When it comes to managing the finances of your business, having access to a credit card with a 0% annual percentage rate (APR) can be very beneficial. A 0 APR business credit card allows you to make purchases or transfer balances without incurring interest charges for an introductory period. This can help improve cash flow and save money on interest.
In this guide, we will take a closer look at 0 APR business credit cards, how they work, their benefits and drawbacks, how to choose the right one for your business needs, and more.
What is a 0 APR Business Credit Card?
A 0 APR business credit card is a type of credit card that offers an introductory period during which no interest is charged on purchases or balance transfers. This period typically lasts between six and eighteen months, depending on the card issuer.
After the introductory period ends, the standard variable rate (SVR) applies to any remaining balance on the account. The SVR is determined by the card issuer and varies based on market conditions and your creditworthiness.
It’s important to note that some 0 APR business credit cards may still charge fees such as foreign transaction fees, late payment fees or cash advance fees.
Benefits of Using a 0 APR Business Credit Card
There are several benefits associated with using a 0 APR business credit card:
Save Money on Interest Charges: With no interest charges during the introductory period, businesses can use these cards to finance purchases or pay off higher-interest debt without accruing additional costs. This can free up cash flow and help reduce debt faster.
Earn Rewards: Many 0 APR business credit cards come with rewards programs that allow you to earn points or cash back on purchases made with the card. These rewards can be redeemed for travel, merchandise or other benefits.
Build Your Credit Score: Making timely payments on your 0 APR business credit card can help improve your credit score. This can make it easier to access other forms of financing in the future or negotiate better terms with suppliers.
Track Business Spending: Using a dedicated business credit card can help you keep track of expenses and simplify accounting tasks. Many cards come with features such as online account management, transaction tracking, and expense reporting.
Easy Access to Credit: A 0 APR business credit card provides easy access to funds when you need them, without the hassle of applying for a traditional loan. This can be especially useful for smaller businesses that may not have established credit or collateral.
Drawbacks of Using a 0 APR Business Credit Card
While there are many benefits associated with using a 0 APR business credit card, there are also some drawbacks:
High Interest Rates: If you don’t pay off the balance before the introductory period ends, you may be subject to high-interest rates on any remaining balance. This can lead to accumulated debt and additional costs.
Fees: Some 0 APR business credit cards charge fees for balance transfers, cash advances or late payments. These fees can add up quickly and eat into any potential cost savings from using the card.
Limited Rewards: While many 0 APR business credit cards offer rewards programs, they may not be as generous as those offered by other types of cards such as travel rewards or cash back cards.
Temptation to Overspend: Having easy access to credit can tempt some businesses to overspend beyond their means, leading to accumulated debt and financial difficulties in the long run.
How to Choose the Right 0 APR Business Credit Card
Choosing the right 0% APR business credit card requires careful consideration of several factors including:
Length of Introductory Period: Look for cards that offer longer introductory periods if you need more time to pay off debt or finance a large purchase.
Standard Variable Rate (SVR): Consider the SVR that will apply after the introductory period ends, as this can impact how much you’ll pay in interest charges.
Fees: Look for cards with low or no fees for balance transfers, cash advances, and late payments. This can help you maximize any potential savings from using the card.
Rewards Program: Consider if the rewards program aligns with your business needs and if there are any restrictions or limitations on earning or redeeming rewards.
Ease of Use: Look for features such as online account management, transaction tracking, and expense reporting to simplify accounting tasks.
How to Qualify for a 0 APR Business Credit Card
Qualifying for a 0 APR business credit card requires meeting certain eligibility criteria such as:
Good Credit Score: The better your credit score, the more likely you are to qualify for cards with longer introductory periods and lower SVRs.
Business Age and Revenue: Some card issuers require businesses to be established for a certain period and meet minimum revenue requirements.
Personal Guarantee: Most business credit cards require a personal guarantee from the owner or co-signer who assumes responsibility for paying off debts incurred on the card.
