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Fly First Class 'Free' w/Business Rewards Cards
Every entrepreneur should be doing this...
956 Words | 3 Min 59 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing how American business owners can fly first class, get flight upgrades, access luxury airport lounges and more - for free - thanks to credit card rewards points.
If you're not an American and/or do not own an American corporation, today's issue wont' be relevant to you.
If you do qualify, however, the below discussion could change how you see business spending forever.
Let’s dive in.
As someone who flies long-haul international fairly often, I've always been jealous of the people I see sitting in First Class.
Except every time I look, the price of a ticket for such long flights is upwards of $6,500...one way. In reality, however, most people sitting up there don't pay out of pocket.
Instead, they leverage credit card rewards points.
Sadly, playing the rewards game as a consumer requires setting up half a dozen (or more) cards, keeping insane spreadsheets, and charging a bare minimum of $3,000 per month before doing so is even worthwhile.
On the flip side, business expenses have to be paid one way or another.
Even better, most business expenses can be charged to a debit or credit card. Making them the perfect opportunity to earn points.
Sure, trying to get rewards on some $10/month SaaS subscription isn't going to get you into first class anytime soon.
However, if your company:
Advertises online
Has big recurring expenses each month
Buys a lot of materials that go into your physical products
Does any kind of marketing or production cost arbitrage
You can earn tens if not hundreds of thousands of points per month.
Further, you don't "have to" use them on flights.
Last year, one of my ghostwriting clients told me he chose to get 2% cash back instead of hoarding miles. And when he decided to sell his company, all that cash back was valued as an asset.
Which, in turn, increased the final EBITDA value of his company (putting even more money in his pocket once he cashed out).
So the question becomes: Which card should you choose?
The answer: It depends.
Mainly because there are different strategies you can take action on depending on your company's spending habits.
Here are the factors you should consider:
#1 - Category Based Rewards Bonuses
Everyone knows most rewards cards pay 2% in either points or miles.
What you might not know is that certain cards, e.g. Chase's Ink Business Cash® Credit Card and American Express' American Express® Business Gold Card pay 4-5% on certain categories of spending.
Meaning, if your company's charges big money in those categories each month, sacrificing an upfront points bonus (or paying a higher than average annual fee) could be worth it.
#2 - Cash Back, Miles or Both
If you're not a big traveler, the idea of accumulating tons of miles might not sound very interesting. But getting cash back on expenses you have to pay for no matter what? Now that's a good deal.
But what if you want both?
Maybe you have a honeymoon coming up and could use the miles. Or maybe you've run the numbers and realized paying for the flights outright is a better deal than taking the cash.
Either way, some cards only offer one or the other. So don't get lured in by big upfront bonuses if the rewards won't be a fit long-term.
#3 - Big Upfront Bonus, Small Rewards
One thing I've noticed over the years of analyzing cards is that in many cases, the ones offering the biggest upfront spending bonus (e.g. 150,000 miles after $5,000 in spending) do not always offer the best rewards long-term.
As an example, Chase's Ink Business Preferred® Credit Card provides a whopping 100,000 points after your first $8,000 in spending. The problem?
They only pay 1% rewards on an ongoing basis.
On the flip side, as we mentioned above, some cards pay as much as 4-5%.
Which, when you do some basic math, is 100,000 points for every $20,000 to $25,000 in spend. Meaning, if your company charges upwards of $40,000 per year, you're better off sacrificing the upfront bonus to get the juicier 4-5% on an ongoing basis.
#4 - Perks
With that said, there's more to the game than just points and miles.
Because one of the biggest benefits of having the right rewards card is the travel perks it gets you. Especially as it relates to airport lounges.
As an example, while Amex cards are known for having high annual fees, their cards can also get you into some of the nicest lounges in both US and international airports.
Which if you have a long layover, can be a lifesaver.
In addition, there are other less well known benefits, like hotel upgrades (depending on the card and their partnerships).
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In conclusion, it's hard to imagine a scenario where an entrepreneur should not take advantage of credit card rewards. What matters is understanding the benefits of each type of card and doing your research before signing up.
💡 Takeaway: From free flights to EBIDTA enhancing cash back, the benefits far outweigh the hassle...assuming you pay off your balance each month. On the flip side, incurring interest can rapidly offset any points of miles you might accumulate. So be smart with these.
🎁 Resources:
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