A guide to low APR business credit cards
Quick insights
- Some business credit cards provide a temporary low annual percentage rate (APR) rate during an introductory promotional period.
- Low APR business credit cards may be beneficial for business owners facing large purchases, seasonal fluctuations or high initial startup costs.
- Balances from higher APR credit cards can sometimes be transferred to these cards, though a fee typically applies.
Low APR business credit cards can be a helpful tool for businesses, potentially offering them a cost-effective way to manage cash flow. These cards can help provide a buffer for businesses who want to make large purchases without the immediate burden of a high APR.
They may be especially helpful to businesses in the early stages as they navigate cash flow. To maximize the benefits of low interest business credit cards, it can be helpful to understand how they work.
Let’s take a closer look at these cards, including their terms, eligibility requirements and potential pros and cons.
What are low APR business credit cards?
Low APR business credit cards typically offer a low APR for an introductory period (typically ranging from 6 to 24 months). The APR represents the yearly interest you’re charged when there’s an unpaid balance after the billing cycle ends. Interest is calculated as a percentage of the outstanding amount.
These cards can provide financial flexibility, which can help businesses manage cash flow. Some operational challenges they can potentially address include:
- Large purchases
- Seasonal fluctuations
- High initial startup costs
- Debt consolidation
Essentially, low APR business credit cards can allow businesses to pay for their expenses without the immediate addition of high interest.
How low APR business credit cards work
Business credit cards often offer a low APR for an introductory period. This low rate may apply to purchases, balance transfers and sometimes cash advances. After this introductory promotion ends, the interest rate reverts to a higher standard APR (outlined in the business card agreement).
Standard APRs vary based on the card issuer, market conditions and factors specific to the applicant. Be aware that missed payments could cause the card to revert to the standard APR—or even a higher penalty APR—during the introductory period.
These introductory offers don’t impact the credit card’s program benefits, and regardless of whether you’re eligible for the offer, you’ll still receive the same features, which could include:
- Rewards program
- Expense management tools
- Employee credit cards
- Travel protection benefits
These cards can be a way to maximize the benefits of business credit cards while receiving a lower APR.
Balance transfers and low APR business credit cards
If you have a balance on a credit card with a higher APR, it may be possible to initiate balance transfer to a business credit card with a low APR. Note that there’s usually a balance transfer fee ranging from 3% to 5% of the transferred amount.
Additionally, credit card issuers may have specific requirements for balance transfer eligibility. In many cases, you can’t transfer balances between two cards from the same credit card issuer. If you plan to transfer a balance, it may be helpful to understand the eligibility requirements before applying.
Pros and cons of low interest business credit cards
Every payment method has its advantages and disadvantages. Here are some of the pros and cons of low interest business credit cards.
Pros
- Low APR business credit cards could help smooth out cash flow by deferring the impact of large purchases.
- Savings on interest may be beneficial, especially for businesses consolidating debt or making large purchases.
- The cards might provide greater financial flexibility, acting as an emergency buffer without instant financial strain.
- Consolidating balances from two or more credit cards on a low APR card could potentially reduce the risk of missed payments.
- Low APR credit cards may help you establish your business’s financial identity and build your business’s credit while limiting the risk of high interest charges.
Cons
- Once the introductory period ends, any remaining balance will accrue interest at a higher rate.
- The initial low APR may tempt some business owners to accumulate interest if they carry a statement balance into the next billing cycle.
- Transferring a balance usually incurs a balance transfer fee, which could offset some savings on interest charges.
- Managing both the introductory offer and standard terms can be complex and may lead to confusion.
- If you carry a large balance during the low interest period, it could increase your credit utilization ratio, which may negatively impact your credit score.
Low interest business credit card eligibility
Generally, anyone with a business is eligible to apply for a business credit card, including:
- Sole proprietorships
- Partnerships
- LLCs
- Corporations
- Freelancers
- Gig economy workers (such as rideshare service drivers)
Business revenue minimums vary by issuer, but some cards allow you to apply even if your business hasn’t generated any revenue yet. Approval often depends on factors specific to the applicant, such as personal income.
In summary
Low APR business credit cards are a potentially strategic financial tool for managing large purchases, improving cash flow and consolidating debt. Cardmembers with low APR credit cards may be able to transfer balances from higher APR cards, although a balance transfer fee may apply.
It may be helpful to understand the terms that apply during and after the promotional period. This knowledge might help you maximize the benefits and minimize the risks with low interest business credit cards. It’s generally recommended to pay off the card’s balance before the promotional period ends to avoid interest charges.
Anyone with a business is generally eligible to apply for a business credit card, with approval based on several factors related to the applicant. You may want to consider Chase for Business® credit cards if you are looking for business-friendly rewards and benefits.
