How to Use Balance Transfers to Help Your Business

How to Use Balance Transfers to Help Your Business

How to Use Balance Transfers to Help Your Business

Business credit cards can be a great way to manage your company’s expenses, and take advantage of benefits and rewards along the way. Most also provide easy access to a line of credit, which small business owners may find incredibly valuable for short-term financing needs and working capital. 

However, credit card interest rates can be upward of 20% or more. That’s where a balance transfer comes in by providing access to lower-cost financing. Learn how a credit card balance transfer can benefit your business. 

What Is a Balance Transfer on a Credit Card?

A balance transfer allows you to take existing debt and move it from one credit card to another, hopefully at a lower annual percentage rate (APR). Balance transfer APRs are often lower than the credit card’s regular APR, and also lower than a credit card cash advance rate. Some issuers even offer introductory 0% promotional APRs for a limited period of time— usually for 6 to 18 months.

If you have multiple business credit cards with balances, you may be able to transfer them all to one card, simplifying your monthly payment and debt payoff plan.

There are a few things to keep in mind. 

First, balance transfers aren’t a silver bullet for eliminating debt. While they can save you money, it’s important that you have a plan in place to pay off the balance, preferably before the promotional period ends.

If you still have a balance when the low-rate introductory period ends, the new interest rate will likely be much higher. That could leave you struggling to pay high-cost debt. 

Second, balance transfers generally aren’t free, even when the credit card offers an interest-free period. Credit card issuers charge a balance transfer fee, typically 3% to 5% of the transfer amount. You need to figure that into your overall cost. 

High balances can hurt your credit scores. If you use a significant amount of your available credit, you may end up with high credit utilization which can impact your credit scores. Note that some business credit cards don’t report to personal credit, though, so you may be able to protect your personal creditworthiness by choosing the right card. 

Also, note that credit card issuers typically won’t allow cardholders to transfer a balance to another card they offer. You often must get a card from a different issuer. 

Importance of a 0% Intro APR

An introductory 0% APR offer can be very useful for short-term small business financing. Startups, for example, often find it difficult to get small business financing. A low-rate balance transfer offer may provide crucial startup capital at an affordable rate. 

For businesses with fluctuating cash flow, these cards can provide access to low-cost financing for business expenses. 

Some cards offer 0% for new purchases as well as balance transfers for a limited period of time. Again this can be very helpful for short-term financing but you need a plan to pay it off before the rate goes up. 

How To Find Out If A Balance Transfer Is Worth It

While a balance transfer can be beneficial, it’s not the right path for everyone. Here are some things to think about before you decide whether to use one for your business.

How Much Debt Do You Have?

If you only have a few thousand dollars in debt, a lower interest rate may save you some money, but it may not be a lot of money given the relatively short time periods these offers apply. 

If you have a larger amount of debt, you’ll need a large enough credit limit to consolidate that debt. Unfortunately, it’s impossible to know what your credit limit is going to be until after you apply. 

Also, if you have a large amount of debt, the introductory APR may not last long enough for you to pay off the entire balance before the interest rate goes up. The higher interest charges can wipe out your short-term savings. 

The lowest cost balance transfers tend to offer 0% for a period of time. (As mentioned earlier, there will be a balance transfer fee that adds to the cost.)

What’s Your Credit Score?

Business credit cards almost always require a personal guarantee, which means that you’re on the hook personally for the debt if your business can’t pay it back. As a result, business credit card issuers typically review your personal credit reports and/or scores when you apply.

In general, business balance transfer credit cards often require that you have good or excellent credit, which often means a personal credit score of 680 or higher. There may be other requirements, such as minimum income requirements or other details the issuer does not reveal. 

What Are the Card Benefits?

Opening a new credit card for just a few months of savings may or may not be worth it to you. Ideally you want to choose a credit card with overall costs and benefits that you’ll use after the low APR period ends. Beyond interest rates, consider the total cost of the card, including the annual fee and foreign transaction fees. 

If you are looking for perks, consider whether you prefer cash back rewards or travel rewards. A large sign-up bonus can be appealing but make sure you can meet the requirements to get the bonus as well as pay off the balance transfer. 

What’s Your Debt Payoff Plan?

It’s generally a good idea to have a repayment strategy in place before you apply for a balance transfer credit card. If you don’t have one, a balance transfer won’t solve your debt problem for you.

In general, it’s best to try to plan to pay off the debt before the promotional period ends. 

Use this calculation to get a rough estimate of what it will take to pay off your debt at the lower rate: divide the amount of debt you want to transfer by the number of billing cycles the intro APR lasts. That will give you a rough estimate of the payment you’ll need to make to eliminate that debt before the interest rate rises. 

