Using Balance Transfers to Reduce Small Business Credit Card Debt[yoast-breadcrumb]
Using Balance Transfers to Reduce Small Business Credit Card Debt
Hey there! If you’re a small business owner, you know how tricky it can be to manage business expenses and cash flow. One common issue many small businesses face is credit card debt piling up from ongoing expenses. The good news? Balance transfers can be a smart money move to reduce your small biz credit card debt. Let’s break it down.
What is a balance transfer?
A balance transfer simply means moving debt from one credit card over to another card. Many credit cards offer promotional balance transfer offers, like 0% intro APR for 12-18 months. If you transfer your balance to one of these cards, you can save a ton on interest while you pay down your debt.
How do balance transfers save money?
High-interest credit card debt can be super expensive. Let’s say your small business has $10,000 in credit card debt at a 16% interest rate. You’re looking at $1,600 per year in interest charges alone. Yikes!
But if you transfer that balance to a card with a 0% intro APR, you could avoid paying interest for over a year. That means you’d have 12-18 months to pay down your debt without racking up more in interest fees. Pretty sweet deal.
Should small businesses use balance transfers?
Balance transfers aren’t right for everyone. But for many small businesses carrying credit card debt, balance transfers can be a smart move. Here are some cases where business balance transfers make sense:
- You have high-interest credit card debt over $1,000
- You have good credit (670+ credit score)
- You can pay off the debt within the 0% intro period
- You need temporary relief from high interest while you pay down debt
The key is having a plan to pay off your entire balance within the intro 0% APR period. Otherwise, you’ll end up right back in high-interest debt when the promo period ends. Make sure you can handle the monthly payments!
How to do a business balance transfer
Doing a balance transfer is pretty straightforward:
- Find a good balance transfer credit card. Look for at least 12 months 0% APR with a fee of 3% or less.
- Apply and get approved for the new card.
- Once approved, request to transfer balances from your old card(s) onto the new card.
- Continue making payments on your old card until the balance transfer goes through.
- Pay off your entire balance on the new card before the intro 0% APR period ends!
That’s the simple version. But there are a few other things to know:
- Make sure your business meets the card’s eligibility requirements.
- Watch out for balance transfer fees. They’re usually 3-5% of the total transfer amount.
- Don’t close old accounts after transferring balances. That can hurt your business credit.
- Create a repayment plan and stick to it. Pay more than the minimum due each month.
- Watch out for deferred interest promotions. You’ll get hit with back interest if not fully paid off.
The best business cards for balance transfers
Not all business credit cards allow balance transfers, so you need to find one that does. Here are some top picks:
Ink Business Cash Credit Card
- 0% intro APR for 12 months on purchases and balance transfers
- No annual fee
- 5% cash back on up to $25,000 in combined spending each account anniversary year on office supply stores, internet, cable and phone services
The Ink Cash card from Chase is a flexible cash back card with solid balance transfer terms. There’s no fee to transfer balances, and new cardholders get 0% intro APR for the first year.
U.S. Bank Business Triple Cash Rewards World Elite Mastercard
- 0% intro APR for 15 billing cycles on balance transfers
- No annual fee
- 3% cash back on eligible purchases in popular business categories
This business card from U.S. Bank offers a generous 15-month 0% intro APR on balance transfers. There’s no fee to transfer balances onto this card.
Wells Fargo Reflect Card
- 0% intro APR for 18 months on purchases and balance transfers
- No annual fee
- Cell phone protection
Wells Fargo’s popular Reflect card offers one of the longest 0% intro APR periods at 18 months. There’s no fee to transfer balances.
Maximize your balance transfer
To really make the most of a balance transfer, be sure to:
- Make payments on time. Set up autopay if needed.
- Pay more than the minimum due when possible.
- Avoid new credit card charges during the intro period if you can.
- Have a plan to pay off the full balance before promotional APR ends.
- Consider consolidating other business debts onto the new card.
Following these tips will help you pay down your balance faster and take full advantage of the 0% intro APR period.
The bottom line
If your small business is carrying high-interest credit card balances, transferring them to a card with a 0% intro APR can temporarily halt interest fees. Just be sure you have a repayment plan to pay off the entire balance before rates go up. Used strategically, balance transfers can be a smart financial move for many small businesses.