Category Archives: Business Cards

Ink from Chase: New Credit Cards for Small Business

Looking for signs that the credit market may be poised for a turnaround? While the trend has been to cut back on offering credit to small businesses, most notably exemplified by the closure of Advanta earlier this year, Chase just announced that it is introducing a new line of credit cards targeted to the small business owner.

Ink from Chase will feature the first charge card from any Visa or MasterCard issuer, as well as three more new credit cards for small businesses, offering rewards, cash back and large credit limits.
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Citi Professional Card: 0% APR on BT for 12 Months Plus 15,000 Thank You Points

Much to my surprise, more no fee balance transfer offers keep popping up. The latest discovery is an offer for the Citi Professional Card. This particular deal provides an intro 0% APR on balance transfers for 12 months with no balance transfer fees. In addition, you’ll earn 15,000 Thank You points after your first purchase.
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Small Business Owners: Save on Taxes By Prepaying with your Credit Card

Did you know that prepaying your business expenses on your credit card could save you money when tax time rolls around? When you make a business-related charge on your credit card, you can recognize the expense as of its transaction date, even if you don’t actually pay it off until the next year. Using this technique allows you to defer your income.

There are a number of caveats, however.
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Amex Business Credit Cards No Longer Allow Balance Transfers

In what could be a portent of things to come, American Express has sent notice to all of its OPEN small business credit card holders that it will no longer process balance transfers or convenience checks. In card holders’ November statements is the notice:

Effective immediately, Balance Transfers and Convenience Checks against OPEN Credit Card accounts will no longer be accepted or available. This includes requests made by phone, online or through the use of Balance Transfer, Convenience Checks and Cash checks.

I called Amex and they confirmed that all small business credit cards are affected, including new accounts.

This is clearly bad news for small business owners. In the current economic climate, businesses can no longer rely on their open lines of credit to be there when needed. Businesses would be well advised to hold adequate cash reserves, have lines of credit from multiple creditors and if necessary, to draw on these lines in advance of when they are required.

Visa SavingsEdge Helps Small Businesses Save More

Visa just announced that it is introducing Visa SavingsEdge, a new automatic savings program for small business credit card holders. Under the free program, members will receive automatic discounts when they use their enrolled Visa Business credit and check cards at participating merchants. Savings will appear as an account credit on their monthly statement. The program is no doubt an answer to similar small business programs already offered by other networks, such as American Express’ Open Savings and the MasterCard Easy Savings program.
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Advanta Platinum 90-Day Interest Free BusinessCard

Advanta has introduced a new business credit card that offers 90 days interest free on all purchases all the time. The Advanta Platinum 90-Day Interest Free BusinessCard charges no interest for 90 days on purchases and offers a business rewards program, all without an annual fee. Since the 90 day interest free period is not a promotional offer, and it can provide up to $50,000 in working capital, the card can be helpful for small businesses looking to better manage their cash flow on an ongoing basis.
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Chase Business Rebate Card: 0% BT for 15 Months, 7.99% Fixed Afterwards

For a limited time, Chase is offering an intro 0% on balance transfers for 15 months on its Business Rebate Card with a balance transfer fee of 3% (min of $5 and max of $99). After that, your interest rate goes to a low 7.99% fixed on both purchases and balance transfers.

There is no annual fee, plus the card earns cash back rewards: a 3% rebate at restaurants, gas stations, office supply stores, building supply stores, hardware and home improvement stores; 1% everywhere else.


Visa Business Card Bonus: Earn $100 After Spending $5000 in May and June

I just received the following offer on my Chase Business Rebate card:

Register your Chase Visa Business Rewards Card at and spend $5,000 or more between May 1 and June 30, 2008 and you’ll get a one-time $100 cash bonus. Your $100 cash bonus will automatically appear as a credit on your statement within 8 weeks of the end of the promotion.

In addition, when you use your card in May and June, you’ll be automatically entered into a sweepstakes to win a Grand Prize of a $30,000 check.

After doing a bit more investigation, I found that any Visa Small Business credit card should be eligible for this promotion. You can see more details about this promo at

IRS Hassle is Your Gain: Why a Business Miles Card is Better than a Cash Back Business Card

I’ve been noticing that Amex has been running a lot of TV ads for the Plum Card recently and it got me to thinking: What is the true value of its 2% early pay discount? Aside from the time value of money aspect, are there tax implications for small business owners that reduce its usefulness even further?

The tax argument against business cash back cards
It’s commonly accepted that any cash rebate that you receive from personal credit cards is not taxable, as it just another form of a discount to you. In the case of a business, however, when the cash rebate is treated as a discount, it reduces the cost basis of your purchase. As a result, this decreases your effective rebate by your marginal tax rate.

To make this concrete, consider this example: You purchase merchandise for $100. You resell it for $150. Your credit card gives you 1% cash back. Your cost basis is actually $99 then. So your profit was $51 instead of $50, and you’ll be taxed on that extra dollar you earned as a rebate. If your effective tax rate of your business is 40%, after tax you made $30.60 ($51 x 0.6) instead of $30 ($50 x 0.6). Your effective credit card rebate then is 0.6% rather than 1%.

What about business miles cards?
Now then the question becomes: is it any better when you earn points or miles instead of cash back? The answer, I believe, comes from IRS Announcement 2002-18:

Most major airlines offer frequent flyer programs under which passengers
accumulate miles for each flight. Individuals may also earn frequent flyer miles
or other promotional benefits, for example, through rental cars or hotels. These
promotional benefits may generally be exchanged for upgraded seating, free
travel, discounted travel, travel-related services, or other services or benefits.

Questions have been raised concerning the taxability of frequent flyer miles or
other promotional items that are received as the result of business travel and
used for personal purposes. There are numerous technical and administrative
issues relating to these benefits on which no official guidance has been provided,
including issues relating to the timing and valuation of income inclusions and the
basis for identifying personal use benefits attributable to business (or official)
expenditures versus those attributable to personal expenditures. Because of
these unresolved issues, the IRS has not pursued a tax enforcement program
with respect to promotional benefits such as frequent flyer miles.

Consistent with prior practice, the IRS will not assert that any taxpayer has
understated his federal tax liability by reason of the receipt or personal use of
frequent flyer miles or other in-kind promotional benefits attributable to the
taxpayer’s business or official travel. Any future guidance on the taxability of
these benefits will be applied prospectively.

This relief does not apply to travel or other promotional benefits that are
converted to cash, to compensation that is paid in the form of travel or other
promotional benefits, or in other circumstances where these benefits are used for
tax avoidance purposes.

Essentially what the IRS is saying is that because it’s too much of a hassle to put a value on your points or miles, they won’t make an attempt to tax them. If, however, you convert them to a cash equivalent, you should pay tax on them.

So, on the one hand you have cash back rebates that are taxed; on the other you have mileage and point rewards that the IRS will not pursue–if all other things are equal, which card are you choosing?

Let me take the time to issue a disclaimer: I am not an accountant, and you should not take this as tax advice. Consult a professional before taking any action.

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