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Business
Credit Cards Can Make You Money
Small business owners, more than any other credit card users, are
in the best position to profit from their use of credit cards.
Profit from credit cards? The idea may seem foreign, if not
preposterous. However, the truth of the matter is simple: if you
use your business credit card wisely and open a high yield savings
account, your credit card can easily make you a few hundred
dollars a month.
Let's begin by discussing the types of small business credit cards
on the market. The first and often easiest for new businesses to
attain are charge cards. There are a wide variety of these
available from American Express' OPEN, the small business network.
The first benefit of a business charge card is the zero percent
interest you pay. Yes, you must pay your balance in full in each
month. However, we’ll soon see how borrowing money interest free
is a great thing.
OPEN credit cards, like other American Express business credit
cards, allow you to earn Amex rewards points with every purchase.
In general, you earn 1 point for every dollar spent. In general, a
point is worth between 1/2 to 1% of purchases, depending if you
want to redeem your rewards for cash (1/2% value) or retail gift
certificates and travel rewards (1%).
Now let's assume your small business spends $10,000 a month. You
will earn $100 in rewards from American Express. Plus, if you
place that $10,000 into a high yield savings account with an
interest rate of 4% or higher, you will earn over $40 a month in
interest. Thus, the net earnings you will accrue by using an
American Express small business credit card can easily equal $140
a month on $10,000 spending. Over the course of a year, that can
add up to over $1500.
Small business credit cards with rewards provide similar profit
opportunities, and fantastic short term profit opportunities, as
many offer 0% interest rates for up to 6 months on purchases. For
example, if you spend $10,000 the first month you have a 0% small
business card, you can earn $100 in rewards, plus a very nice $200
in interest over the course of the introductory offer. When the 0%
expires, you simply pay your bill in full and avoid all interest
charges. You'll find your business $300 richer.
Once the 0% APR expires on a small business credit card, you will
have a "grace period" of around 25 days to pay off your new
purchases before interest is charged. Thus, you simply treat your
credit card like a charge card, and pay your balance in full each
month, allowing you to earn rewards points on every purchase you
make while earning interest on the money you already spent.
Over the course of a year, a small business that uses an American
Express OPEN card and spends $10,000 per month can earn the
equivalent of $1200 in Amex cash, travel, or retail rewards, plus
over $400 in interest. That frees up over $1600 in capital that
can be used to offset the cost of travel, purchase new equipment,
or simply enhance your company’s cash flow.
Using small business credit cards strategically can positively
affect your company's bottom line, free up cash, and generate
income through interest and rewards. With the wide range of cards
on the market, it is important for each business owner to examine
the interest rates, types of rewards, and fine print of small
business credit cards before making a final choice. Personally,
I've been a proud American Express OPEN Gold and Platinum small
business cardholder for nearly two years and have nothing but
praise for the company.
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