The new American Express FreedomPass credit card from OPEN, the small business team, is a business credit card that provides users with high yield rewards. With only 7500 points, you earn a $100 American Express travel reward certificate for purchases on your Card Account at airlines, hotels, car rental companies, cruise lines, travel agencies, tour operators and on-line travel sites. For most small businesses, obtaining a few thousand dollars in travel rewards every year would be in reach with this credit card.
There are a few notable differences between the American Express FreedomPass and most travel rewards business credit cards. For example, the CitiBusiness® / AAdvantage® Visa®, which only allows for travel on American Airlines, and the Gold Delta SkyMiles® Business Credit Card charge annual fees of $85. This is also true for consumer travel and airline rewards credit cards. The American Express FreedomPass does not charge an annual fee, which makes it unique among travel rewards credit cards.
A second notable difference between FreedomPass and other business rewards credit cards is the rewards rate. Although this business credit card, like most other cards, gives 1 travel rewards point for every dollar spent, the value of 1 point is 33% higher for FreedomPass points. Why? A $100 American Express travel rewards credit to your account only takes 7500 points to earn. This detail in itself makes this business credit card a rewards standout.
Earning over $1000 in rewards with the American Express FreedomPass credit card is easier than doing so with a card that only offers a standard 1 dollar = 1 point = 1 cent business credit card. For example, if your business spends $10,000 a month with this American Express business credit card, expect to cash in $1600 in travel rewards. That’s equivalent to earning 1.33 points with every purchase you make. Plus, as an added bonus, American Express will also get you started with 5,000 free FreedomPass Miles after you use the card to make your first purchase. Spend $2500 with your card and you’ve already earned a $100 American Express travel reward.
Now, there are some issues of fine print to examine. Let’s say you spend $167.88 on a hotel room. Because American Express FreedomPass points are redeemed in increments of 7500, you would need to use 15000 FreedomPass points to pay the bill in full, or use 7500 points to cover the first $100 and pay off the remaining $67.88 in cash. While a rewards point redemption situation such as this may not be ideal, your business reaps more benefits by mixing its FreedomPass miles with Amex spending than it does by wasting $32.12 in future rewards.
Business rewards credit cards and business charge cards provide a great way to make spending profitable. When you spend cash, you get nothing in return. When you spend with a business rewards credit card such as the American Express FreedomPass, you earn a small percentage of your business’ spending back. This American Express small business credit card may not be right for everyone, as some may enjoy the option to earn giftcards and other non-travel rewards. However, in terms of travel rewards business cards, the American Express FreedomPass is worth giving a second look.
Jeff Weber is the President & CEO of Credit Card Depot Inc. His primary
website, Credit Card Depot, features detailed credit card application
information and links that has helped over 10,000 consumers find new credit card
over the past two years. You can find over 80 current credit card applications,
including the
American Express FreedomPass and other
American
Express business credit cards, at http://www.credit-card-depot.com
What are the avenues available to businesses with weak credit profiles or to companies pursuing credit transactions that are perceived as too risky by credit providers? Many companies apply for credit at banks, finance companies or equipment leasing firms and are routinely rejected due to the high degree of perceived credit risks. When approaching a credit provider, it is helpful to understand what can be done to reduce the risk of a credit transaction in the eyes of the provider. Never accept a credit rejection without considering credit enhancements. Here are a few tips on credit enhancement to help guide you in approaching the credit process:
1. Credit enhancements are modifications to credit transactions that improve the risk-reward relationship for credit providers. Enhancements can be real or merely perceived by the receiving party. Also, they can be tangible things like real estate and equipment or they can be intangibles like future rights or options.
2. Use credit enhancements to strengthen credit transactions and to improve pricing or terms. They may be used to entice credit providers to approve credit transactions that would otherwise be unacceptable because of the perceived risks. They can also encourage credit providers to make transaction approvals faster.
3. Credit enhancements usually fall within one of these general categories: improvement in credit terms favoring the credit provider; additional collateral; guarantees, insurance or third party assurances; increased pricing, compensation or upside gain potential; or granting of specific rights or options.
4. Some specific enhancements include: granting a security interest in additional equipment, real estate, inventory, accounts receivable, intellectual property rights or other company assets; pledging cash; pledging securities; third party guarantees; surety bonds; letters of credit; pledging cash value of insurance; increase in transaction rate; additional fees or other transaction compensation; shortening the term of certain transactions; granting first refusal rights on future transactions; permitting call options; obtaining re-marketing guarantees or agreements.
5. When considering using credit enhancements to improve your transactions, use these guidelines: try to get a fair and objective assessment of your credit profile and the inherent transaction risks from a knowledgeable credit person; take inventory of the possible credit enhancements your firm can provide; evaluate the cost of possible enhancements to decide whether using them will be worthwhile; if there is time and opportunity for a second chance to present your transaction to the credit provider, present it first without the credit enhancement or with the minimum enhancement you think acceptable; of the credit enhancements available to your firm, decide which ones will be effective and the degree of enhancement necessary to achieve your objectives.
6. It helps to develop a credit enhancement strategy in the planning stage of your transaction. Start by understanding the transaction’s credit strengths and weaknesses. Decide which enhancements available to your firm will help strengthen the risk profile of the transaction. Try to assess the credit provider’s sensitivity to various types and degrees of credit enhancement. Later, if the credit provider turns down your transaction or proposes unacceptable terms, ask the provider to suggest enhancements that will make a difference in the decision. You may be able to negotiate further, once you have this information.
7. All credit enhancements have a cost. In many instances the cost is the opportunity cost of not having the credit enhancement available for future use. Before offering or providing a credit enhancement, do a thorough cost-benefit analysis to make sure the potential benefit is worth the cost to your firm.
Though it is not always possible to enhance a credit to the satisfaction of credit providers, you should understand the value of credit enhancements and know when they may be useful. By carefully considering potential credit enhancements, you can often improve the pricing and terms of your firm’s credit transactions. If your firm has a weak credit profile, use of a credit enhancement might make the difference between obtaining financing or being rejected.
George Parker is a Director and Executive Vice President of Leasing Technologies International, Inc. (”LTI”), responsible for LTI’s marketing and financing efforts. A co-founder of LTI, Mr. Parker has been involved in secured lending and equipment financing for over twenty years. Mr. Parker is an industry leader, frequent panelist and author of several articles pertaining to equipment financing.
Headquartered in Wilton, CT, LTI is a leasing firm specializing nationally in direct equipment financing and vendor leasing programs for emerging growth and later-stage, venture capital backed companies. More information about LTI is available at: http://www.ltileasing.com.
