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Nearly 70 percent of entrepreneurs fund their companies with external capital, according to a 2017 U.S. Trust Insights on Wealth & Worth survey. Credit card cash advances are among the most common sources of this money -- right up there with personal loans. It shouldn’t be surprising, then, that 46 percent of small business owners use their personal cards for company spending, according to the U.S. Small Business Administration.

But entrepreneurs don’t always know how to best utilize these forms of spending and avoid debt -- let alone understand how to even make money via their credit cards. Entrepreneurs using credit card rewards programs often fail to align their points with their spending and struggle to choose cards that maximize their potential rewards. Putting $100,000 on a card that offers a point per dollar reward, for example, will rack up 100,000 points. But that’s 200,000 fewer than a card that offers three points -- which equates to thousands of dollars in missed opportunities.

By matching those benefits with the areas of highest spending, entrepreneurs can make sure their credit cards are a source of capital -- and not a burden -- on their overall financial health.

The most rewarding way to use credit cards

Using credit cards for outside capital isn’t a bad idea, especially for entrepreneurs who have a plan for avoiding any snags. Minimizing credit card debt is easy if you take care to pay the minimum monthly payment on each card and then pour remaining money into the card with the highest interest rate.

But making the most of credit card rewards might take more forethought than paying down debt. As with interest rates, every card offers differing reward values. Those rewards also differ in where they can be applied -- which is why an appropriate rewards strategy needs to be more than just comparing numbers. Follow these tips to develop such a strategy and use credit card rewards to your advantage:

Related: 8 Ways to Get the Most From a Business Credit Card

1. Choose cards that reward spending

Strategically maximizing credit card rewards isn’t just a guessing game -- it’s a science that has to be supported by data. A savvy entrepreneur knows where the company allocates most of its budget and then chooses cards that offer the most rewards in those categories.

For example, if you travel a lot for work, try getting a card that offers rewards on airfare, lodging and rental cars, as some cards even offer more incentives for travel-related expenses. The same goes for companies that spend a lot on office supplies, business lunches or online advertising.

Make sure to allocate more than just one card to the category with the most spending. Using several cards will yield the highest points per dollar spent. Over the course of a year (or several years), this can make a huge monetary difference.

2. Budget points like cash

Diversify cards to ensure that your points will be more versatile and that you don’t wind up with a bunch of points that you’ll never use. For example, if 1 million points is more than enough for the year, then switching to a cash-back card after accruing them is a good strategy.

After reaching the threshold of usable points, you can benefit more from racking up cash-back rewards that can be applied anywhere. Some cards offer bonuses of up to $1,000 cash back, which can quickly add up alongside the million or more travel, dining or shopping points reaped from other cards.

However, cash-back rewards often equate to less than the specific points that other cards offer. Therefore, keep one or two cash-back cards in reserve, but be sure to maximize the points earned on the more strategic rewards cards first.

Related: 7 Ways to Cut Travel Expenses on Your Next Funding Round

3. Get only transferable points

Speaking of maximizing points, the best method is to choose cards with transferrable points. Having a whole handful of cards isn’t necessary for earning a lot of points. Maintaining two or three with transferrable points is enough to accrue plenty of rewards.

Transferrable points let you take full advantage of all the airline and hotel partners to that accept those points. When employees travel, they have a range of options when choosing which airline, hotel and rental car company to use. Choice equals flexibility and opportunities to get the lowest prices for any specific route.

Related: 4 Credit Card Tips to Make Business Travel Easier

To make the most of that flexibility, choose cards with points that can be transferred to several different transfer partners. This will not only give employees more options, but it will also help companies avoid losing out when specific airlines devalue their points.

For small business owners and startup founders, responsibly used credit cards can be a valuable way to fund business expenditures. They’re also a great way to lighten the burden on a company’s highest expenses. With a little strategic planning, entrepreneurs can harness credit card rewards to get their companies off the ground faster without needing to seek more outside capital.


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