Business credit cards with 0% interest can be a great option for small business financing. You only borrow what you need, and you have a period of time to pay off your debts interest-free. On some credit cards, you can even earn rewards on your purchases.
And 0% APR credit cards are particularly appealing if you have a new business and want to pay for startup expenses like furnishing the office, getting your initial inventory, and other setup costs.
Here, we break down the best 0% APR credit cards for business owners to help your business get the funding it needs.
Chase Ink Business CashSM (12 months of 0% interest on purchases and transfers)
The Chase Ink Business CashSM offers a one-two punch of a zero APR period and cold, hard cash-back rewards. You earn a $300 signup bonus when you spend $3,000 in the first three months—an attractive option if you need to make a big purchase and pay it off over time. And, of course, you’ll enjoy a 0% interest period of 12 months on purchases and balance transfers, after which your variable APR ranges from 13.99% to 19.99%, depending on creditworthiness. Finally, the card offers great ongoing rewards:
- 5% cash back on office supplies and landline, cell phone, internet, and cable TV services (up to $25,000 spent combined annually)
- 2% cash back on gas and restaurants (up to $25,000 spent combined annually)
- Unlimited 1% cash back elsewhere
There’s no annual or additional employee card fee. Finally, you get a solid suite of perks including purchase protection, travel and emergency assistance, and auto rental insurance. The Ink Cash is one of the top 0% APR options out there for small businesses.
American Express SimplyCash® Plus: 9 months of 0% interest on purchases
The American Express SimplyCash® Plus also offers cash rewards alongside its zero-interest period. First, you’ll get nine months of 0% APR on purchases, with an ongoing APR of 12.99%, 17.99%, or 19.99%, depending on creditworthiness. As for ongoing rewards, you earn:
- 5% cash back on the first $50,000 spent annually on office supplies and wireless phone services
- 3% cash back on the first $50,000 spent annually on your choice of eight categories: airfare; hotels; car rentals; gas; restaurants; advertising; shipping charges; or computer hardware, software, and cloud computing purchases
- Unlimited 1% cash back elsewhere
Like the Ink Cash, there’s no employee card or annual fee. Its 0% APR period is shorter, and there’s no signup bonus, but it’s a good choice for businesses that spend above the Ink’s $25,000 bonus rewards cap. If you spend at least $31,000 on office supplies and wireless phone services, or $35,000 on the 3% bonus category, you’ll earn more in SimplyCash ongoing rewards than you’d get from the Ink Cash signup bonus.
Citi Simplicity®: 21 months of 0% APR on purchases and transfers
Don’t discount the Citi Simplicity® just because it’s a personal, rather than business, credit card. It offers one of the longest zero APR periods out there, with 21 months of no interest on purchases or balance transfers. It doesn’t offer rewards, but it gives nine extra months of 0% interest than the Ink Cash does. If you need more than a year to pay off your debt, you should definitely consider the Simplicity.
Not only does it waive annual fees, it also offers no late fee or penalty APR (there is a balance transfer fee of $5 or 3% of the balance, whichever is higher). Since it’s a personal credit card, you can’t get employee cards, but you can add authorized users. It’s possible to use a personal card for business purposes (after all, the bank almost certainly requires a personal credit check and personal guarantee), and if you want to max out the 0% APR period, the Citi Simplicity is the way to go.
What happens if I can’t pay my bills?
Of course, you should also consider what happens if you can’t pay off your debts within the zero APR period—or you can’t pay them at all. There are many reasons to choose credit cards over other types of financing, like small business loans.
Since credit cards are revolving lines of credit, you only pay for what you need. Cards with a zero-APR period are even more attractive—and 0% cards that offer rewards are doubly so. However, if you can’t pay off your balance before the 0% APR period ends, your interest rate will probably be higher than a regular small business loan’s.
SBA-guaranteed loans have a maximum APR of 9% (as of June 2017) and, depending on the loan terms, can have caps as low as 6.5%. That’s much lower than the 12.99%-19.99% we see in the small business cards’ ongoing APR.
If you have a hefty balance when the 0% APR period ends, you’ll face steep interest charges unless you can transfer your balance or take out a lower-rate loan to pay off your debt. Consolidation is definitely an option, but if you can’t qualify for a loan once it’s time to apply, you’ll be in a tough situation.
If your business simply can’t pay your credit card balance, you’re personally still on the hook. In almost all cases, business credit cards require a personal guarantee—meaning you as the cardholder are liable for the debts, even if your business is an LLC. Unfortunately, if you have a credit card, you’re almost certainly going to assume liability. If this is a concern for you, you might want to consider a more traditional small business loan (though even those might ask for a personal guarantee).
That said, 0% APR credit cards are a great source of financing, particularly for businesses just getting off the ground. If you want a combination of great rewards, strong loan terms, and flexible financing, look no further.
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from Fundera Ledger https://www.fundera.com/blog/0-apr-business-credit-cards