Capital One Announces 2% Cash Back Business Card; What’s the Catch?

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Capital One recently released a new business rewards credit card that is sure to catch the attention of small business owners everywhere. According to Card Hub’s data, the Capital One Business No Hassle Cash Rewards Premier card is the only business card currently on the market to offer a full 2% cash back on all purchases without any qualifiers or special requirements. In addition to that ongoing benefit, you’ll get a $100 cash back bonus for spending $1,000 in the first three months as well as $50 for signing up employees as authorized users. So there has to be a catch, right?

What’s the Catch?
Let’s see, you aren’t required to join a rewards program and there aren’t any rewards tiers you have to reach, so those are out as possible catches. Your rewards won’t expire either, there aren’t any rotating spending categories, and like any other Capital One card, it’s also a no international fee credit card.

The only two things that could be construed as major catches are the $59 annual fee starting year two and the fact that Capital One has yet to voluntarily apply to its business credit cards the CARD Act rule requiring that a cardholder be at least 60 days delinquent before an issuer increases the interest rate on existing debt. The Capital One Business No Hassle Cash Rewards Premier is therefore ill-suited for small business funding (i.e. revolving a balance).

To be fair though, Bank of America is the only major credit card company to have extended this aspect of the CARD Act to its business card offerings. The CARD Act by law currently only applies to general-consumer credit cards. You’ll therefore need to get a BofA business credit card or a personal credit card with which to make significant business purchases that you cannot immediately pay for in full.

Overall Benefits
The No Hassle Cash Rewards Premier card has a number of benefits, some of which are common among the best business credit cards, some of which are unique. Here’s a quick look at the most important perks this card has to offer:

Standard:

  • Free employee cards with customizable limits
  • Online quarterly and yearly statements, which make it easy to track spending and prepare your taxes
  • Specially trained business customer service representatives

Less common, but found elsewhere:

  • Initial cash back bonuses
  • Ability to brand the entire front of card with a business-related image

Unique:

  • 2% cash back on all purchases
  • No foreign transaction fees

Conclusion
This card is obviously attractive not only because of its high rewards earning rate across all purchases, but also because you earn these rewards in cash, which is not subject to the devaluation risk, which rewards points and miles have. Other than that, all you really need to know is that there aren’t any underlying tricks or snags that effectively decrease its on-paper benefit. If you value the simplicity of cash rewards, would rather not worry about different earning rates for different spending categories, and use a two-card business spending strategy, then this new Capital One offer would work well as the card with which you make everyday business purchases.

 

This article was written by Odysseas Papadimitriou, founder and CEO of Card Hub, a leading online marketplace for all types of credit cards, including business credit cards for new businesses.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




Referenced Stocks: COF

Odysseas Papadimitriou

Odysseas Papadimitriou

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