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Updated: December 15th, 2020
Many credit card issuers offer business credit cards with an introductory 0% APR for periods of six months or more. These 0% APR business credit cards (also called interest-free or free period credit cards) may be a good tool to help manage your business finances and grow your business. You can transfer balances from other credit cards to reduce the amount of interest you are currently paying on other credit card balances, make purchases or pay bills directly with the 0% APR credit card, or use the cash advance feature of the 0% APR credit card to pay other loans or vendors that do not accept credit card payments. It’s important to choose a credit card that fits your business’ needs so you can grow your business and not add unsustainable debt.
Business credit cards come with different 0% APR introductory periods and different fees. 0% APR credit cards allow you to make purchases or other payments without paying interest for a limited period of time. Once the interest free period ends you will pay interest on any outstanding balance and on any new purchases or payments at the credit card’s regular interest rate. You may also incur fees during the interest free period that are added to your credit card balance.
In order to take full advantage of a long introductory 0% APR business credit card, you need to factor in the length of the 0% APR period, any fees related to the use of the credit card, your spending needs, and your monthly budget to make timely payments. For example, in order to avoid incurring interest on a $10,000 purchase made under a 6-month 0% APR introductory period will require a monthly payment of at least $1667. The same purchase, if under a 12-month introductory period will require a monthly payment of at least $334.
Other factors to think about when considering applying for a 0% APR business credit card are whether or not the issuer offers instant approval, if there are any other welcome offers or card perks (like cash back, points, or miles), any other promotional offers from the issuer, and whether or not you are likely to meet the credit requirements. You may apply directly to a card issuer or you may engage the services of a credit card broker to help find an appropriate 0% APR business credit card. Credit card brokers charge fees for their services.
If you are looking to consolidate high-interest credit debt and/or need to make a large purchase in the near future, and you’ve done the math to see if your cash flow can support the monthly payments, a 0% APR business credit card could be a good option to grow your business.
Now that you are armed with information about 0% APR credit cards, we hope that you are more informed about this type of business financing that will help you to reach your business goals and grow your business. Funding Circle and our network of lending partners can provide your business many different options for all your financing needs, such as business line of credit, term loans, and invoice factoring.