Should You Get a Business Balance Transfer Credit Card?

October 10, 2019

By Sherry Keyles

When you run a small business, it’s easy for debt to accumulate. If you are a small business owner or self-employed and have high-interest credit card debt, a business balance transfer credit card with a 0% introductory APR offer on balance transfers might be a good option.

Not only will you save money on interest, a business balance transfer card It can help consolidate credit card debt, free up more cash flow and improve your credit score.

About Business Balance Transfer Credit Cards

Business credit cards are available for small and midsize business owners who don’t qualify for a corporate credit card. To apply for a small business credit card, you must own a business, even if it’s not incorporated, or be self-employed. With a small business credit card, the account holder is responsible for debt on the card.

When applying, you will be asked to provide information about your business including its name, its legal structure, its tax ID number (which can be the owner's Social Security number if it's a sole proprietorship) and its annual revenue — as well as information about the individual guaranteeing the debt.

Each issuer has its own requirements for approval but they will consider your debt service coverage ratio (DSCR) and your credit score. Most cards require very good to excellent credit.

How Business Balance Transfers Work

Small business credit cards with introductory 0% APR offers on balance transfers operate much the same as a personal balance transfer credit cards. In order to get value from your card, you need to pay off the debt before the zero-interest offer expires. If you don’t, the standard APR (which can be as high as 26%) will apply to your remaining balance.

In addition, the cards charge balance transfer fees and the balance transfer must be made within a certain time period from account opening or account approval (generally, 60 days).

The credit card issuer may cancel the introductory APR and apply the standard APR or penalty APR if you make a late payment or your account exceeds your credit limit.

Many business balance transfer cards also 0% APR on purchases. However, as with a personal card, it’s best not make purchases with your new card until you pay off the debt. The same goes for cards offering rewards or cash back. Consider the rewards if you plan to keep the card after you pay off the balance.

Benefits of a Business Balance Transfer Credit Card

There are several benefits for obtaining a business balance transfer credit card including:

  • Pay off balance without having to pay high interest rate
  • Invest money saved back into your business
  • Eliminate debt faster as monthly payments go towards your principal
  • Simplifies your finances by consolidating debt from multiple credit cards
  • Higher credit limits than personal cards
  • Build business credit history

Business Balance Transfer Credit Card Offers

Unlike personal balance transfer cards, not many issuers offer 0% APR offers on balance transfers. When comparing offers, factors to consider include: length of 0% APR offer period, regular APR after the introductory rate expires, fees, rewards and other benefits you might use.

Most cards do not allow balances to be transferred between accounts with the same card issuer. For example, if you have a credit card account with Chase, you must select a card from Citi or American Express.

Read the terms and conditions of the balance transfer credit card before applying to ensure you understand the balance transfer guidelines.

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