Commonwealth Bank Business Low Rate

10 Jun 2009

Tags: commonwealth bank|low rate|business

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Commonwealth Bank Business Low Rate
Pros
  • Low interest rate
  • Optional property security
  • No (or low) annual fee
Cons
  • No interest free period
Summary Commonwealth have created a business credit card with a truly low rate, without over-compensating the annual fee. It's just a pity it doesn't have an interest free period.
Interest Rate (purchases): 12.55 %
Interest Rate (cash): 12.55 %
Annual Fee: $0.00
Interest Free Days: 0
Travel Insurance:
Rewards Program:
This is the first business credit card we've reviewed which doesn't have a rewards program, which is surprising when you consider most proprietors couldn't give two figs about earning Frequent Flyer points if it means they get a cheaper rate.

Which is why the Commonwealth Business Low Rate is likely to be popular: CBA have stripped away the rewards program and other superfluous features to deliver what is easily the lowest interest rate we've seen (12.55%), plus a clever facility which allows you to reduce the rate to as low as 6.29%.

The Commonwealth Business Low Rate allows you to offer up a residential or commercial property as security against your credit card. For a commercial property, the rate will be reduced to 10.55% and for a residential property, it will be 6.29%.

Obviously there is a trade-off here: you're securing the debt against your home or business premises which can be risky, but for businesses with strong cash flow, a rate of 6.29% may be difficult to resist.

The card has no annual fee at the default rate of 12.55%, but offering security and reducing the rate will cost $40.00 per year.

The rest of the card is fairly standard - there are no bells and whistles, with the exception of transit accident insurance up to the value of $250,000 and unauthorised use insurance up to $150,000 per annum.

On the downside, the card has no interest free period, which means your purchases begin accruing interest immediately. If you really need the interest free days, Commonwealth offer a Business Interest Free Days card with a higher interest rate and annual fee.

The verdict: this will be the perfect card for businesses who just want a basic card to manage their expenses and aren't looking for reward programs, balance transfer deals or travel features. The exclusion of an interest free period is disappointing, but understandable given the very low interest rate.