For example, let’s say you want to transfer $5000 to a card with a 12 month intro APR of 0%. You’d have to pay around $417 to pay it off over the course of the year. 

Can you make that payment each month and pay off the debt before the low rate expires? If not, what will the interest rate be on the remaining debt? 

Best Balance Transfer Business Credit Cards & 0% APR Offers

If you’re looking for the best business credit cards with introductory 0% APRs, here are several worth considering. The first cards on this list offer 0% APR on both purchases and balance transfers while the rest offer 0% intro APRs on purchases only. 

Note we have not listed the purchase APR for these cards. That’s because issuers advertise a range of rates, and the interest rate you get will be based on your credit and other qualifications. Credit cards almost always carry variable APRs that will change as interest rates change. Be sure to check your APR when you receive your card, and when possible pay non-promotional purchases off in full to avoid interest charges. 

1. U.S. Bank Business Platinum Card

Intro APR: 0% intro APR on purchases and balance transfers for first 20 billing cycles.

Balance transfer fee: 3%

Annual Fee: $0

Foreign transaction fee: 3%

Rewards: N/A

Welcome Offer: N/A 

*All information about the U.S. Bank Business Platinum Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

2. U.S. Bank Triple Cash Rewards Visa® Business Card

Intro APR: 0% intro APR on purchases and balance transfers for first 15 billing cycles

Balance transfer fee: 3%

Annual Fee: $0

Foreign transaction fee: 3%

Rewards: Earn 3% cash back on eligible purchases at gas and EV charging stations, office supply stores, cell phone service providers, and restaurants. Earn unlimited 1% cash back on all other eligible purchases. 

Welcome Offer: Earn $500 in cash back when you spend $4,500 on the Account Owner’s card in the first 150 days of account opening. $100 recurring software subscription credit (such as Quickbooks). 

*All information about the U.S. Bank Triple Cash Rewards Visa® Business Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

3. Wells Fargo Business Platinum Credit Card

Intro APR: 0% introductory rate for first 9 months on purchases and balance transfers

Balance transfer fee: 4%

Annual Fee: $0

Foreign transaction fee: $0

Rewards: Cash back (1.5%) or rewards points (1x)

Welcome Offer: $300 cash back bonus or 30,000 bonus points when you select a Business Card Rewards Program and spend $3,000 in the first three months after account open date

*All information about the Wells Fargo Business Platinum Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

4. PNC Visa® Business Credit Card

Intro APR: 0% introductory rate on balance transfers for first 13 billing cycles after account opening

Balance transfer fee: 3%

Annual Fee: $0

Foreign transaction fee: 3%

Rewards: None

Welcome Offer: None

*All information about the PNC Visa® Business Credit Card has been collected independently by Nav. This card is not currently available through Nav. To see what business credit cards are available, please visit the Nav Credit Card Marketplace.

5. Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® credit card

Note this intro APR applies to purchases, not balance transfers.

Intro APR: 0% for 9 billing cycles on purchases

Balance transfer fee: 4%

Annual Fee: $0.00

Foreign transaction fee: 3% of the U.S. dollar amount of each transaction

Rewards: 1.5% cash back for every $1 spent on all purchases.

Welcome Offer: $300 statement credit online bonus after you make at least $3,000 in net purchases in the first 90 days of your account opening.

6. Ink Business Unlimited® Credit Card 

Note this intro APR applies to purchases, not balance transfers.

Intro APR: 0% Intro APR on Purchases for 12 months 0% Intro APR on Purchases for 12 months

Balance transfer fee: 5%

Annual Fee: $0

Foreign transaction fee: 3% of each transaction in U.S. dollars

Rewards: Earn unlimited 1.5% cash back on every purchase made for your business.

Welcome Offer: Earn $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening.

7. American Express Blue Business Cash™ Card 

Note this intro APR applies to purchases, not balance transfers.

Intro APR: 0% on purchases for 12 months from date of account opening

Balance transfer fee: 3%

Annual Fee: $0

Foreign transaction fee: 2.7% of each transaction after conversion to US dollars.

Rewards: Earn 2% cash back on all eligible purchases on up to $50,000 per calendar year, then 1%.

Welcome Offer: Earn a $250 statement credit after you make $3,000 in purchases on your Card in your first 3 months.

Bottom Line & Next Steps

A low-rate balance transfer can help your business eliminate its credit card debt while saving money in the process. Intro 0% APRs on purchases can provide you with inexpensive short term financing for your startup, or to expand your business. Make sure you take into consideration the transfer fee, and aim to pay off your balance before the intro rate expires. 

Nav can help you find your next business credit card, as well as monitor the financial health of your business. 

FAQs

This article was originally written on April 23, 2019 and updated on September 19, 2022.

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