Commonwealth Bank will offer zero-interest credit cards to small businesses to lure millennial entrepreneurs averse to debt-accruing lending products.
The nation’s largest banking group will expand its no-interest Neo card to small businesses for credit amounts of up to $3000 that are then repaid to the bank in installments. CBA launched Neo last year after rival bank NAB implemented the first zero-interest card called StraightUp in September.
Both products are in response to the growing use of zero-interest lending such as buy now, pay later among younger demographics, who are turning their backs on traditional high debt-accruing credit cards that in some cases garner rates of more than 20 percent.
CBA’s latest rendition targeting young business owners has a fixed monthly fee and, aside from not charging interest, does not incur late or foreign exchange settlement fees.
CBA head of small business banking Claire Roberts said the card would assist businesses and start-ups gain access to quick and cheap funds for their operations.
“A dedicated business credit card with no interest, no late fees, and no foreign currency fees ticks the boxes for small businesses who want more flexibility with short-term cash flow to make purchases for their operations,” Ms. Roberts said. “Further, the fixed monthly fee provides small business owners with some level of financial certainty, which will help with their budgeting.”
The card also can link with accounting software to assist in bookkeeping and budget management. The bank’s research shows millennial-owned small businesses are on the rise, with half of all the new business transaction accounts opened at CBA in the past six months from people born between 1981 and 1996. The number of new CBA business transaction accounts is up 36 percent, with 57 percent of those accounts being in the name of a millennial entrepreneur.