Points vs cash back: which reward option is best for your business?

When it comes to financing your business, the debate between credit card points vs. cash back rewards is a hot topic. Each option offers its own pathway to maximize the value of your credit card spending, but how do you decide which is right for your business? 

While points can whisk you off to a dream destination, cash back brings immediate financial returns and lots of flexibility. Both have their allure, but one might be better for your business than the other. Join us as we demystify these reward systems, so you can make an informed choice for your business credit card — and get the most bang for your buck. 

How do credit card points work?

Credit card points operate like a reward currency; the more you spend, the more points you rack up. These points can be a versatile tool in your business's financial strategy and are often considered a key credit card hack, offering an array of redemption options like travel or gift cards. 

But not all point systems are created equal — some cards offer a fixed point system, where each dollar spent earns an equal number of points, straightforward and predictable. Others, however, spice things up with rotating bonus categories, allowing your business to rack up more points during specific periods, or double points on certain types of purchases.

How do you calculate the value of points?

The value of points can vary depending on when and how you choose to redeem them. The basic idea is simple: divide what you'd pay in cash for a reward by the number of points it costs. 

If a flight that costs $500 in cash requires 25,000 points to redeem, each point is worth $0.02 (500 divided by 25,000). 

This simple calculation can help you assess whether using points for a specific redemption is a better deal than other options, like paying in cash or using a different rewards system.

But remember the value changes based on how you use them. For example, the points needed for a flight or hotel can vary depending on when and where you're going. A flight on a busy weekend might use more points than a mid-week trip, even if it's the same route. So, a key business travel tip is to use your points when they'll get you the most bang for your buck.

Pros and cons of credit card points

While credit card points can be a windfall for your business, weighing their pros and cons is key to deciding if points vs. cash back are the right fit for your spending habits and business goals.

Pros of credit card points include: 

• Versatility: Points can be redeemed for a variety of rewards, from travel and merchandise to sometimes cash or gift cards.

• Potential for higher value: In travel redemptions, points can be worth more than their cash back equivalent.

• Bonus categories: Many points cards offer additional points on specific spending categories, boosting your earning potential.

Cons of credit card points include: 

• Complexity: Understanding the best use of points can require time and effort, as their value can vary greatly depending on how they’re redeemed.

• Variable value: Points can fluctuate in value, and not all redemption options offer the same return, making it tricky to assess their true worth.

• Expirations and limitations: Some points may expire or come with limitations, reducing their overall value. 

How does cash back work?

With cash back, your rewards come in the form of cold, hard cash. Who doesn’t love that?

Here’s how it works: Every time you use your cash back card, you earn a certain percentage of that spend back. This could be a flat rate on all purchases, like 1% or 2% on everything you buy, or varying rates depending on the spending category, such as higher cash back on office supplies or travel.

Claiming your cash back is user-friendly too. You can often apply it as a statement credit to offset your bill, or in some cases, redeem it for checks or direct deposits. The advantage here is the flexibility of cash — you can use it to cover business expenses or reinvest in your company. Plus, some cash back cards even offer sign-up bonuses, giving your earnings an initial boost.

Curious about how much you could be saving with a cash back card? Check out the Expensify Card savings calculator.

Pros and cons of cash back

When thinking about cash back or points, there are a few things to keep in mind. Cash back cards are appealing for their simplicity, flexibility, and immediate return, but it's important to weigh these factors against your business’s spending habits and goals to determine if they’re the best fit. Let’s break down the pros and cons of cash back credit cards below. 

Pros of cash back credit cards include: 

• Overall simplicity: Cash back is straightforward — spend money, get money back. It's easy to understand and manage.

• Flexible use of rewards: Unlike points, cash back is versatile and can be used for any business need, whether it’s offsetting costs or direct investment into growth.

• Immediate benefits: Cash back offers immediate financial rewards, providing a quick return on your business expenditures.

Cons of cash back credit cards include: 

• Lower potential value: Compared to points, cash back might not offer the same high-value potential, especially in categories like travel.

• Limited bonus categories: Some cash back cards offer lower rewards on certain spending categories, which might not align with your business spending.

• Fewer frills: Cash back cards often come with fewer additional perks and bonuses compared to points cards, which might offer travel perks or exclusive access to events.

Is cash back or points better for business spending?

For businesses that have significant travel expenses or regularly purchase specific categories of goods and services, points might be the way to go. They can unlock greater value in travel rewards or other targeted redemption options. On the other hand, if your business expenses are varied and you value straightforward, flexible rewards, cash back is more beneficial. It offers simplicity and immediate financial returns, which can be crucial for businesses focusing on immediate cash flow and direct investment.

At the end of the day, deciding between cash back or points for your business spending boils down to your specific financial habits and goals. It's not a one-size-fits-all answer; it requires a bit of introspection and strategic planning.

That’s where the Expensify Card shines. Our card gives you 1% cash back on every US purchase and 2% cash back if you meet spending requirements. Plus, it offers additional perks, like 50% savings on Expensify, revenue sharing for accountants, and more. This blend of cash back and rewards can help you save and manage money — a total win-win. 

Start saving with the Expensify Card

Whether you’re looking for tangible rewards or flexible cash back, Expensify’s got it all. Plus, with our included expense management tools, you can spend, save, and organize your finances, without ever lifting a finger. 

Ready to get started? Sign up for the Expensify Card today and see how much you can earn.