How do cashback credit cards work? A guide for businesses
- What is cashback?
- How does cashback work for credit cards?
- Types of cashback cards
- How to redeem cashback rewards
- Examples of the best cashback credit cards for business
- Cashback vs. points vs. miles: Which is best?
- Pros and cons of cashback credit cards
- How to choose a cashback business credit card
- Simplify cashback and spend management with Ramp
The basic concept of business is that you spend money to make money. But the payoff from those expenses usually takes time, whether it’s waiting on sales, closing deals, or seeing the return on a marketing investment. Wouldn’t it be nice if your business could get something back immediately?
That’s where cashback credit cards come in. While rewards structures vary, all cashback cards earn a percentage back on each eligible purchase you make, turning everyday spending into incremental rewards.
Read on to learn what cashback is, how cashback credit cards work, the different types of rewards available to you, and how you can maximize your business's earnings as you spend.
What is cashback?
Cashback is a type of credit card reward where you earn back a small percentage of your spending as a statement credit or cash. For example, if your card earns 2% cashback and you make a $500 purchase, you’ll get $10 back in rewards.
It’s a simple way to turn everyday business expenses into savings. Over time, those rewards can help offset costs and improve your company’s cash flow, especially if you're using the card regularly for costs like office supplies or travel.
Unlike travel credit cards, which offer points or miles with varying redemption values, cashback rewards have a consistent cash value, making them straightforward and easy to use.
How does cashback work for credit cards?
In most cases, cashback business credit cards follow a simple process:
- You use the credit card to make purchases for your business or pay your business’s bills
- The credit card issuer rewards you by giving you a small percentage of your purchase total back as cashback rewards
- Those cashback rewards accumulate in your account until you choose to redeem them
- You can then use your cashback to reduce your balance or make other purchases. Depending on the card, you can also redeem it for gift cards or deposits
Your cashback percentage determines how much money you get back on purchases. For example, if your credit card offers 5% cashback on eligible purchases, you’ll earn 5 cents in rewards for every dollar you spend on qualifying purchases.
It’s important to note that you only earn cashback on eligible purchases, which usually include spending categories like office supplies, subscriptions, travel, or dining. The specific rewards categories vary by business credit card. Most cards exclude certain transactions, such as cash advances, balance transfers, and sometimes gift card purchases.
One common misconception is that cashback is free money—it's not. Since you have to spend money to earn it, you’re still covering most of the purchase cost out of pocket.
Types of cashback cards
Business credit cards offer different cashback structures, allowing you to earn rewards based on your business spending habits. Understanding how these different structures work can help you select the best cashback business card for your needs.
Here’s a breakdown of the most common ways to earn cashback:
Fixed or flat-rate rewards
Some business credit cards simplify cashback by offering a fixed rewards percentage. With a flat-rate cashback rewards card, you earn the same cashback percentage on every qualifying purchase you make, usually 1.5% or 2%.
Tiered rewards
Tiered cashback rewards cards earn a higher cashback percentage on certain types of purchases. For example, you may earn 3% cashback on travel expenses, 2% back on office supplies, and 1% back on everything else. If your business spends heavily in specific categories, like fuel for a vehicle fleet, tiered rewards can offer greater returns than a flat-rate card.
Rotating category rewards
This type of rewards structure is similar to tiered rewards, but the qualifying categories change several times a year, usually once per quarter. These cards typically offer up to 5% cashback on rotating categories, which might include anything from dining to gas to rideshares, and 1% back on non-category purchases.
You typically need to activate the categories each quarter, and there’s often a quarterly cap on how much spending earns the higher rate.
Choose-your-own-category rewards
Some cards let you pick your own bonus cashback category. These cards tend to work just like tiered rewards cards, except you get to choose one of several bonus rewards categories, like gas, internet and phone service, or travel.
For example, if your business spends most of its budget on SaaS subscriptions, you could choose internet services as your bonus category to maximize rewards. These cards usually offer around 3% cashback in the selected category and 1% back on everything else.
How to redeem cashback rewards
Once you earn a meaningful amount of rewards, you’ll want to redeem them. Most credit card issuers let you do this online or through their mobile app, though you can also call in to redeem.
Here are the most common cashback redemption options:
- Statement credit: Use your cashback rewards to reduce the overall balance you owe on your credit card. This is one of the most straightforward ways to apply your cashback earnings and directly lower your expenses.
- Direct deposit: Many cards let you deposit your cashback rewards into a linked bank account
- Gift cards: Some issuers let you redeem rewards for gift cards, sometimes with added value. For example, $20 in cashback might get you a $25 gift card to a popular store or restaurant.
- Travel: Certain cards allow you to redeem cashback for travel bookings, such as flights or hotels, through their travel portals. This can sometimes yield greater value than other redemption options.
- Merchandise: Some cards may offer online shopping portals where you can redeem cashback for merchandise or apply rewards at checkout through sites such as Amazon. However, these redemptions may not offer as much value compared to other options.
In most cases, you can redeem rewards simply by logging in to your credit card account or mobile app, navigating to the rewards section, and selecting from a list of redemption methods.
Some credit cards that promote "cashback" actually reward users with points instead.
