Are you a business owner? Or a tennis star? Or an althlete? Or anything where you are self employed?
If yes, then You should be aware that:
Since you are spending money anyway for your business or travel, or supplies, you should get some value back as points. You should “funnel” all spending on the credits cards that offer the most value back. Why?
Because it would be a waste not to. And because you can indirectly get minimum 2% value out TAX FREE!
Tax free : would you like it if you can automatically earn 2 percent tax free, ie equivalent to withdrawing money from business tax free?
Supposed these following options:
A. Supposed If you had paid business supplies with your company check, and did not get rebates for not using credit cards from suppliers,
B. or even if you get rebate from suppliers at a usual rate of 2% for not paying with credit cards, pay with check.
C. Or Pay business spend with credit cards cash rewards (with cash back rewards)
D. Or if you had paid those supplies with a credit card earning frequent points reward, especially the amex rewards or spg rewards,
which one bring the most value?
It is D. Pay with credit cards earning strategic points. Why? Rewards points are not taxable.
While option C. cash back rewards for business credit cards spending may be taxable, (as the reward is Cold hard cash, or cash equivalent, it can be taxable) !!
Option A. Is obviously not the best, no cash back, no value back for spending. Option B. Sounds good, but 2 percent back in a company, taxable is worth less than the same amount out of the company, tax free.
Option C. The cash back is usually capped at maximum 2%, while smart travelers can usually get MORE than 2 percent value back with strategice redeemed points.
Not all credit cards offer the same value. Even in different frequent traveler reward points, not all points are the same. (Future post)
The minimum value that you can get through points should be 2%, but if you use the points properly, it can be much more.
How would you like to feel if your normal business spending pays for either yours or your staff luxurious vacations and trips… Tax free??!!
It is always funny to see people of all backgrounds, rich to poor, to dismiss the points collection scheme. For them, they are too “rich” or too busy to focus on minor details intangible like points reward maximization. But yet, the same peopke would do anything to gain 1-2 extra percentage points return on their stock porfolio… All while they could have consistenly gain min 2% value back for just spending or funneling on credit cards.
There is one person that managed to get each year, 20 MILLIONS spg points.. Apparently rumours are that he is in NBA… So when he spend to book the players rooms, parties, supplies etc, he made sure to get lots of value back, even if obviously he could have said he is too “rich” or too “busy” to collect points.
What is 20 millions spg points? Well even at the max rate (there are ways to lower) 30000 points spg get you one free night at one of the TOP hotels in paris ie : prince de galles, or top hotels in maldives, tokyo etc.
For around 200 k spg points, you can go around the world in first class.
But you need to pay your credit card balance in full.