How to Transfer Personal Balance to a Business Credit Card

If you’re a business owner looking to save money on credit card payments related to your private life, you may want to consider a business credit card balance transfer.

A credit card balance transfer is a process by which a credit card holder takes advantage of lower interest rates on some forms of debt to minimize the fees associated with debt repayment.

Typically, balance transfers involve moving debt from one credit card to another with lower interest rates or better terms, though sometimes they also apply to other forms of debt, such as personal loans.

To transfer personal credit to business credit between cards, you must be approved for both cards involved in the transfer and typically have a good or excellent credit score.

The exact process varies by lender, though most balance transfers go through relatively quickly and easily. Ultimately, a balance transfer is a valuable strategy for managing and reducing your overall debt.

How Can Your Business Benefit From It?

There are many ways business owners can benefit from a balance transfer. Here’s why you should consider this strategy.

Lower Interest Rates

One of the most significant benefits is that it can help you save money on interest payments. If you have high-interest debt on your personal card, transferring your credit card balance to a business credit card with a lower APR can reduce your overall payments and get you out of debt more quickly.

In fact, even a slight difference in interest rates can significantly impact your bottom line. For example, let’s say you have $20,000 in credit card debt with an interest rate of 20%.

Over the course of a year, you would pay $4,000 in interest alone. However, if you were to transfer that balance to a business credit card with an APR of 15%, you would only end up paying $3,000 in interest over the year - saving $1,000.

Increased Spending Power

Another benefit is more spending power, because business credit cards often come with higher credit limits than personal cards.

So, if you have a personal credit card with a $5,000 limit and a business credit card with a $10,000 limit, transferring your balance to the business card will give you an extra $5,000 to work with. This can be helpful if you need to make a large purchase or cover unexpected business expenses.

Improved Credit Score

The balance transfer will lower your overall credit utilization ratio - the amount of credit you're using compared to the amount you have available. For example, if you have a $20,000 limit and a balance of $15,000, your utilization ratio would be 75%.

Generally speaking, it’s best to keep your credit utilization ratio below 30%. So, if your utilization ratio is currently above 30%, a balance transfer could help you get it back down to a more manageable level.

A lower utilization ratio is generally seen as being more favorable by lenders, so a balance transfer could help you qualify for better interest rates and terms in the future.

Of course, there are other ways to lower your credit utilization ratio, like paying down your debt or increasing your credit limit on the current card. This is a quick and easy way of getting your ratio down to a more favorable level.

Things To Be Aware Of

The most important considerations here include interest rates, fees, and promotional offers.

First, consider the interest rate and how this will affect your business. Higher-spending businesses can sometimes negotiate lower interest rates on their business credit cards, so it's worth checking with your lender if this is an option. Additionally, make sure that the balance transfer fees don’t exceed the potential savings you may realize by switching to a new card.

Second, be aware of any promotional offers or other benefits that come with your new credit card. For example, some issuers offer cashback bonuses or travel rewards with eligible purchases, while others offer more flexible payment options to help manage cash flow throughout the month.

Before committing to this approach, it’s essential to evaluate the mentioned features carefully and determine whether they make sense for your particular needs.

Finally, remember that a balance transfer may impact your personal credit score: The transfer will appear as a new account on your credit report. Opening a new account can temporarily lower your credit score and affect your credit history, so keep this in mind if you're planning to apply for any new loans or lines of credit.

With these key factors in mind, moving your balances between cards can be a great way to save some money and improve your bottom line as a small business owner. So be sure to do your research and choose wisely!