The Chase Freedom Unlimited, for example, earns cashback as Chase Ultimate Rewards points, which you can use for travel, transfer to travel partners, or redeem for cashback.
Examples of the best cashback credit cards for business
The best business cashback credit cards offer companies flexible ways to earn rewards on everyday business expenses while managing cash flow efficiently. Here are some top business credit cards with cashback rewards:
Card comparison
- Save an average of 5% by spending less time and money across your entire business
- Automatically prompt, collect, and match receipts after each transaction through SMS, mobile app, and integrations
- Set granular controls down to the merchant, category, and transaction level for every card to prevent out-of-policy spend
- Requires no personal guarantee and bases credit limits on the company's financial health indicators
- Integrate directly with accounting software like QuickBooks, Xero, NetSuite, and Sage Intacct to automate bookkeeping
Annual Fee
$0
APR
N/A
FX Fees
$0
Rewards
Cashback
Chase Ink Business Unlimited Credit Card- Unlimited 1.5% cashback
- 0% intro APR for the first 12 months
- Receive employee cards at no additional costs
- Set individual spending limits for each card
- Fraud and purchase protection included
- Travel and emergency assistance services
- Earn $750 bonus cash back after you spend $6,000 on purchases within the first three months after opening your account
Annual Fee
$0
APR
17.49%–23.49% variable
FX Fees
3%
Rewards
Cashback
Capital One Spark Cash Plus- Business charge card that requires full monthly balance payments
- Designed for larger, higher-spending businesses
- Carrying a balance incurs a 2.99% late payment fee
- 2% cashback rewards on purchase
Annual Fee
$150
APR
N/A
FX Fees
$0
Rewards
Cashback
Cashback vs. points vs. miles: Which is best?
When choosing a business rewards credit card, it’s important to understand how different reward types (cashback, points, and miles) compare. Each comes with its own advantages, trade-offs, and ideal use cases.
Feature | Cashback | Points | Miles |
|---|---|---|---|
Reward type | Money back on purchases | Flexible currency used for rewards | Travel-specific rewards |
Value | Typically 1 cent per $1 spent (1%) | Varies by program and redemption method; typically 1 cent per $1 spent (1x points) | Varies by program and redemption method; typically 1 cent per $1 spent (1x miles) |
Ease of use | Very simple and predictable | Requires tracking and comparing redemption rates | Often complex and tied to airline partners |
Best for | Business owners who want simple savings | Those who want flexibility in reward types | Frequent travelers who can maximize travel value |
Downsides | Lower overall earning potential | Redemption values can be inconsistent | Blackout dates, limited flexibility |
Pros and cons of cashback credit cards
Understanding the benefits and the potential drawbacks of cashback cards can help you decide whether this type of card is the right fit for your spending habits and financial goals.
Pros
- Straightforward savings: Cashback rewards are simple—you get a percentage of your spending back without needing to track points or conversions
- Flexible redemption options: Most cards allow you to redeem cashback as a statement credit, direct deposit, gift cards, or even travel
- Potential to lower costs: When used responsibly, cashback can offset everyday business expenses and improve cash flow
- Consistent rewards value: Unlike points-based programs, cashback rewards have consistent value and are easy to calculate and use
Cons
- Temptation to overspend: The desire to earn rewards can lead to unnecessary purchases and added debt
- Annual fees: If your spending is low, annual fees can reduce or eliminate the value of your cashback rewards
- Potential for limited earnings: If your team frequently travels for business, you may be leaving money on the table with a cashback card. Travel rewards cards can offer greater redemption value through transfer partners and added travel benefits.
- Redemption restrictions: Some cards impose minimum redemption thresholds or limit how and when you can redeem rewards
How to choose a cashback business credit card
Here’s what you should look for as you compare cashback offers:
- Assess your business’s spending patterns: Start by reviewing the expense categories where your company spends the most, such as travel, software, or office supplies. Matching your card’s rewards structure to your largest spending categories can help you earn more over time.
- Rewards structure: It’s best to steer clear of overly complex cashback programs unless you’re prepared to track rotating or tiered categories. Fixed-rate cards are easier to manage and give you consistent value, while tiered or rotating options can offer higher rewards if your spending aligns with those categories.
- Low interest and fees: Pay close attention to annual fees, interest rates, and any hidden charges. Earning rewards isn’t worth it if the fees you pay cost more than the cashback you redeem.
- Reward expiration: Look for credit card offers with cashback rewards that never expire, so you don’t lose unredeemed rewards
- Compare cashback bonus offers: Some cards come with welcome bonuses or introductory APR offers, which can give your business a boost in the first few months of use
- Other features: Some cards, like the Ramp Business Credit Card, offer additional perks to help your business thrive beyond just earning cashback. Think accounting integrations, automated receipt tracking, and spend controls.
Simplify cashback and spend management with Ramp
The Ramp Business Credit Card offers a lot more than just cashback rewards—it's an all-in-one finance operations platform designed to save your business time and money.
Ramp simplifies your company’s finance operations from end to end, providing unlimited physical and virtual corporate cards, expense management, customizable approval workflows, accounts payable automation, and more. Businesses that use Ramp have saved over $10 billion and 27.5 million hours with smarter spend controls and better visibility.
Learn more with an interactive product tour.
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