Given the work of many on the team at American Express back in the day, a lot of our entrepreneur friends often ask us what small business credit card we use. Strangely, we also get emails from folks who are having an issue with their card who think we have some hotline to people that will magically make their issue disappear. Unfortunately, we didn’t work in customer service when at American Express so we cannot really help there as much as we might want to.
But we are happy to tell you what small business credit cards we use in case it is useful. This is not a recommendation but really just what works for us. Also, there are elements detailed below which will likely change so be sure to check out the latest greatest terms and conditions if you are interested in any of the below.
Our team primarily uses two cards from American Express. Yes, we remain loyal to the alma mater to some extent but we also find these cards to be good for our purposes.
The first is the Starwood Preferred Guest Business Card. This is our standard default day-to-day business card. We are not big fans of the annual fee, but as far as travel reward cards go, this is the relatively undiscovered gem that people within AmEx who want a deal use. (the personal Starwood card is equally good)
If you or your employees need to travel, this is where the American Express Starwood excels. For every dollar spent, we get a Starwood Preferred Guest (SPG) point and if we stay at a Starwood Hotel (Westin, Sheraton, 4 Points, etc), we get bonus points. But the real killer application of Starwood points is that they can also be converted to almost all airlines. And to make things sweeter, when you convert Starwood points to an airline, you generally get a 5000 mile bonus for every 20,000 Starwood points converted. So for example, if you have 40,000 SPG points and want to convert to Continental, you can do so and will come out with 50,000 Continental miles.
But when we do the on SPG points, we think the math works out better to keep the points for hotel stays. Let us explain.
Let’s say you have 20,000 SPG points. Depending on the quality of the Starwood property you want to stay at, that many points may translate into 2-3 hotel nights. Assuming 3 nights would get you into a hotel that costs $300/night, those 20,000 points translated into $900 of value. For a 2 night stay, let’s assume the per night cost is $500/night, your 20,000 points resulted in value of $1000. Plus, redeeming SPG points is straightforward.
Now let’s figure out what the value of these points is in airline miles. Those 20,000 SPG points get you 25,000 miles on an airline. When is the last time you found a reward ticket on an airline for 25,000? Yeah us too. Never. But for the sake of argument, let’s say you could get a domestic United States ticket for 25,000 and you’re going to go from NY to San Francisco, how much would you have paid for that? Assuming you’re a businessperson who will look for a reasonable airfare, you probably got this ticket for $600 worst case.
So with the hotel stays, you’re ahead in terms of value you’ve received by $300 to $400. That’s our rationale for the Starwood Card for Business.
The second small business credit card we have is the American Express SimplyCash Back. We strategically use this card for certain expense types. Its cash back rate on office supplies and wireless is currently 5%. And it’s 3% on gas. That is where we use it, i.e., for Staples, company smartphones, etc. The regular cash back rate is 1% which isn’t particularly good and so we don’t put day to day business expenses on it.
But the new negative of the SimplyCash back is a $50 annual fee in year two if you don’t spend at least $20,000 on the card in the year. So this makes the card a lot less attractive for us given we cherry pick the expenses we put on it. There was probably a finance guy at American Express who realized folks were using the card like we were just to max out cash back and so they put on this limit. Nice work I guess, but I suppose we’ll defect soon enough.
To this end, we have heard Chase’s Ink Small Business card is better than the Open Cash Rebate card and so we may make the switch if there rewards are going to be better over the long-term and not just as part of some initial teaser campaign and there is no annual fee. We’ll look into this and let you know what we find.