How to Evaluate Corporate Credit Card Programs & Rewards
Corporate cards nowadays offer a plethora of reward perks and benefit points, but it’s hard to distinguish which programs are going to actually deliver the most value to your company. Thankfully, we’re here to help! We’ll help you understand all the ins and out of perks and points and what you should be looking out for as you check out different cards.
Are rewards and benefits the best way to evaluate a corporate card, though?
A few thousand dollars in cash back might not be worth the extra time in reconciliation and oversight that traditional corporate cards necessitate, not to mention the risk that you might be over budget and have no visibility into spend if that card isn’t part of a spend management solution. So, what should your company do? Keep reading to the end to find out!
What are credit card rewards and benefits?
Let’s start by making sure we’re on the same page about what reward perks and benefit points actually are. A reward, also referred to as a perk, is something that you have access to but must redeem. Perks often come in the form of special offers and discounts from partners that you’re given just for being a card member. Getting a 25% discount off of a software subscription for being a cardholder? That’s a perk!
Benefits, on the other hand, are earned by using your card. The most common form is accumulating loyalty currency (also referred to as points, or miles in the travel world) based on the type of spending that you put on your card. If you’re offered “2x points on all purchases made with your card” and earn 20 points for a $10 purchase, you’re taking advantage of a points program.
Time to talk rewards. Which are the best for your company?
What are the best rewards perks for SMBs? Plain and simple, it’s things that you already use or buy or are planning to use or buy. Obviously this will vary greatly depending on what stage your company is at, but this is a great rule of thumb. While lifestyle and/or luxury perks are great, the move useful perks will likely be significant discounts off of software or other services crucial to your business’s success.
Now let’s get into the gritty stuff.
Benefit points: what are they and how do I get them?
Good (and common) questions. While perks are pretty easy to explain, points are not. Every card has a different points program, and it can get pretty confusing. In the corporate card world, points are loyalty ‘currency’ that’s earned based on how much you spend, and often depends on what types of purchases you make.
We’ll try to break it down for you. The two main things that you have to understand are how much points are worth, and rate(s) at which you can accumulate points. Unfortunately, card providers will only advertise the accumulation part (more on that later). Some will offer “2x on all purchases,” while others might provide “4x on dining, 3x on travel, and 1.5x on everything else.” The possibilities are endless.
So, it seems like the higher the multiplier, the more money you’ll have back in your pocket, right? Not quite. You need to make sure to dig deeper into the real, monetary value of a specific program’s points. Let’s take two cards, A and B, and say that a point with card A is worth $0.10, and a point with card B is worth $0.20. If you get “2x on all purchases” with both cards and spend the same on both cards, you’ll have more (twice actually) monetary value with card B. Additionally, some cards may allow you to accumulate a lot of points, such as 5x on certain purchases, but the valuation of their points is incredibly low. So, don’t fall into the trap of thinking that just because the accumulation rate of points with the card is high, the card will be valuable. For this reason, a card offering 5x points could give you less ‘cash back’ than a card offering 2x points – confusing, right?!
Ok, now how do you find information on point valuations? Unfortunately, cards don’t make this easily accessible and you’ll have to search around to find this info. One example of a place to find this is on The Points Guy, a site that publishes a report every few months with up-to-date points valuations – here’s the most recent one. Additionally, it’s important to note that any valuation info you’ll find is all just an estimation, but as you can see even having these ‘ballpark figures’ can be super useful!
Which corporate card benefit points programs are best for me?
Much like with perks, the most valuable benefit points programs for your business will be those that help you earn more on whatever you’re already spending money on. Take a look at the multiplier categories – such as 5x on travel or 3x on dining – and see if they line up with your spending. Also, definitely don’t spend just to spend. If you try to limit employees taking lunch meetings on the company dime, don’t ease up on this just because you’ll be getting more points if they do; it’ll cost you more money in the end! A points program should be a natural fit. If your company travels a lot, like many of our customers, they may be more inclined to look at corporate cards offering higher multipliers for travel.
Once you’ve narrowed down your list, you should compare points programs by using their respective points valuations. As we discussed above, this isn’t always super easy to find, but the information is out there. Let’s continue with the travel example and say that you’ve narrowed down your search to two cards, A and B. If card A offers 3x on travel and has a point valuation of $0.10, but card B offers 2x on everything and has a point valuation of $0.30, hopefully you’ll know by now (and if you didn’t, then we probably did a poor job explaining *nervous laugh*) that you should choose card B.
Another crucial detail in determining the best points program for your company is that points don’t always redeem for money. Sometimes you can transfer these points into statement credit, but in many cases, you can only spend points through portals sponsored by your card program. Popular portals are those that book travel, offer a selected range of retail products or gift cards, and more. So, even if you find a really attractive points program that has a good point valuation and the multipliers lines up with things that you already spend money on, make sure that you’ll be able to use the points on things that are valuable to you! If points are only redeemable on retail or gift cards (which is very rare, though), then that program is bound to be a bad fit.
What if a corporate card has just rewards, or just benefits?
As you can see, while points can be valuable, they can also be very confusing and even sometimes hard to use. For SMBs in particular, a corporate card with robust perks in the form of great discounts (on things that you already spend money on) may be the best way to put money directly back into the corporate bank account. With a mainly perks-focused program you’ll also be able to mostly tangibly and quickly see value from your corporate card program; whereas with one primarily focused on points, this will take much longer and encourage spending, sometimes to a degree that is unnecessary and detrimental to your business.
Are rewards and benefits even worth it?
The reality is that even if you get 1.5x points on all purchases, and each point is valued at around $0.01 (this is pretty typical), $1 million in non-payroll spending would only give you back $15,000. That’s often less than 10% of a single finance employee’s salary! If a corporate card takes a ton of time for you to manage and creates a lot of hassle in terms of reconciliation, the cost of having the card most certainly exceeds the benefit of all of these points.
What’s more important than rewards and benefits
As a startup, you really don't need a corporate credit card with perks.
Rewards and benefits may not be the best way to evaluate a corporate card, especially if the card uses dated software that can be a complete time-suck. What’s a better and more important way to evaluate a corporate card? If it’s accompanied by a modern, spend management solution like Lola.com with tons of automation built in.
Eliminating expense reports will help prevent purchases from slipping through the cracks, and real-time visibility will force employees to be more responsible with their spending. Plus, you’ll save tons of time from employees not having to write up these reports and finance to review them!
The Lola card is directly tied to budgets too, so that you can relax knowing that you’ll never overspend.
As we’ve seen, points and rewards can be pretty complex, and time spent decoding them or trying to tailor your spending to maximize them is time lost to focus on growing your company. Check out spend management software if you want to save money in a way that gives you your time back – not drains it.