If your small business has racked up a lot of credit card debt, you may be looking for a balance transfer card that will give you some time to pay down your debts interest-free. However, many 0% APR cards charge a balance transfer fee—a 3-5% levy on the amount you transfer. In some cases, the balance transfer fee can outweigh the savings on interest.
While there aren’t any business-specific balance transfer cards that waive the fee, you do have options. We lay out your choices for transferring existing credit card debt and help you decide whether it’s a worthwhile move.
Option 1: Swallow the Balance Transfer Fee
Your first choice is the most straightforward—you can choose a business credit card with a 0% APR period on transfers and accept the fee as the cost of doing business. In that case, consider the Chase Ink Business CashSM, which offers both a 0% APR period and cash back rewards.
First off, you can get $300 in a signup bonus when you spend $3,000 in the first three months. You’ll enjoy a 0% interest period of 12 months on purchases and balance transfers, after which your variable APR will range from 13.99% to 19.99%, depending on your creditworthiness.
The card also offers ongoing cash back rewards of:
- 5% cash back on office supplies and landline, cell phone, internet, and cable TV services (up to $25,000 spent combined annually)
- 2% cash back on gas and restaurants (up to $25,000 spent combined annually)
- Unlimited 1% cash back elsewhere
The Ink Cash charges no annual or additional employee card fees. However, it does charge a balance transfer fee of $5 or 5% of the transfer, whichever is greater. This is a pretty steep fee and can easily cost you more than you’d save in one year of zero APR.
Another card that’s better in terms of the balance transfer fee perks but offers worse rewards is the Blue Business℠ Plus Credit Card from American Express. With 15 months of zero APR on purchases and transfers and a balance transfer fee of 3% or $3, whichever is higher, the Blue for Business has the Ink Cash beat. (Its ongoing APR is a variable 12.24%, 16.24%, or 20.24%, depending on your creditworthiness.)
However, the Blue’s rewards can be less enticing. The card offers 2 points per $1 spent on the first $50,000 annually, and 1 point per $1 spent thereafter. If you maxed out the Ink Cash’s 5% cash back category with $25,000 spent annually, you’d earn a solid $12,500 cash back. That same spending pattern would get you just $500 with the Blue. Plus, the Blue for Business doesn’t have a signup bonus, which could lose you an extra $300 in rewards.
If you’re looking to minimize what you pay on your transferred balance, go with the Blue. However, if you want a mix of good rewards and 0% APR, go with the Ink Cash.
Option 2: Use a Personal Credit Card
While a business credit card without balance transfer fees is rare, a few personal credit cards do fit the bill. One of the best options out there is the Chase Slate®.
In addition to waiving the balance transfer fee for the first 60 days, the Slate offers 15 months of 0% APR on both transfers and new purchases. As for ongoing APR, you get a variable 15.99%–24.74%, depending on your creditworthiness. The card has no annual fees or penalty APR, and you get a free monthly FICO score.
Another option is the Barclaycard Ring™ MasterCard®. Not only does it charge no balance transfer fee, it also boasts no annual or foreign transaction fees. It also gives 15 months of zero APR on purchases and transfers, and its ongoing APR is lower at a variable 13.99%. You also get easy access to your credit score, for free. If you travel abroad, the Ring is a clear winner over the Slate, but the Slate wins out if you think you might miss a payment and get hit with a penalty APR.
There are some downsides to transferring your business credit card debts onto a personal credit card. For one, it’s harder to keep business expenses separate from personal ones. For another, you miss out on business perks like employee cards and accounting help.
Perhaps the most important factor, though, is how transferring your balance can impact your personal credit score. Many credit card issuers don’t report business credit card usage to personal credit bureaus unless an account is seriously delinquent; other issuers don’t report usage at all. If you transfer your debt from one of those issuers to a personal credit card, your own FICO score might fall. It’s one thing to sign a personal guarantee, as you probably did when you took out the card. It’s another to tank your debt-to-credit ratio by adding your company’s balance to your own.
Option 3: Refinance
The final arrow in your quiver is to use another, lower-interest loan to pay off your credit card debt. Credit cards are one of the most expensive financing options out there—think online lending marketplaces, business lines of credit, term loans, and more.
In particular, a loan subsidized by the Small Business Administration can be a lot cheaper. If your business has been around for at least two years, you have a credit score above 640, and you’re making at least $100,000 in annual revenue, you might qualify for an SBA loan, which, thanks to a partial government guarantee, can boast lower interest rates and a longer repayment term. This might be a good option to shuck high-APR credit card debt.
Since all business credit cards charge balance transfer fees, you don’t have any perfect options. However, depending on your company’s needs, you can take the hit on a BT fee, move your debts to a personal credit card, or look into other financing options.
The post Are There Business Credit Cards with No Balance Transfer Fee? appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/balance-transfer-fee