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Top Business Credit Cards with No Annual Fee

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Update: Some offers mentioned below are no longer available. View the current offers here: The Business Gold Rewards Card from American Express OPEN, Capital One Spark Miles for BusinessCapital One Spark Cash for Business, The Blue for Business Credit Card from American Express, Ink Cash Business Card

Part of maximizing your award travel is learning to weigh the value of the points and miles you earn against the cost of earning them. This is particularly evident when deciding whether to get a credit card with an annual fee, so today TPG Contributor Nick Ewen looks at several business cards with no annual fee to determine whether each one is an opportunity to save, or a missed opportunity to earn.

Earlier this fall, TPG posted an overview of the Top 7 business credit cards for earning travel rewards. Unfortunately, each of those products comes with an annual fee. While extra card benefits can justify that added expense, some of you might rather stick to cards without one. So today I’ll look specifically at business credit cards with no annual fee that can still help you earn points and miles for award travel, and help you figure out whether each one offers the best value.

Cards from several issuers provide primary coverage, including Discover, Chase and Visa. (Image courtesy of Shutterstock)
Business credit cards can enhance your points & miles strategy. Photo courtesy of Shutterstock.

Why get a business credit card?

As TPG discussed in the post linked above, business credit cards aren’t limited to mega-corporations. They’re also a great option for smaller business, and you can open one as a sole proprietorship. Business cards can help separate your personal and business finances, but they can also diversify your earning rates for different spending categories. To top it all off, many come with large sign-up bonuses that are every bit as lucrative as personal cards.

Many of the cards discussed below have a premium version with an annual fee, so I’ll explain when it makes more sense to incur the annual fee in exchange for the souped up benefits.

The Ink Cash offers cash back, but you also have the potential to convert those rewards to more valuable Ultimate Rewards points.
The Ink Cash offers cash back, but you can also convert rewards to more valuable Ultimate Rewards points.

Ink Cash Business Card

Sign-up bonus: $200 cash back after spending $3,000 in the first three months of card membership.
Earning rates: Earn 5% cash back at office supply stores and on cell phone, landline, internet, and cable TV services (on up to $25,000 in purchases annually); earn 2% cash back at gas stations and restaurants (again on up to $25,000 annually); earn 1% cash back everywhere else.
Other benefits: Car rental collision damage waiver, purchase protection, extended manufacturer’s warranty
Premium version: Chase Ink Plus, which has a much larger sign-up bonuses (60,000 Ultimate Rewards points after you spend $5,000 in the first three months), double the yearly cap on bonus category spending ($50,000), and no foreign transaction fees. Ink Plus comes with a $95 annual fee.

Verdict: The Ink Cash is a terrific fee-free business card. Almost any 5% bonus category is great, but when you consider how much a single household (let alone a small business) can spend at office supply stores and on telecommunication services, the bonuses on this card seem pretty terrific. If you max out both bonus categories and earn the full sign-up bonus, you would take home $1,950 in cash back, a return of 3.9% in the first year and 3.5% each year thereafter.

This card is even more valuable when you pair it with a premium card that earns Ultimate Rewards directly (like the Chase Sapphire Preferred), since your cash back can then be converted to Ultimate Rewards points (worth 2.1 cents apiece, according to TPG’s November valuations). That ups the value of rewards earned in the first year to $4,095 (when you max out the bonus spending categories), for a return of 8.19%.

The Ink Plus and Ink Bold cards are clearly the winners in year one, but do they beat out the Ink Cash in the long run?
The Ink Plus card gives you great additional benefits, but does it beat the Ink Cash in the long run?

However, the Ink Plus is the clear winner in year one; you pay no annual fee, and can earn 50,000 Ultimate Rewards points as a sign-up bonus. If you spend the same $25,000 in both bonus categories (note that the Ink Plus offers 2x points at gas stations and hotels, not restaurants), you would take home 225,000 Ultimate Rewards points. These would be valued at $4,725, giving you a return of 9.45%.

