Cashback or points: Unlocking the best credit card for your startup’s bottom line

For startup founders, choosing between a cashback and points-based rewards program credit card is a key financial decision. The cash or rewards you get back from using a credit card can help increase your bottom line or give you access to perks that you might otherwise have not had. 

When it comes to your business, you likely have ROI in mind for most decisions: where you spend your time, how you allocate resources, your team and staff. Business credit cards, when used wisely, can be a major tool to help increase your bottom line.

The key, though, is identifying your startup’s priorities, and moving from there. So, what does that mean, in terms of credit cards? That means choosing between a credit card that prioritizes travel perks or one that prioritizes time-saving tools to cut down on your operational costs and improve your team’s productivity, or you might find a card with a mix of both.

So, what is best for your startup?

Let’s dive into which type of card so you can make an informed decision.

What are the key differences between cashback and points-based credit cards?

The key differences between cashback and points-based credit cards lie in their reward structure, redemption options, and overall value proposition.

Cashback cards

Cashback credit cards typically give you back a percentage of the amount you’ve spent in cash. This makes it easy to understand and calculate the value of your rewards. For example, if you spend $100 with a 2% cashback card, you get $2 back. Cashback rewards are typically redeemed as statement credits, direct deposits to a bank account, or gift cards for specific retailers. 

Points-based cards

Points-based cards, on the other hand, award points for purchases. The value of these points can vary depending on how the card is used, meaning in what category the money is spent, and how the points are redeemed. 

For example, with a travel points-based card, you might earn more points when you book a flight through the card’s travel portal. Then, those points could have a higher value if you use them again on the same travel portal, versus on merchandise. These cards typically also offer complimentary access to airport lounges.

Points-based cards usually provide a wide range of redemption options, including hotel night stays, airline miles, or gift cards. Sometimes, you can receive cashback as well, but at a lower value.

Which is better for your startup: a cashback or points credit card?

Both types of cards have their pros and cons. But, making the decision can be easy when you first decide what matters most to you as the startup founder. 

What is the most important thing you’re trying to solve?

If cash flow and immediate returns are priorities, cashback could be the better choice. In addition to the percentage of cash back, look into the perks that each card offers. 

Check for these benefits:

• Financial management tools (e.g., integration with accounting software, spending controls, detailed spending reports)
• Free employee cards
• Customization (e.g., can set spending controls on specific teams)
• Travel and purchase protections
• No foreign transaction fees

But, if you're willing to invest time in optimizing rewards, a points program could offer more value.

Do you spend more on a specific category? If so, then you might consider a points-based card. 

Points cards often provide higher reward rates for specific spending categories, such as business travel or marketing spend, which can lead to greater overall value if your spending aligns with these categories. 

For instance, if you’re on the road often, you could get points every time you use the card and fill up your car with gas. Or, if you travel in Uber or Lyft, you might benefit from a card that offers higher points for car ride-sharing apps.

Check for sign-up bonuses, bonus points, and promotional offers, as points cards frequently feature substantial initial bonuses that can significantly enhance their value during the first year.

Next, analyze the redemption options and potential value of points compared to cash. Look for flexibility in how points can be used—some cards allow transfers to loyalty programs that may offer even greater rewards. 

Finally, consider any associated fees and the card's overall cost-effectiveness; a card with an annual fee may still provide better value if the rewards and benefits outweigh the costs. 

To get the most out of points-based cards, you must use the card in a way that maximizes the various rewards. So it really depends on how much time you want to dedicate to strategizing your card’s use. Or, alternatively, you could get a points-based card that you solely use for a specific type of spending, such as travel purchases with a travel credit card.

While points-based systems can offer value, particularly for businesses with high travel expenses in which travel rewards credit cards could be an option, cashback programs generally provide the simplicity, flexibility, and immediate financial benefits that align with the needs of most startups. Decide what is best for you.

Which is better for startups with tight margins – cashback or points?

Cashback provides instant, tangible returns on business spending. For startups operating on tight margins, this immediate financial benefit can be crucial. The cash earned can be directly reinvested into the business or used to offset expenses, helping to stretch limited resources.

For startups with high expenses, cashback can add up quickly. For example, a business spending $4,000 a month on inventory using a 2% cashback card could earn $80 per month or nearly $1,000 per year in rewards.

Also, cashback programs are typically straightforward and easy to understand, which is valuable for busy startup founders juggling multiple aspects of a growing business. There's no need to navigate complex redemption rules. This predictability can be valuable for startups trying to manage their finances carefully and forecast cash flow accurately.

How to choose which credit card incentives align best with your brand and business model

Choosing a card can be overwhelming. That’s why it’s important to first identify what matters most to you as the business owner. Then, look at where you spend most every month. 

If you take clients out for dinners often, a card with dining rewards could be valuable. Or, are you planning on spending large amounts on equipment? If so, then a card with no pre-set spending limits could be the best choice. 

After you’ve analyzed your spending patterns, evaluate the types of rewards that each card offers. 

Then, look beyond the rewards and identify the additional perks. These could be 0% intro APR, welcome bonuses, finance management platforms, etc.

Having your business objectives clearly defined will simplify the process of choosing a credit card.

Rho Platinum: For startups that want to maximize their cashback 

Rho Platinum is a premium version of Rho that offers even more benefits for growing startups with zero SaaS fees. 

In addition to an industry-leading 2% cashback¹, businesses can unlock access to exclusive events alongside well-connected founders and influential investors across New York and San Francisco. To help with day-to-day operations, Rho Platinum provides over $600K+ in rewards for tools like Perplexity Enterprise, Google Cloud, and AWS, among many more. Businesses can also access 24/7 live customer support with real humans on the other end of the line. 

And with no minimum balance required, getting started with Rho Platinum is simple. 

First, use your Rho Checking account for the majority of your day-to-day operational costs, such as marketing spend, SaaS licenses, office rent, etc. Connect Rho to your payroll provider and make sure it’s your primary account for connecting revenue. Then, sign up for a Rho Corporate Card. It’s a frictionless process. 

Wrap up

Choosing the right credit card for your business can be a game changer. Having your business goals and priorities in mind will simplify the process. 

Cashback cards are great for cashflow. Points-based cards are a little trickier to optimize but could be the right option if most of your expenses are in one specific category. 

Look for additional perks. Rho Platinum was created specifically for startups, and in addition to the 2% cashback, it offers networking events alongside other founders, $600K+ in rewards for enterprise tools, and 24/7 live customer support with real humans.

Sign up for Rho Platinum today!