Cashback vs Air miles: Which business credit card should you get?

Choosing the right business credit card can be tricky. You want rewards, but which type? Cashback pays back every time you make a purchase, while air miles can fund your next business trip. Both have their perks, but what’s best for your company? We show you the pros and cons of cashback and air miles cards to help you decide which one will give your business the boost it needs.

Cashback cards

Cashback cards are straightforward—you spend, you earn. Every purchase puts a percentage of your spend back in your pocket. So those expenses you make, whether it’s putting petrol in the company car or buying software, gives you something back. 

How cashback works 

Most cashback cards offer a fixed percentage back on all purchases. Some cards have tiered rates, giving higher cashback on certain categories like office supplies or travel.

For example, the Funding Circle Cashback card offers 2% cashback on all spending for the first six months (up to £2,000), then 1% after that. If you spend £10,000 in those first three months, you’ll earn £200 back.

Benefits of cashback cards

• Flexibility: Use your cashback for business expenses, such as marketing spend or software purchases.
• Simplicity: The concept of cashback is straightforward and easy to understand. The same goes for tracking your rewards.
• Immediate value: You know exactly how much you’re earning on each purchase. 

Drawbacks of cashback cards:

• Potentially lower value: If you travel a lot, air miles might offer more value than a cashback business credit card. 
• Temptation to overspend: The lure of earning cashback might encourage unnecessary purchases. 

Air miles cards

Air miles cards (also called travel rewards cards) earn you points or miles on your spending, which you can redeem for flights, hotel stays, and other travel perks.

How air miles work 

You’ll typically earn a set number of miles or points per pound spent. These can then be transferred to various airline loyalty programs or used to book travel directly through the card issuer’s portal.

Some cards offer bonus miles for spending in certain categories or with specific airlines. You might also get perks like free checked bags or airport lounge access.

Pros of air miles cards:

• High potential value: If you redeem your points wisely, miles can be worth more than cash back
• Travel perks: Many cards offer additional benefits like travel insurance or airport lounge access
• Aspirational rewards: Saving up means you might be able to upgrade your trip to business class. 

Drawbacks of air miles cards:

• Complexity: Understanding and maximising value from miles can be tricky. They tend to be quite tricky, and the terms of conditions are usually far from straightforward. 
• Less flexibility: You’re limited to travel-related redemptions. If you don’t travel much for work, they’re almost pointless. 
• Fluctuating value: The worth of miles can change based on airline policies and availability

Feature	Cashback cards	Air Miles cards
Reward type	Cash back on purchases	Miles or points for travel
Earning structure	Fixed percentage on spending	Miles/points per pound spent
Redemption	Direct cash or statement credit	Flights, hotels, travel upgrades
Flexibility	High (cash can be used for anything)	Limited to travel-related expenses
Simplicity	Easy to understand and track	Can be complex with varying point values
Additional perks	Sometimes offers category bonuses	Often includes travel benefits (e.g., lounge access)
Best for	Businesses with varied expenses	Frequent business travellers
Value potential	Predictable, fixed value	Can offer high value if redeemed strategically
Cash flow impact	Provides regular cash returns	Rewards typically realised through travel

Which card is right for your business?

So, should you get a cashback card or air miles? To choose between the two, consider:

Spending habits

If your business spends regularly on travel, an air miles card could offer great value as you’ll use it frequently. If your expenses are more varied, however, a cashback card might be better because you always get something back on those everyday business expenses.

Business goal

Are you looking to cut costs (cashback) or invest in business travel and relationships (air miles)? Consider your long-term strategy. Cashback can provide a boost to your bottom line, while air miles might help you expand your network and reach new markets through increased travel opportunities.

Time and interest 

Cashback offers a straightforward return, ideal for busy owners. Air miles can provide higher value, but require more effort to understand redemption options and find the best deals. Consider your bandwidth for managing rewards.

Your travel needs 

Consider your travel patterns and destinations. Air miles cards often offer perks like lounge access, free checked bags or travel insurance. For frequent flyers, these benefits can significantly reduce travel costs and improve comfort.

Cash flow consideration

Cashback can provide a steady, predictable boost to your monthly income. Air miles, while potentially more valuable, are less liquid. Think about how each option fits into your overall cash management strategy and financial planning.

Making the most of your business credit card

Whichever type of card you choose to apply for, here are some tips to make the most of its value:

• Pay in full each month. Interest charges will quickly outweigh any rewards you earn. Always pay your balance in full to avoid fees.
• Use your card for all eligible expenses. The more you put on your card, the more rewards you’ll earn. Just don’t spend more than you normally would.
• Keep track of your rewards. Whether it’s cashback or miles, make sure you’re actually using what you earn.
• Review your choice periodically. As your business grows and changes, your credit card needs might too. Reassess every year or two.
• Look beyond the rewards. Consider other features like purchase protection, travel insurance, or expense management tools.

Remember the best card is the one that fits your specific business needs and spending patterns. A high-flying air miles card might sound exciting, but if a simple cashback card better suits your business, that’s the smarter choice.

Don’t forget to factor in any annual fees when calculating the value of a card. Some premium travel cards have high fees that might eat into your rewards unless you’re a big spender. That’s not the case with Funding Circle’s cashback business credit card—there are no monthly or annual fees. 

Lastly, always read the fine print. Having better insight into the exact terms of your rewards program will help you make the most of your chosen card and avoid any surprises down the line.

Choosing between a cashback business credit card and air miles

Whether you opt for the straightforward appeal of cashback or the globetrotting potential of air miles, the right business credit card can provide the extra flexibility your company needs to grow, and seize new opportunities. Consider your business’s unique needs and spending patterns to make the choice that will take your company further.

28/11/24: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.