APRs In Business Credit Cards

One of the most attractive features of business credit cards is the zero percent introductory annual percentage rate (APR). All issuers of business credit cards offer this feature, and most applicants for business credit cards have learned to expect this as a standard feature. There is actually a variation on this, but more on this later.

You will notice from the fine print (do read the fine print, as a responsible business credit card user) that the zero percent APR in business credit card offers apply only for specific time frames, generally six to twelve months, although there are business credit cards that offer up to 15 months.

After the expiry of the zero percent introductory APR, business credit card issuers will charge you an APR which they will determine, using as a basis their evaluation of your credit, the size of your credit limit, and a couple of other factors. This rate will then be added to the prime rate.

Thus you will often see in your business credit card offers, that after the introductory period, the applicable rate on your business credit card transactions will be prime rate + a certain APR. You will have to check your Business Credit Card agreement, which constitutes your final contract with the business credit card company regarding the business credit card issued to you.

This zero percent APR during the introductory period will be applied to all purchases during the period and to balances from other business credit cards that you transfer to your new business credit card within the specified period. Take note of these specified periods always, because there may be variations.

In the variation that was mentioned above, instead of offering you the limited-period zero percent APR, some business credit cards offer a low percent APR (usually around 5 percent) which will be fixed until you shall have paid off the entire balance transferred from other business credit cards. Remember that balances transferred are covered by zero percent only during introductory period; if the balance remains unpaid at the expiry of the introductory period, they will be subject to the standard, higher APR.

You already know that cash advances on your business credit card are subject to a higher APR than usual purchases. In addition, you must remember that you will also be charged a cash advance fee, usually a minimum $3.00, and that all cash advances are due immediately – that is, they are added to your usual minimum monthly payment due, and cannot be carried over into your next billing period.

You must not forget that your default APR is much higher than cash advance APR. So, when does default occur on your business credit cards?

If you do not pay the minimum amount due on your business credit card in any two billing periods, you will be considered in default and immediately subject to the high default APR. You will be considered in serious default when the following conditions obtain:

· Non-payment of minimum amount due in at least any three billing periods

· Non-payment of minimum amount due in two consecutive billing periods

· Any check payment is not honored by the depository bank

· Exceeding credit limit at least three times during the preceding 12 months

This underlines the importance of promptly paying amounts due on your business credit cards. The moment you fail to pay any minimum amount due by the payment due date, the promotional or introductory APR will automatically terminate. No more zero percent. Using your business credit card wisely also means managing your payments religiously.

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