Points and miles vs. cashback: Which credit card rewards are best for your business?

Points and miles business credit cards can be useful for frequent travelers, while cashback may be more advantageous for businesses looking for uncomplicated and valuable rewards.

But is cashback or points better for your bottom line?

In this article, we’ll compare points and miles versus cashback credit card rewards programs so you can choose the best option based on your business spending habits.

Miles vs. cashback rewards at a glance

Here’s how miles and cashback rewards credit cards work at a high level:

Business cashback credit cards

Cashback credit cards give you back a portion of the money you spend on your card in the form of cash rewards. For example, if your card offers 1% cashback rewards, you’ll receive 1% of the amount you spend as cashback. You can choose to redeem your cashback as a check, a direct deposit into your bank account, or a monthly statement credit toward your card balance. Some credit card issuers also allow gift card and merchandise redemptions in exchange for cashback at various retailers, too.

One of the key differences in points versus cashback cards is that cashback cards make it easy to calculate how much you’ll earn. Points-based rewards can be trickier to translate into cash value.

Unique to cashback cards is their potential to serve as a budgeting tool, directly reducing monthly business expenses or accumulating savings. This means using your card saves you money rather than encouraging you to spend more to accumulate points or miles.

Pros and cons of cashback cards for business

Pros:

• Straightforward: It’s easy to calculate the real value of cashback rewards
• Flexibility: Cashback cards often apply rewards to all categories of purchases rather than only certain purchase types.
• Resistant to inflation: While points-based rewards can decrease in value as prices rise, cashback rewards increase proportionally with inflation.
• Easier accounting: Cash rewards can be directly credited, while points and miles come with valuation and conversion challenges.
• No annual fees

Cons:

• Flat value: Cashback programs often offer lower rewards rates than other credit cards and a fixed value
• Reward caps: Some cashback cards cap your cash rewards credit after a certain spending amount
• Fewer frills: Cashback cards often come with fewer built-in bonuses; for instance, some travel credit cards come with perks like travel insurance, rental car insurance, etc.

Business credit cards for travel rewards

Travel rewards credit cards will earn you points and miles on card purchases, which you can redeem for services like flights, hotel stays, and rental cars. These business credit cards generally offer higher rewards on travel than cashback credit cards, which can be useful if your work often takes you away from home.

The value of points and miles varies across cards and the method by which you redeem them. For instance, points and miles are generally worth more when redeemed for travel versus merchandise, cash, or gift cards. Some business travel cards allow you to transfer your rewards currency to different airline and hotel partners who offer higher value per mile.

There are three main types of credit cards for travel rewards:

1. Airline credit cards: Airline miles credit cards are directly tied to specific airlines, allowing you to earn miles on purchases that you can redeem for flights, upgrades, or other travel benefits with that airline and its partners. These cards often include brand-specific perks like priority boarding and free checked bags. The rewards value of miles on these cards is highest when flying with the associated airline. Example cards include the Delta SkyMiles® Reserve American Express Card, the United Club℠ Infinite Card or the Citi® / AAdvantage Business™ World Elite Mastercard®.
2. Hotel credit cards: Hotel credit cards partner with specific hotel chains, offering rewards points for stays and purchases within the hotel network. Cardholders can get benefits like complimentary room upgrades, late checkout, and annual free night stays. Business owners who want to maximize hotel stays might add the The Hilton Honors American Express Business Card or the Marriott Bonvoy Brilliant® American Express® Card to their wallet.
3. General travel rewards credit cards: General travel rewards credit cards offer the most flexibility. After earning points or miles, your redemption options include flights, hotels, rental cars, and even non-travel purchases. These cards also don't restrict you to a particular brand, allowing you to use rewards for a wider range of companies. Popular general travel cards include The Platinum Card® by American Express, the Chase Sapphire Reserve, or the Capital One Venture X Rewards Credit Card.

Pros and cons of business credit cards for points and miles

Pros:

• Higher travel rewards: Travel credit cards usually offer higher rewards on travel expenses than cashback credit cards
• Variety of travel rewards: Aside from just flights, you can usually redeem rewards for seat upgrades, rental cars, and nights at hotels
• Additional perks: Travel rewards cards often come with extra benefits, like travel insurance, priority boarding, and airport lounge access

Cons:

• Complexity: Points and miles can be more difficult to translate into dollar value vs. flat-rate cashback rewards
• Expiration risk: Points and miles from credit cards may expire if you don’t use them within a certain time frame, leading to lost rewards‍
• Annual fees: The best travel rewards cards often carry high annual fees

Discover Ramp's corporate card for modern finance

Learn more

More considerations for business credit cards

Calculating the value of cashback vs. points and miles

Figuring out the value of different rewards programs can be tricky if you have to convert points and miles into dollars, but it can be done.

