Interest rate is one of the most important factors that you need to consider when shopping for a credit card for yourself or for your business. There are several factors that influence the interest rate applicable on your card and it is only appropriate that you acquaint yourself with the same. This is because they can either increase or lower your business credit card’s applicable interest rate.
Interest rate prevailing in the Market at any given time
One of the major factors that affect your business credit card interest rate is the interest rate prevailing in the market at any given time.
This is because it is the prevailing interest rate in the market that informs the interest rate charged by credit card companies. Just in the same way that the prevailing interest rate fluctuates so is the interest rate charged by credit card companies. There is really nothing that you can do to influence the prevailing interest rate in the market since it is determined by the countries various economic factors.
A credit card company’s own credit card policy also affects interest rates attached to its credit cards. Note that different credit card companies have different policies that inform how much interest rate they charge. A company is obligated to determine how much interest rate to charge on its credit cards to be able to realize profits and because some companies want high profit margins, they no doubt charge high interest rate. Apart from a company’s policy, its size also has an impact on level of interest rate charged.
Your business’ credit history and credit rating directly affects interest charged on your credit card. Your business will enjoy low interest rate in case it has been operational for some time and has high credit rating. In contrast, your business credit card will attract high interest rate in case it has been operational for short duration and has low credit rating. Working to improve on your business credit rating before you apply for a business credit card can therefore go along way in having a business credit card with low interest rate.
Making a Decision to Apply
Making a decision to apply for a secured business credit card automatically means obtaining a business credit card with low interest rate.
This is because applying for a secured business credit card involves depositing collateral with your credit card company that secures your line of credit. Your credit card company therefore provides you wit a card at low interest rate with knowledge that risks associated with your business credit card are covered.
It is common for credit card companies to offer very low or zero interest rates commonly referred to as promotional interest rates when marketing their cards. This is usually intended to attract new clients. A promotion period can range between 12 and 18 months, a period during which you are not charged any interest rate on any purchases or balance transfers you make. Although very attractive, you need to ascertain what the permanent interest rate will be once the promotional period is over before making any commitments.