Credit Card Tricks
By Ron Leiber
Whenever people think of mileage hounds, they picture road-warrior corporate executives jetting between world capitals. But an onion distributor from Oregon — who has amassed upward of three million frequent-flier miles a year — aims to change that perception. His method: funnel as many business expenses as possible, from cardboard boxes to water-cooler bills, through his credit cards.
This is all part of an ongoing effort to bring the country’s obsession with racking up rewards into the business world. Major card companies are hard at work trying to persuade business owners that it makes sense to charge as much as possible. Perhaps the biggest trailblazer is American Express Co., which aggressively tries to persuade nuts-and-bolts business suppliers to take cards.
Visa meanwhile, offers services that help businesses find vendors who will let them pay their bills with credit cards. U.S. Bancorp’s U.S. Bank, one of the biggest business-card issuers, will dispatch staffers to help companies figure out how to use plastic to pay more bills and earn more rewards.
Business Credit Card Menu
The newest entrant is a company called Zevez Corp., owned by Joe Graziano, the onion distributor, who is trying to make a business out of maximizing miles. His approach has been to develop a process that tries to make mileage collection an integral part of the accounts-payable process. After helping a company pick the right cards — and figure out which vendors will accept them — his software tracks a company’s bills, cards, credit limits and rewards earned. It suggests the best card to use to pay a particular bill, depending on how many more dollars a customer needs to spend to meet their rewards goal. By using a variety of cards and paying them off quickly to circumvent credit limits, Mr. Graziano says he has earned about 125 first-class plane tickets himself during the past decade or so, including about 20 international trips just this year.
Zevez Corp has also partnered with Award Planner, a travel agency that specializes in redeeming frequent-flier miles. Redemption of rewards is a source of frustration for travelers, who have to compete for the few seats available to popular destinations.
In many respects, Mr. Graziano is just the latest in a long line of consumers who have come up with ingenious, and sometimes masochistic, ways to milk miles out of a system that was intended simply to reward people for flying around in airplanes. Some go on “mileage runs” — watching for discount long-haul flights and hopping a weekend round-trip to, say, Tokyo, just to bulk up on miles. The most revered in rewards circles is an engineer from California — he came to be known as the “pudding guy” — who figured out several years ago how to cash in on a Healthy Choice promotion, earning 1.25 million miles simply by buying about $3,000 of pudding.
Credit Cards for Business
Mr. Graziano’s service has been in beta testing with about a dozen companies for the past year or so. One client is hoping to trade in some points for Harley-Davidson motorcycles to give to some of its customers, while others kept the miles for themselves to use for travel. In most cases, rewards are transferable and tax free.
Of course, plenty of small-business owners have figured out all by themselves how to pay their company’s bills with plastic. An American Express study this spring found that 83% of small-business owners surveyed already use cards for company expenses, up from 74% the year before. Then there’s the matter of Zevez’s fee: The company charges a $2,500 setup fee, plus one-half of 1% of all money flowing through the system, with a limit of $30,000 a year.
As a businessman attempting to turn a personal obsession into a profit-making enterprise, Mr. Graziano acknowledges the obstacles. “Nobody says it’s a stupid idea,” he says. “What they say is, ‘Why do I need you?’ ” He says his service, which primarily targets businesses with revenue of $5 million to $100 million, helps automate the process and cuts down on the learning curve.
Corporate Credit Cards
These days, card companies often send out promotions for business cards aimed at persuading executives to use plastic for their company’s expenses. In assessing these options, one of the first things a small business must decide is the kind of perks it wants (cash-back rewards, for instance, or miles for first-class seats) and then choose a card that maximizes those perks.
In fact, it can make more sense to use a personal credit card to pay company bills, as opposed to a more specialized small-business card. That’s chiefly because some personal cards tend to be more generous with the miles, whereas small-business cards make up for it with non-miles perks like rental-car discounts. (All of this is different from the traditional corporate cards that big companies hand out to staffers. Typically, with those cards, the individual keeps the rewards, not the company.)
There can be advantages to business cards, however. American Express and Visa offer discounts at places like FedEx and Dell.com. AmEx had a promotion last year for business-card users in some big cities where they got double rewards points for buying supplies and equipment during a certain period.
Melissa Abernathy, a spokeswoman for American Express, the largest issuer of corporate cards, adds that business owners who use personal cards may be sacrificing other important features in order to rack up rewards. The company’s cards offer frequent updates of what companies are spending and where, which can come in handy for budgeting and negotiating bulk discounts. It’s much harder to tease that information out if isn’t spread out over several bills from various personal cards.