A 0% APR business credit card can seem like a dream come true for small business owners.
If you need to make a big purchase—furnish a new office, for example, or book tickets to a conference on the other side of the country—a zero interest card can offer the chance to pay down your debt interest-free.
But those deals do come with a dark side. If you mismanage your debts on a 0% APR card, you could be hit with high-interest rates or worse.
Here are three risks to consider before you apply for an intro APR card.
0% APR cards can offer significant upside compared to business loans.
First, you only borrow what you need (up to your line of credit). Second, you have a decent amount of time—up to 21 months—to pay down your debt interest-free.
Still, if you can’t pay your balance during the zero APR period, your interest rate will probably be much higher than a small business loan.
For example, SBA-guaranteed loans can have APRs as low as 3%, while credit cards—even low APR offers—typically charge 12% or higher.
Some business credit cards report usage to personal credit bureaus, meaning that the balance on your business card can hurt your own debt-to-credit ratio.
This can make it harder to qualify for and get good rates on auto loans, mortgages, consumer credit cards, and more.
Of the big banks, Capital One and Discover report business usage to personal credit bureaus. American Express, Chase, and US Bank report seriously delinquent accounts. And Bank of America, BBVA, Citibank and Wells Fargo don’t report.
You almost certainly need to provide a personal guarantee on your card, but depending on which bank you choose, your card might impact your personal credit score.
Finally, getting a 0% APR card usually means missing out on good rewards.
There are a few exceptions (and we’ll talk about them later on) but for the most part, the best signup bonuses and rewards rates are reserved for travel cards without intro APR offers.
If you don’t plan on carrying a balance, you’re better off maximizing your rewards, getting a great signup bonus, or enjoying travel perks like lounge access.
Unfortunately, 0% introductory APR periods come to an end.
But after months of enjoying an interest free period to borrow for your business, the end of that period might sneak up on you.
Once you do reach the end of your 0% introductory APR period, you’ll need to pay off your balance in full before incurring interest charges on the card. And depending on how you’ve used the card, this balance could be high, and you’ll need to make a big payment.
Make sure that your cash flow is prepared for the payment you’ll need to make on the card once the end of the 0% introductory comes around.
Here are our top three picks for low-interest cards:
The Chase Ink Business CashSM is one of those rare rewards/low APR combos: It offers up to 5% cash back on typical office purchases, plus 12 months of 0% interest on purchases and balance transfers. And there’s a signup bonus of $300 when you spend $3,000 in the first three months.
If you want a 0% APR card because you’re making a big purchase and need time to pay it off, the Ink Cash can help turn your upfront spending into cash rewards. As for ongoing rewards, you’re looking at:
The card has no annual or employee card fees, and offers side benefits like purchase protection, travel and emergency assistance, and auto rental insurance.
With the combination of a long zero-interest period and a high cash back rewards rate, the Ink Cash is one of the best business options out there.
We did say that the Ink Cash is one of the best business options available, but the Citi Simplicity®, a personal credit card, offers 21 months of no interest on purchases or balance transfers. That’s pretty much the longest 0% APR period out there.
Though the card doesn’t offer rewards, if you need more than a year to pay off your debts, the Simplicity might be better than the Ink Cash. It’s also much lighter on fees. There aren’t any annual fees, late fees, or penalty APRs (though there is a balance transfer fee of $5 or 3% of the balance, whichever is higher).
Generally, personal credit cards are better regulated and have lower fees than business cards. 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, though as usual, you’ll go through a personal credit check and be personally guaranteeing the card.
If you don’t need employee cards or accounting help and want to max out the 0% APR period, the Citi Simplicity is your best choice.
If you aren’t sure about paying off your debts during the zero APR period and want a card with a low ongoing APR, the Bank of America Platinum Plus® for Business MasterCard® fits the bill. After seven months of 0% interest on purchases, you’ll enjoy one of the lowest APRs available for business credit cards.
You’ll also get free employee cards, no annual fee, and a $200 statement credit if you make at least $500 in purchases during your first 60 days of cardmembership.
Finally, the card offers accounting help with a QuickBooks integration; travel services like accident and rental car insurance, emergency ticket replacement, and lost luggage assistance; and dashboards to monitor employee cards’ activity.
Though it doesn’t offer ongoing rewards and has a shorter 0% APR period than the Ink Cash and Simplicity, the Platinum Plus provides one of the lowest ongoing rates in the business and is a good option for the long haul.
Although 0% intro APR business cards won’t offer you the same perks as a business rewards card, if you plan on taking over a year to pay off your business expenses, the trade-off could be well worth it.
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