After year one, the $95 annual fee kicks in on the premium cards. So when does it make sense to have the fee-free Ink Cash vs. the fee-based Ink Plus? Here are some sample scenarios:

  1. If you spend more than $25,000 per year in one (or both) of the bonus categories, go with the Ink Plus. You would need to spend an additional $1,900 in the 5x category to cover the annual fee, or an additional $4,750 in the 2x category.
  2. If you already have a card (like the Sapphire Preferred) that earns full Ultimate Rewards points, and you don’t spend more than $25,000 a year in either bonus category, go with the Ink Cash.
  3. If you spend substantially more at hotels than you do in restaurants in an average year, go with the Ink Plus; otherwise, stick with the Ink Cash.
  4. If you spend more than $3,166.66 in transactions outside the United States, go with the Ink Plus or Ink Bold. The Ink Cash charges a 3% foreign transaction fee, so if you spend more than that amount abroad, you’ll save more by avoiding fees than you would by going with the free version.
The Simply Cash card from American Express gives you the flexibility to choose your own category bonus.
The SimplyCash card from American Express gives you the flexibility to choose your own bonus category.

Simply Cash Business Card from American Express

Sign-up bonus: $250 cash back after spending $5,000 in the first six months of card membership.
Earning rates: Earn 5% cash back at office supply stores and on cell phone purchases (on up to $25,000 in purchases per yer); earn 3% cash back in a category of your choice (again on up to $25,000 in purchases per year); earn 1% cash back everywhere else.
Other benefits: Car Rental Loss & Damage Insurance, Purchase protection, Extended Warranty Coverage, Travel Accident Insurance.
Premium version: None

Verdict: The Simply Cash Business Card is simply outstanding when it comes to benefits without an annual fee. The return is very similar to the Ink Cash (though I wish the 5% category was expanded to include landline, internet, and TV services), but the best aspect of this card is the flexibility of the 3% category. You initially select a category during the first two months of cardmembership from among the following options:

  1. Airfare purchased directly from airlines
  2. Hotel stays
  3. Car rentals
  4. US gas stations (default selection if you don’t choose otherwise)
  5. US restaurants
  6. US shipping purchases
  7. US advertising expenses (in select media)

While you can’t change your bonus category retroactively if you decide a different category would serve you better, you can change it for future years during the annual selection period (from December 1 – January 31).

While there isn’t a premium version of this card, the Ink Plus is again a fair comparison. I would favor Ink Plus if your expenses in the 5% bonus categories typically surpass $25,000 in a given year, or if you typically spend more than $3,500 abroad each year, since the SimplyCash card charges a 2.7% foreign transaction fee. However, if you spend a lot in one of the 3% bonus categories aside from hotel and gas stations, SimplyCash could provide the overall greater return.

The Spark Miles Select card from Capital One has some intriguing benefits, but you may be better off with the fee-based version.
The Spark Miles Select card from Capital One has some intriguing benefits, but you may be better off with the fee-based version.

Capital One Spark Miles Select for Business

Sign-up bonus: 20,000 miles after spending $3,000 on purchases within three months of approval.
Earning rates: Earn 1.5 miles per dollar spent on every purchase.
Other benefits: No foreign transaction fees, $0 fraud liability, car rental collision damage waiver, travel & emergency assistance.
Premium version: Capital One Spark Miles for Business, which offers double miles on all purchases, a 25,000-mile sign-up bonus (after spending $5,000 in the first three months), and 5,000 bonus miles when you add at least one additional cardholder within 60 days of opening the card. The $59 annual fee is waived for the first year.

Verdict: The Spark Miles Select card is another solid fee-free card, and it’s a terrific option for businesses with any amount of foreign travel. It’s also a solid card for everyday earning, as the 1.5 miles/$ is standard regardless of the purchase category. Still it loses out in the first year to the premium version with the higher sign-up bonus and earning rates.

Beyond the first year, since the miles you earn on both cards can be redeemed at a rate of 1 cent apiece, you’re getting an additional 0.5 cents of return for each dollar you spend on the premium Spark Miles card. As a result, $11,800 is the break even point. If you spend above that amount, the extra rewards you earn will more than cover the $59 annual fee:

$11,800 x 2 miles/$ = 23,600 miles (worth $236)
$11,800 x 1.5 miles/$ = 17,700 miles (worth $177)
Difference = $59

The Spark Cash Select card gives you cash back rather than miles.
The Spark Cash Select card gives you cash back rather than miles. (Image courtesy of Shutterstock.)

