Team member Jason has been helping his parents earn points and miles with their small business. So I’ve asked him to explain how he convinced his family to make the leap into the points and miles world!
Jason: Thanks, Daraius! For the past few decades my parents have made their living building custom kitchens and cabinets. But they’ve only been earning credit card rewards for their business expenses for the past few weeks! 😮
For frugal business owners, like my folks, “credit card” is a 4-letter word. And earning points & miles for travel is a completely new concept. So it if you are hesitant – you’re not alone!
I got my parents excited about the idea of Big Travel with Small Money by booking a family trip to see the Statue of Liberty with points! Seeing really is believing.
Change can be scary. And running a business that you, your family, and your employees depend on is a stressful job. So it makes sense that making a change involving your business is not an easy decision.
But my parents made a small change. And now they are going to be able to take their dream vacation for just a fraction of what it would have normally cost them!
I knew they wanted to take a train trip across America next year. So they applied for the Bank of America Amtrak Guest Rewards World Mastercard.
They also got a Starwood Preferred Guest Business Credit Card from American Express. Because they wanted to keep business and personal expenses separate. And Starwood points transfer to Amtrak at a 1:1 ratio!
Let’s take a look at what it takes to earn rewards for the business that you’re already doing!
First Things First – Build the Foundation
If you’re carrying a balance on your credit card, it’s better for you to pay it off before you consider going for a lucrative sign-up bonus. Because the interest you’re paying will erase any value you get from even the best credit card bonuses. So start off by practicing good financial habits.
It seems counter intuitive, but sometimes, the folks who are most hesitant about getting a small business credit card are the best candidates to get one! Because this is not a good hobby for folks who want to buy now and pay much later.
In some cases it might make sense to have a balance on your business credit card to make an investment in your business. In that case, I would suggest looking into a small business card with 0% APR offer like the Chase Ink Business Cash Credit Card, which charges 0% interest for the first 12 months from account opening on purchases and balance transfers.
As always, do what is best for your situation.
Take Care of Your Credit Score
Some folks are concerned that applying for credit cards will negatively affect their credit score. It is true that when you apply for a new credit card your credit score will take a small hit (usually 3 to 5 points).
But this is only temporary. And it’s only a small factor that is used to determine your overall credit score. Team member Harlan has over 20 credit cards and a credit score of almost 800!
The best thing you can do to maintain healthy credit is to pay your bills on time. And to keep no (or low) balances on your credit cards.
Also some, but not all, small business credit card accounts won’t show up on your personal credit report. This is great news for folks trying to get under the Chase “5/24” rule.
Watch out for Fees!
Most retail stores charge the same price regardless of whether you pay with cash or credit card. But when it comes to businesses paying their vendors, it can be a different story.
My parents were going to pay a $10,000 bill to meet the minimum spending requirement on their AMEX Starwood Business card. But the vendor was going to charge a 3% fee for paying with a credit card! Because they have plenty of other expenses they can pay to meet their minimum spending requirement, they decided it wasn’t worth the extra fee.
Some vendors will charge 3% to 5% if you pay with a credit card. You could reduce those fees by paying your bills with a service like Plastiq, which only charges a 2.5% fee to make a payment with a credit card.
But unless you are trying to meet the minimum spending requirement and earn the sign-up bonus on a new credit card, it’s usually not a good deal to pay extra fees to earn points.
Figure out Your “Why”
When you want to make a change, having a “why” is more important than knowing “how.”
I know how to get 6-pack abs. But I still don’t have 6-pack abs. Because as a married man, I don’t have any use for them. 😉 I don’t have a “why” big enough to get me to the gym.
For years I talked to my folks about how I used points & miles for Big Travel with Small Money. But why did they end up finally getting their first travel rewards credit card? Because they want to ride the California Zephyr from San Francisco to Chicago.
So dig through your bucket list. And set a travel goal. Don’t be afraid to think big. And don’t be too busy to start small.
Choosing Your Small Business Card
With so many great small business cards to choose from it can be overwhelming to pick your first one. I suggest starting with a small business card that earns transferable points. Because that will give you the most flexibility in booking travel.
The Chase Ink Business Preferred card comes with a 80,000 Chase Ultimate Rewards point sign-up bonus after spending $5,000 on purchases within the first 3 months of account opening. And the sign-up bonus is worth $1,000 in travel when booked through the Chase Travel Portal!
If you do a lot of business travel, the Business Platinum Card from American Express Open could be a good card for you. Because you’ll get 5 points per $1 spent on airfare and hotels booked through the AMEX Travel Portal.
The AMEX Business Platinum card comes with a 50,000 AMEX Membership Rewards point bonus after spending $10,000 on purchases within the first 3 months. You will also earn an additional 25,000 AMEX Membership Rewards points after spending an additional $10,000 on purchases within the first 3 months. But it does have a $450 annual fee that is not waived the first year.
But if you want an AMEX Membership Rewards points earning credit card with a smaller annual fee, you could consider the AMEX Business Gold card (the $175 annual fee is waived the first year). It comes with a 50,000 AMEX Membership Rewards point bonus after spending $5,000 within the first 3 months of account opening.
But for my parents’ trip, I am going to recommend they consider a straightforward rewards card, like the Capital One® Spark® Miles for Business card or the Capital One® Spark® Cash for Business card. Both cards have sign-up bonuses worth $500. And it’s easy to redeem rewards for other expenses they’ll have, like a rental car.
If you’ve got a small business and you’re not earning points & miles on your business expenses, you’re missing out! Because you could be earning Big Travel with Small Money for the bills you are already paying.
All you need to do is make a small change and start paying your bills with a small business rewards card like the Chase Ink Business Preferred card or the AMEX Starwood Business card. But you’ll need to make sure your vendors won’t charge an extra fee if you pay with a credit card.
Making a change to how you pay your business expenses can be a little intimidating at first. But if you have a travel dream that is bigger than your fear, it will get you moving in the right direction.