store compared to a gas station or office supply store. Some cash back credit cards have a minimum spending amount before points can be redeemed.
To maximize the benefits of cash back credit cards, you need to be disciplined. Cash back credit cards can be very tempting to make extra purchases just to get more money back. Only do this if you can pay off the card at the end of the month. Otherwise you would just be creating more interest charges. If you are able to pay the card off every month, try to use your credit card more often instead of cash.
For some businesses the cash back maximum can also be a problem. A business with high operating expenses could easily reach the annual cash back limit in a very short time. If this is the case, consider getting a different credit card to use once the limit has been reached. Some newer cash back business credit cards offer no limit on the amount of cash back you can earn.
Take your time to read the terms and conditions of the credit card before applying. Many cash back credit cards use tricky phrases like "up to 5% cash back". This normally means that you can only get that cash back percentage for only one type of purchase or there is some other catch.
Despite certain card restrictions, a cash back credit card is a very good idea for your business. Your business could be saving thousands of dollars on your business expenses. Just take the time to compare different cash back business credit card offers before you apply.
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Compare the best cash back credit cards and then apply online. If you spend a lot on gas, you might want to consider a gas credit card.
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