A low-interest-rate credit card offers a smaller interest percentage on your purchases. If your business tends to carry over a monthly credit card balance, the savings you’ll make from a low-interest credit card can add up.
However, these cards are usually basic without the bells and whistles that more premium cards offer, like rewards programs and other perks.
Pros and cons of low-rate business credit cards
Low-rate business credit cards are often preferred by businesses that aim to minimise interest costs and may only be able to pay their balance in part each month. Although many cards offer interest-free periods, in some cases up to 55 days, interest is applied if you make only the minimum payment or carry a balance.
Lower interest payments: The most obvious benefit is paying less interest than more premium cards. This means more savings for your business.
Potential lower fees: Generally, credit cards that offer low interest rates also have lower annual fees, providing additional savings. Annual fees for low-rate cards are usually in the ballpark range between NZD $35-$50, while the annual fee for premium cards with more rewards and perks can set you back up to NZD $100.
Some also waive the annual fee altogether if a minimum spend is met over the year.
Business-oriented benefits: Some card providers offer features designed specifically for business. For instance, a few low-rate cards might include complimentary liability waiver insurance to protect your business against unauthorised transactions.
No or basic rewards programs: A common trade-off with low-rate cards is that they usually don’t offer rewards programs. These reward schemes can be quite valuable for businesses, especially if you have a high monthly expenditure.
For instance, a card with a rewards program could provide you with points that can be redeemed for business travel, allowing you to cut costs on flights or hotel stays.
Fewer perks: Low-rate cards also typically lack other benefits, such as complimentary travel insurance.
Limited balance transfer opportunities: One potential drawback of low-rate cards is that they might not offer balance transfer options. This feature allows you to transfer the debt from one card to another, usually with a lower interest rate, which can be especially helpful if your business is trying to manage or consolidate debt.
What is considered a low interest rate?
A ‘low rate’ is subjective and will vary between card providers. This is why comparing offers is important to find the best deal for your business. Factors to consider include the annual fee, transaction fees, and any interest-free period.
Is a low-interest-rate credit card right for your business?
The best choice for your business depends on your spending and repayment habits and what you value in a credit card.
If you tend to carry a balance, the interest savings with a low-rate card might outweigh the lack of rewards.
If you’re diligent about paying off your balance each month and value perks like reward points or travel insurance, a premium card could be a better choice.
Compare Low Interest Business Credit Cards
If you have an outstanding balance each month on your credit card, consider getting a card with the lowest purchase interest rate