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How Credit Cards Can Help Your Business Deal With Inflation

By: David Halverson August 26, 2022

Inflation can wreak havoc on household finances, but it can be even more devastating for small businesses. Rising costs hit companies on a number of fronts, from higher shipping, material and inventory costs to demands for wage increased fuel expenses. Although some of these costs may be able to be passed on to customers, it’s rare that a company can raise prices so as to completely negate the effects of inflation. Typically, a business has to get creative on the financing side of things to help balance out its ledgers. This is where a smart credit card strategy can fit in. Business credit cards are specifically tailored to the needs of companies and can provide a wide range of benefits that have a real financial impact. Here’s a look at some of the key features that you should look for in a credit card to help your business deal with inflation, along with two examples of high-rated cards.

One of the most damaging side effects to rising inflation is higher interest rates. In its efforts to bring the inflation rate back down to its 2% target range, the Federal Reserve has embarked on an aggressive campaign of interest rates hikes thus far in 2022. Based on the slowly declining inflation rate and the words from the mouths of Fed members themselves, it appears as if rates will continue to get jacked up throughout the rest of the year, if not into 2023.

For small businesses, this translates to higher costs on everything from equipment financing and traditional loans to credit card rates. In some cases, the rate on business credit cards may now be over 20%. This can be a tremendous drag on your company’s cash flow. To alleviate some of that pressure, it can be a good idea to sign up for a business credit card with a 0% introductory rate. Ideally, this rate will apply to both new purchases and balance transfers, giving you the most flexibility with your credit card financing strategy.

There’s something of an arms race in the credit card industry, with each issuer fighting hard to gain new customers. This competition can end up benefiting your small business. Many small business cards offer huge sign-up bonuses that can be worth hundreds of dollars or even more. With business cards in particular, many of these bonuses come in the form of actual cash back after meeting a minimum spending threshold. Getting cash in your account for spending that your business would have undertaken anyway is the most direct way to fight inflation, as your rising costs can be at least partially offset by the cash back you receive. Other cards offer points that you can convert to cash at a lower rate or use for things like airfare and hotels, if these types of expenses apply to your business. Some cards even offer big sign-up bonuses without charging an annual fee, so it pays to shop around for the best match for your company.

Nearly every credit card in existence will provide you with one point or 1% cash back on your everyday purchases, but the real value comes in the points multipliers that most cards offer. Generally, a credit card will offer bonus rewards in particular categories, like office supplies, printing or gasoline purchases. This can help directly reduce your effective cost of purchases in these categories. For example, a card may offer you 1x points on everyday purchases but 5x points on gasoline. This can essentially reduce the price you are paying for gas by about 2.5% to 5%, depending on the value of the points you’re awarded. While the price of gasoline has gone up by much more than 5% over the past year, the bonus points you’re earning will at least partially offset the price jump. The same is true for other bonus categories where costs have risen – which is likely nearly everything your business purchases these days.

There is no such thing as the single best business credit card. Every company will have different needs and spending patterns, so the best one for you may be different from the business next door. But the beauty of competition in the industry is that you’re likely going to be able to find a card that offers a compelling package to help combat the inflationary impact on your company. Here are just two of the top available cards.

The Chase Ink Business Cash card has a lot going for it, but the headline features for most businesses are likely the $0 annual fee and the whopping 5% cash back on internet, cable and phone services, along with purchases at office supply stores. Additionally, the card pays 2% cash back at gas stations and restaurants. Both categories are limited to $25,000 in annual spend.

 

The card also offers a $750 cash back bonus if you spend at least $7,500 in the first three months of card ownership, which is a huge amount for a card that has no annual fee.

 

If you’re looking to manage your credit card financing portfolio, the Chase Ink Business Cash card also offers a 0% introductory rate on all purchases for the first 12 months. This can be a great way to finance some near-term spending if you anticipate having the cash flow to pay it off within a year.

The headline bonuses on the Chase Ink Business Unlimited card may not be as noteworthy as its sister card, but some companies will likely appreciate its broader scale and simpler structure. Whereas the Chase Ink Business Cash pays 1% cash back on general purchases and has extra kickers in a few bonus categories, the Chase Ink Business Unlimited card pays a flat 1.5% cash back on all purchases. This can be a better card for businesses that spread their spend over a wide range of categories, as they won’t have to deal with remembering when to use the card to trigger the bonuses. Like its sister card, however, the Chase Ink Business Unlimited card also has no annual fee and offers $750 cash back after spending $7,500 in the first three months. The card also has the same 0% introductory APR on purchases for the first 12 months.

When used properly, business credit cards can offer a decent level of inflation protection for your business. You’ll never be able to cover all of your rising costs by simply opening a new credit card, but if you get a card that has no annual fee, you essentially get all of the perks for nothing. This can be a great way to take away at least some of the sting of rising inflation.

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