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In my last post for American Express, I focused on foundations for an effective rewards points strategy. In that post, I briefly addressed work expenses and the necessity around using a credit card to maximise your points earning potential. Today I thought I’d evolve on that for business employees and business owners, who may not have yet realised the significance of their spending habits and capacity to earn American Express Rewards Points.
First and foremost, it is important to understand the difference between a charge card and a credit card. American Express offers consumers both card types. A charge card offers users a no pre-set spending limit and a no interest solution to cash flow, but the balance must be paid off in full every month, with a fee incurred if the amount is not paid off in full. A credit card allows you to defer payment of the balance over time, with interest applied to the remaining balance. If you’re an employee of a business with a consistent monthly income which you can use to pay off your bill in full, then a charge card like the American Express Platinum card might be the right choice. However, if you’re a small business and revenue is more sporadic, you may want to look at a credit card, giving you more flexibility around your payments.
Depending on where you see yourself spending your points, it’s important to look at a card’s ‘burn’ or redemption rate, which is the value of the cash back, or points and miles that you redeem for rewards. Some cards might promise the world with sign on bonuses or earn rates, only for you to find out the value of the points isn’t what you expected when you go to redeem them. Most cards will allow you to earn at least one bank reward point for every dollar you spend, however, you need to evaluate what that point is worth when you go to redeem it.
Once you’ve settled on a card to handle your work expenses, it’s time to start earning. For employees who fill out a weekly, monthly, (whenever you get around to it), expense claims, this is your time to shine. Every single transaction you have to process that is work related goes onto your new card – pay it off as you go with your funds (which you’d be using to make those purchases regardless had you not possessed the Card) or when your work has reimbursed you. If your job has issued you a Corporate Card with your name on it, find out whether your company lets you keep the rewards as an individual or if they get returned to the company. Whether you use your personal or Corporate Card, make sure you get the best return.
For business owners, any purchase on your new credit card is an expense and offsets your taxable income. It’s not as free as the points earned above because you’re using your businesses money, but it’s as close to free as you’re going to get. As a business owner myself, I rarely retrieve my debit card, always seeking suppliers who facilitate American Express payments and avoiding EFT transactions as often as I can.
Paying your work expenses on a credit card not only brings in points, but it also gives you more freedom. A work trip can quickly add up to four or five figures. Why should you be using your money to pay for that? That admittedly is a question for your employer. However, spending on a credit card improves your personal cash flow, keeping you in the green for mortgage, rent, bucks parties or the festive season. It’s the same for my business. It’s inevitable that I will need cash in the bank for EFT transfers so I use my American Express Business Accelerator card for large transactions as often as possible to ensure I maintain positive cash flow between invoices.
The next step is to start getting into a routine of planning ahead. Being aware of earn rates in different categories or with various partners when booking work travel and entertainment will play a huge factor in your points accrual. Find out which partners offer complimentary wine, dishes or discounts at restaurants and which cards reward more for spending overseas. The Qantas American Express Ultimate Card earns you 3 points per dollar spent with Qantas, a must have for corporate Qantas flyers.
And then to finish are the additional perks. If you travel a lot for work, an American Express Card that offers the holder unlimited lounge access (like the American Express Platinum Card) might be well worth the fee, as would the complimentary travel insurance. Likewise, American Expresses’ security procedures and Card replacement process are unbeatable. I lost my card in Florence last year and had a new one delivered to my hotel two days later.
There’s a lot to consider when looking for a Card to handle your work expenses. Ensure you’ve evaluated your circumstances and chosen a card that will benefit your spending habits to maximise your free point haul!
American Express’ new Explorer Business Card is currently offering a 100k sign on bonus, you can read more and apply here.
To find out more about American Express Rewards Points or which Card is right for you head to American Express.