Are 0 Percent APR Credit Cards Right for Your Business?

Business.com / Financial Solutions / Last Modified: November 16, 2017
Photo credit: Olleg/Shutterstock

A 0 percent APR credit card can be a great solution for a business's short-term financing needs. See which ones could help your business.

Despite the popularity of lean startups with lower operating costs, owning a business is still anything but cheap. Just starting a business costs an average of about $30,000, and operational expenses could run thousands more per month. 

Whether you need funding to launch or expand your business, a credit card with a 0 percent annual percentage rate (APR) allows you to borrow money without paying a cent in interest. The 0 percent APR is an introductory offer, and after that, it adjusts to a new rate. Here's what you need to know before you apply for a card.

Advantages over other business financing options

The biggest benefit of a 0 percent APR card is right there in the name – for that introductory period, you won't pay interest. The length varies by card, but it's usually between six and 18 months. Even though the APR is the main selling point, many no-interest credit cards also earn you reward points or cash back on the money you spend.

If you choose a business credit card, you'll build your business credit score when you use the card. Just like using a personal credit card is the best way to build your own credit score, there's no faster way to improve business credit than a business credit card.

Potential drawbacks

The greatest danger with a 0 percent APR card is mismanaging it. If you fail to pay off the balance before the introductory period ends, the card issuer will start charging you interest, and interest on a credit card is typically higher than it would be for a loan. Miss any payments and you could forfeit that 0 percent offer.

Since a credit card is a revolving line of credit, there's a greater temptation to make additional purchases than there would be if you got a loan. These potential problems are self-inflicted, but it's important to be aware of them.

There are also certain purchases you can't make with a credit card. When you're using your card for financing, you'll need to make sure it's a valid payment method for everything you need.

Top-line 0 percent APR business credit cards

Here are four of the best 0 percent APR business credit cards on the market to consider for your business, all with no annual fee:

American Express Blue Business Plus

This card's 15-month introductory period is among the longest for a 0 percent APR business credit card, and it has a high rewards rate of two points per dollar on your first $50,000 in annual spending.

American Express SimplyCash Plus

This Amex card has an introductory period of nine months and multiple cashback bonus categories. For your first $50,000 in annual spending, you'll earn 5 percent cash back on spending at U.S. office supply stores and on wireless phone services, plus 3 percent cash back on a spending category of your choice.

Chase Ink Business Cash

This Chase card has a 12-month introductory period and a $300 signup bonus for spending $3,000 within the first three months. You earn 5 percent cash back on your first $25,000 in annual spending at office supply stores and on internet, cable and phone services, plus 2 percent cash back on your first $25,000 in annual spending at gas stations and restaurants.

Capital One Spark Business Cash Select or Miles Select 

These cards have similar features, the only difference being whether you want to earn cash back or miles. The reward rate is 1.5 percent cash back or 1.5 miles per dollar spent, the bonus is $200 or 20,000 miles for spending $3,000 within the first three months, and the introductory period is nine months.

How to save money with a 0 percent APR credit card

The best use of a 0 percent APR card is for short-term financing, but it's suitable for any business expense you're able to pay with a credit card. Even if you were considering a loan to pay for a long-term expense, it could still be beneficial to use a 0 percent APR card first. Put the expense on the card and pay off what you can over the introductory period. After that, apply for a loan and use it to pay the card's balance.

 

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