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Managing a small business involves juggling lots of tasks, from handling cash flow to covering unexpected costs. One tool that can simplify this is a 0% interest business credit card. In this blog, we’ll break down what a 0% interest business credit card is, how it can benefit your UK small business, and offer tips on using it effectively.
Key takeaways
- Leverage interest-free periods wisely: Use a 0% interest business credit card to manage cash flow and cover expenses without incurring interest.
- Consider costs beyond interest: Look at factors like annual fees, credit limits, and additional benefits when choosing a card. Ensure the card’s features align with your business needs and financial goals.
- Maximise rewards and perks: Choose a card that offers extra perks like cashback, travel rewards, or discounts. These added benefits can enhance the value of your card and support your business growth.
What is a 0% interest business credit card?
A 0% interest business credit card offers a set period during which you won’t pay any interest on new purchases or balance transfers. This introductory offer typically lasts from 6 to 18 months.
Key features:
- Interest-free period: No interest on purchases or balance transfers for a specific time.
- Balance transfers: Move existing debt without paying interest during the promotional period.
- Detailed statements: Helps track and manage expenses.
- Credit limit: The maximum amount you can borrow, which varies based on your creditworthiness.
Unlike standard business credit cards that charge interest from day one, 0% interest cards offer a temporary break from interest charges. After the introductory period ends, the card will revert to a higher standard interest rate.
Benefits for UK small businesses
Interest-free borrowing period
The primary advantage is the interest-free borrowing period. This can give your business extra breathing room to manage expenses or invest in growth without worrying about accruing interest.
Cash flow management
With no interest charges during the promotional period, you can use your business credit card to smooth out cash flow gaps. This is particularly useful if you have seasonal fluctuations or unexpected expenses.
Business expense tracking
Most 0% interest business credit cards come with detailed monthly statements and online tools that help you track and categorise expenses. This can simplify bookkeeping and financial planning.
Potential rewards and perks
Some 0% interest business credit cards offer rewards, such as cashback, travel points, or discounts with partner businesses. These perks can add extra value beyond just the interest-free benefit.
How 0% interest business credit cards work
- Interest-free period: The introductory interest-free period begins as soon as you activate your card. During this time, you won’t pay interest on new purchases or balance transfers.
- After the promotional period: Once the interest-free period ends, the card will revert to its standard interest rate, which can be quite high. To avoid interest charges, make sure to pay off the balance in full before the promotional period expires.
- Minimum payment requirements: Even though you’re not paying interest, you must still make at least the minimum payment each month. Failing to do so can result in late fees and potentially impact your credit score.
Factors to consider when choosing a 0% interest business credit card
Length of the interest-free period
Different cards offer varying lengths for the interest-free period. Consider how long you’ll need the interest-free benefit and choose a card that matches your needs.
Annual fees
Some 0% interest business credit cards come with annual fees. Weigh these fees against the benefits of the interest-free period to ensure it’s a cost-effective option.
Credit limit
Check the credit limit offered by the card. Ensure it’s sufficient for your business needs, but also manageable to avoid overextending yourself.
Additional benefits and rewards
Look for cards that offer additional perks, such as cashback, travel rewards, or discounts. These can enhance the overall value of the card.
Eligibility criteria
Ensure you meet the eligibility requirements for the card, including credit score and business financials. Each card issuer has different criteria.
Best practices for using 0% interest business credit cards
- Budgeting and repayment strategies: Create a clear plan for how you will use and repay the credit card. Set aside funds to pay off the balance before the interest-free period ends to avoid paying interest.
- Avoiding common pitfalls: Don’t rely on the card for all your expenses, as it can lead to overspending. Also, avoid making only minimum payments or missing payments to prevent damage to your credit score.
- Maximising benefits: Use the card strategically to manage cash flow and take advantage of rewards or perks. Regularly review your statements to track expenses and ensure you’re getting the most out of your card.
Capital on Tap’s 0% interest credit cards
At Capital on Tap, our business credit cards are designed to offer clear and ongoing benefits for your business. Here’s how they work:
- Interest-free borrowing: You can enjoy up to 42 days of interest-free borrowing on card purchases. This means if you pay off your balance in full every month, you won’t pay any interest at all. There’s no introductory or promotional period—just continuous interest-free benefits as long as you repay in full.
- No annual fee: Our free card has no annual fees, which means you won’t have to pay extra just to keep your account open. This helps you save more and makes our cards a cost-effective option for your business.
- Rewards tailored to you: Our card also offers 1% cashback on card purchases, unlimited employee cards, and the ability to redeem points for gift cards. Plus, there are no foreign exchange fees, making them ideal for international transactions.
The bottom line
A 0% interest business credit card can be a powerful tool for managing your finances, boosting cash flow, and earning rewards. By understanding the key features and benefits, and choosing a card that fits your business needs, you can make the most of this financial resource. Explore your options and use the card wisely to keep your business on track and thriving.
This does not constitute financial advice. Please consult an accountant or financial advisor if you would like more information.
