How do business credit cards for travel work?
Business credit cards for travel rewards are specialized financial tools designed to benefit businesses with frequent travel needs. These cards operate by converting spending into points or miles, which can then be redeemed for various travel-related rewards, enhancing the value of every dollar spent on business trips.
Here’s how the process typically works:
- Earning Rewards: Each time an employee uses the card for business expenses, especially travel-related purchases like flights, hotels, or rental cars, the company earns a certain number of points or miles based on the amount spent. Some cards offer additional points for categories such as dining, fuel, or office supplies, aligning with common business expenses.
- Bonus Opportunities: Many travel rewards cards offer sign-up bonuses and promotional offers that can significantly increase reward balances. To qualify, a minimum spend within the first few months of card ownership is usually required.
- Redeeming Rewards: Points or miles can be redeemed through the card issuer’s rewards program. Redemption options often include free or discounted travel, flight upgrades, hotel stays, car rentals, or even cash back. Some programs also allow points to be transferred to partner airlines or hotels, which can provide additional flexibility and value.
- Added Perks: Besides rewards, these cards often come with benefits tailored for travelers, such as complimentary airport lounge access, travel insurance, priority boarding, and no foreign transaction fees, all of which can significantly improve travel experiences and efficiency.
By utilizing a business credit card for travel rewards, companies not only streamline expense management but also maximize the returns on their travel investments, turning ordinary business expenses into strategic assets for cost savings and travel enhancements.
Do business credit cards affect my credit score?
Credit card companies check your consumer credit score when you apply for a small business card. They also usually require a personal guarantee, which means that even though it's a business credit card, you're still personally responsible for any debts on it.
Some credit card issuers report activity on business cards to the consumer credit bureaus. This means your business card could affect your personal credit score. Other card issuers will only report activity if your card account becomes past due.
Types of business travel credit cards
There are a few types of travel credit cards. When you're looking for a business travel card, it helps to start by learning about these different card types.
Airline business credit cards
An airline credit card is tied to an airline, like Delta or United. When you use the card, it earns miles in the airline's frequent flyer program. For example, Delta credit cards earn Delta miles on qualifying purchases. Many of these cards also get you a free checked bag and other perks with the airline.
Travel cards connected to one company, such as an airline, are only a good choice if you're a loyal customer. If you fly with the same airline multiple times per year, then one of its business cards may be worth a look.
Hotel business credit cards
A hotel credit card is tied to a hotel chain, like Hyatt or Marriott. It earns points in that hotel's loyalty program, and you can put those points toward free stays. Hotel cards may also get you a free night reward every card membership year and additional benefits with the hotel chain.
This is another type of business card that only works for loyal customers. If you spend a lot of time staying at one hotel chain, then its business credit card would probably make sense for you.
Business credit cards with fixed-rate travel rewards
These business travel cards are as straightforward as it gets. Their rewards have a fixed value and can be used for travel purchases. The most common rate is $0.01 per point, meaning 10,000 points could cover $100 in travel purchases made with the card.
If you want a travel card that's easy to use, this type of card works well. You'll be able to redeem rewards for basically any type of travel purchase.
Business credit cards with transferable travel rewards
These business cards are part of a major credit card rewards program with various travel partners. You can transfer points to any of the program's partners, which gives you a lot more ways to redeem rewards.
To put it in perspective, an airline card will earn miles you can use with one airline. It's the same with a hotel card. But a card with transferable rewards lets you send your points to multiple airlines and hotels.
There's more of a learning curve to transferable travel rewards. If you don't mind that, it's often possible to get great deals on expensive travel purchases with these rewards. Here are the biggest rewards programs that offer business credit cards:
How to choose the best business credit card for travel
My rule of thumb for choosing a credit card is to start by focusing on a couple key factors. Ask yourself, "What do I need most from a credit card?"
Maybe you're most interested in credit cards for international travel. In that case, a business card with either fixed-rate or transferable rewards could be the way to go, since they'll give you lots of booking options. If you're more interested in a card to help you on the business side of things, you might want one that offers detailed spending reports.
It all depends on what matters most for you and your business. I've listed some of the most common things business owners look at below so you can figure out what to prioritize:
Low annual fee: It's important to find a business card that fits your budget. Now, most business credit cards for travel charge an annual fee. There are some travel credit cards with no annual fee, but you'll have a lot more options if you're willing to spend at least $90 to $100 on a card.
Rewards and bonuses: It helps to have a card with a competitive rewards rate -- the amount of points/miles a card earns on every eligible purchase. Most business credit cards also have welcome bonuses. These are bonus points you can earn as a new cardholder within a certain time period after account opening. Some of them are extremely valuable, so it's worth comparing the welcome offer available on each card you like.
Employee cards: If you want employees to be able to make business purchases, check if there's a fee for adding an employee credit card. You may also want to look at what kind of controls different cards offer for employee cards. There are business cards that let you set individual spending limits on employee cards or set up an employee as your account manager.
Travel benefits: You can find business travel credit cards with all kinds of special travel perks. There are travel credit cards that get you airport lounge access, a statement credit for the Global Entry membership fee, and much more. I'd suggest checking out features for several top cards to see if they have anything that stands out to you.
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