Capital One Spark Cash Select for Business

Sign-up bonus: $200 cash back after spending $3,000 on purchases within three months of approval.
Earning rates: Earn 1.5% cash back on all purchases.
Other benefits: No foreign transaction fees, $0 fraud liability, car rental collision damage waiver, travel & emergency assistance.
Premium version: Capital One Spark Cash for Business, which offers a $250 sign-up bonus (after spending $5,000 in the first three months), 2% cash back on all purchases, and a $50 cash back bonus when you sign up for at least one additional employee card within the first 60 days of cardmembership. The $59 annual fee is waived for the first year.

Verdict:
This comparison is identical to the one between the Spark Miles and Spark Miles Select cards. Year one again goes to the premium version of the card thanks to the waived annual fee and larger sign-up bonus. Since the regular Spark Cash also gives you a 0.5% bump in earning for all purchases, the break even point (above which you should go with the fee-based version of the card) is again $11,800:

$11,800 x 2% cash back = $236
$11,800 x 1.5% cash back = $177
Difference = $59

If you typically spend more than $11,800 in a given year, you’re better off with the regular Spark Cash card.

The Blue for Business card from American Express is another great no-fee option for you.
The Blue for Business card from American Express is another great no-fee option.

Blue for Business Credit Card from American Express

Sign-up bonus: 10,000 Membership Rewards points after your first purchase on the card within three months.
Earning rates: Earn double points on airfare, prepaid hotels, and vacation packages when purchased through amextravel.com; earn 1 point per dollar spent elsewhere; earn a 30% anniversary bonus.
Other benefits: Purchase Protection, Extended Warranty, Travel Accident Insurance, Car Rental Loss & Damage Insurance.
Premium version: Among others, the Business Gold Rewards Card, which offers a 25,000-point sign-up bonus (after spending $5,000 in the first three months), triple points on airfare, and double points on advertising, shipping, gas stations, and select computer purchases (on up to $100,000 in purchases for each category per year). The $175 annual fee is waived in year one.

Verdict: Membership Rewards points are valuable, and having a card that accrues them with no annual fee is a huge plus. The yearly 30% bonus is also quite valuable. Unfortunately, the bonus categories are somewhat lacking, and once again, the premium version of the card is a clear winner in year one (given the waived annual fee, higher sign-up bonus, and better earning rates).

Beyond year one, the value really comes down to how much you spend in the bonus categories. TPG pegs Membership Rewards points at 1.9 cents apiece, which means that you would need to earn an additional 9,211 points on the Gold card to cover the annual fee (note that this figure jumps to 11,842 points if you plan on adding another employee, since the fee for the first additional cardholder is $50). You could do this in one of three ways:

  1. Spend more than $23,027.50 on airfare. This would earn you 69,083 Membership Rewards points on the Gold card (assuming you book directly with the airline) and only 59,872 on the Blue card (assuming you book through Amex Travel). This takes into account the 30% anniversary bonus on the Blue card.
  2. Spend more than $13,158.50 in the double points categories. These purchases would earn you 26,317 points on the Gold card but only 17,106 on the Blue card (again, taking into account the 30% yearly bonus on the Blue card)
  3. Some combination of #1 and #2

The Blue for Business card charges a 2.7% foreign transaction fee, so if you plan to use your card outside of the country, the Business Gold Rewards card is a better option.

Final Thoughts

Though your default choice may be to avoid an annual fee when you sign up for a new credit card, the examples above demonstrate that there are times when paying the annual fee makes sense. Run the numbers based on your own spending patterns to see if the amount you save justifies the lesser benefits you get with a fee-free card. If you’re a big spender, the premium cards will generally be the better option.

What are your experiences with any of these cards?

Ink Cash® Business Credit Card

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  • Earn $300 bonus cash back after you spend $3,000 on purchases in the first 3 months from account opening
  • Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year
  • Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
  • Earn 1% cash back on all other card purchases with no limit to the amount you can earn
  • 0% introductory APR for 12 months on purchases and balance transfers
  • Employee cards at no additional cost
  • No Annual Fee
Intro APR Regular APR Annual Fee Foreign Transaction Fee Credit Rating
0% for 12 months 13.49%-19.49% Variable $0 3.00% Excellent Credit