Application Process: Apply through the issuer’s website by filling out an online application form and providing documentation such as proof of business ownership, tax ID number, and financial statements.
Best 0 APR Business Credit Cards in 2021
Here are some of the best 0% APR business credit cards available in 2021:
American Express Blue Business Cash Card offers a 12-month introductory period with no annual fee and cashback rewards on purchases up to $50,000 per year
Capital One Spark Cash Select offers a nine-month introductory period with no annual fee and unlimited cashback rewards on all purchases
Chase Ink Business Cash Credit Card offers a 12-month introductory period with no annual fee and cashback rewards on purchases up to $25,000 per year
Discover it Business Card offers a 12-month introductory period with no annual fee and cashback rewards on all purchases
U.S. Bank Business Cash Rewards World Elite Mastercard offers a 15-month introductory period with no annual fee and cashback rewards on purchases up to $250,000 per year
A 0 APR business credit card can be a valuable tool for managing business expenses and improving cash flow. However, it’s important to weigh the benefits against the potential drawbacks before deciding if this type of card is right for your business.
By comparing different cards based on factors such as length of the introductory period, standard variable rate, fees, rewards program, and ease of use, you can find the best 0 APR business credit card for your specific needs.
Remember to make timely payments and avoid overspending beyond your means to maximize the benefits of using a 0% APR business credit card.
What are 0 APR business credit cards?
0 APR business credit cards are credit cards that offer an introductory period with no interest charged on purchases, balance transfers or both. This can be a great financial solution for businesses that want to make large purchases or transfer balances from other high-interest cards.
Are there any fees associated with 0 APR business credit cards?
While some 0 APR business credit cards come with no annual fee, others may charge a balance transfer fee ranging from 3-5% of the total amount transferred. It is important to read the terms and conditions carefully before applying for a card.
Can I earn rewards with a 0 APR business credit card?
Yes, some 0 APR business credit cards also come with reward programs that allow you to earn cash back, points or miles on your purchases. However, it is important to check whether these programs have any limitations or restrictions.
How long do the introductory 0 APR periods last?
The introductory period for a 0 APR business credit card can range from six months up to two years, depending on the card issuer and their terms and conditions. It is important to note that once this period ends, the standard variable interest rate will apply to any remaining balances.
Are there limits on how much I can spend during the introductory period?
Some 0 APR business credit cards may have spending limits during the introductory period, while others may not have any limitations at all. It is best to check the terms and conditions of each individual card before making any assumptions about your purchasing power.
Do I need good credit in order to qualify for a 0 APR business credit card?
Yes, most issuers of 0 APR business credit cards require applicants to have good or excellent credit in order to be approved. This is because they are taking a risk by offering an interest-free period and want to ensure that the applicant has a history of responsible credit behavior.
Can I transfer multiple balances onto a 0 APR business credit card?
Yes, in most cases you can transfer multiple balances from other credit cards onto a 0 APR business credit card. However, it is important to check whether there are any limitations on the total amount you can transfer and whether each balance transfer incurs a separate fee.
What happens if I don’t pay off my balance before the introductory period ends?
If you do not pay off your balance before the 0 APR introductory period ends, you will be charged interest on any remaining balance at the standard variable rate specified by the issuer. This rate may be higher than those offered by other credit cards, so it is important to have a repayment plan in place before applying for a 0 APR business credit card.
Are there any downsides to using a 0 APR business credit card?
While 0 APR business credit cards can be great for short-term financing needs or paying off existing high-interest debt, they may not always be the best long-term solution due to their high variable rates and potential fees after the introductory period ends. Additionally, missing payments or exceeding your credit limit could result in penalties and negatively impact your credit score.
How can I compare different 0 APR business credit cards?
To compare different 0 APR business credit cards, consider factors such as length of introductory period, balance transfer fees, reward programs, annual fees (if applicable), and standard variable interest rates after the introductory period ends. By carefully weighing these factors against your own financial situation and goals, you can choose the right card for your business needs.