For instance, consider a 2% cashback card versus a travel credit card that earns 2x miles on purchases. For the cashback card, a $100 purchase would earn $2 back. The 2x miles card doesn’t always earn that same $2 back because the value of miles can vary depending on how you redeem them and the card you earn them on.

To compare the value accurately, you'll need to assess how much each mile is worth when redeeming rewards for flights, hotel stays, or other categories. Typically, miles are valued between 1 and 2 cents each, but this can vary widely based on the redemption option.

For example, using points and miles for an economy flight might yield less value per mile than redeeming them for a business class upgrade. Thus, the actual benefit of a 2x miles card depends on the specific redemption value of the miles, which requires time and research to determine the most advantageous use.

Strategies to maximize your earnings for cashback vs. travel rewards

Choosing between points and miles and cashback credit cards involves more than just comparing rewards rates and perks; it requires a strategic approach tailored to your business's spending habits and goals. Here are some strategies for businesses to maximize the benefits of each card type:

For cashback business credit card users:

• Redemption flexibility: Opt for cards that allow for direct cashback redemption without minimum thresholds. This flexibility allows you to use cashback rewards at your convenience, helping to manage cash flow.
• Stacking rewards: ‍Maximize your savings on business expenses by pairing cashback rewards with merchant discounts and promotions. This strategic combination can greatly decrease the cost of your everyday purchases, allowing you to stretch your budget and boost your bottom line.
• Budgeting tool: ‍Use cashback rewards as a direct way to reduce monthly operational costs or reinvest in other areas of your business. This strategy not only provides immediate financial relief, but also lets you plan for future investments or expenses by strategically allocating cashback rewards throughout the fiscal year.
• Consolidate purchasing: ‍Try to use your cashback card for all business-related purchases instead of switching between cards. By funneling all possible business expenses through your cashback card, you can maximize your earned cash on every dollar your business spends.

For business travel credit card users:

• Strategic spending: Focus spending on your travel rewards card for business travel expenses to earn more points and miles faster. Choose a card that offers bonus points for airline, hotel, and car rental expenses to accelerate your accumulation of rewards. This spending strategy will increase the value of every business trip, ensuring every dollar spent contributes directly to your next travel opportunity.
• Travel rewards optimization: Make it a habit to regularly assess the value of your points and miles when considering different travel choices. Try to use your rewards for more valuable rewards, like international flights or business class upgrades, to get the most value out of them. Keeping up to date with its changing value and redemption opportunities can help you make smart choices that enhance the return on your travel expenses.
• Transfer partners: Choose a card travel that allows you to transfer rewards to a variety of travel partners, like airline and hotel chains, to take advantage of the best redemption rates and travel options. This flexibility will let you choose the most cost-effective flights and hotels while also adapting to changing travel plans without sacrificing the value of your points and miles.
• Loyalty benefits: ‍You might want to use travel cards affiliated with specific airlines or hotels to enjoy extra perks like free checked bags, priority boarding, or complimentary night stays, making your business trips more enjoyable and productive for employees.

Is cashback or points better for business spending?

It can be tough to figure out how to choose between a business travel rewards or a cashback credit card. So let’s break it down.

Cashback rewards are usually the best choice if you want to earn flat-rate, predictable rewards on all your purchases. You can then put your statement credit value toward whatever your business needs most.

However, if you spend an outsized amount on travel compared to other expenses, then a points or miles credit card may be a better option. Depending on your rewards card, a point may be worth more (or less) than what you'd save on each purchase with cashback. Though a travel rewards card may offer equal or greater value than cashback, they require more intense strategy and planning (read: work) to get the greatest value.

Ultimately, the best choice depends on your business’ unique financial goals and spending habits.

If you’re looking for a solution that is built with business value top of mind, you might consider a completely different kind of card altogether. The Ramp Business CreditCard, for instance, saves businesses an average of 5% across all spending. Plus, cardholders enjoy additional perks like streamlined expense management and customized card controls.

This powerful combination of savings and control can help you optimize your finances and drive growth. Here's a closer look.

Consider the Ramp Business Credit Card instead

Ramp is an all-in-one corporate card and expense management platform designed to simplify your company’s financial operations. By providing easy-to-use funds, approval flows, vendor payments, and more, Ramp creates a seamless way to manage expenses and optimize savings.

Some of Ramp’s features include:

• Savings and rewards: Ramp customers save an average of 5% each year, directly contributing to your bottom line and offering immediate value
• Simplified expense management: Ramp's platform integrates with your existing accounting software, making it easier to track expenses, categorize spending, and automate reports, reducing administrative workload and human error
• Real-time insights: Get instant access to your spending data, allowing you to make informed and timely financial decisions
• Enhanced control: Set custom spending limits, create virtual cards for specific expenses, and manage employee spending with ease, ensuring compliance and preventing out-of-policy spending