What to do when you don’t pay off the balance on a 0% APR business credit card

Photo by Getty Images/Illustration by Bankrate

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

Dear Business Banter,

I got a 0 percent APR business card but didn’t pay the balance off in full and the high interest rate will be on it soon. What should I do? Can I open another card and transfer the balance? – William

Dear William,

As you know, the beauty of 0 percent APR business credit cards is that they allow users to charge and maintain a balance without interest being applied to the debt. All you have to do is send at least the minimum requested payment by the due date. It’s no surprise, then, that these products are very attractive to business owners who want to borrow for necessary expenses without having to worry about financing fees increasing the cost.

Unfortunately, few good things last forever, and in this case, it’s when the 0 percent APR period ends. Depending on the card, the interest-free time frame typically lasts between nine and 15 months, starting when the account is first opened. After that, the regular rate kicks in.

Thankfully, there are at least two sound methods to manage zero interest business credit cards when you can’t pay off the entire balance during the promotional APR period.

1. Develop a payoff plan

You don’t specify the amount of debt you’re carrying or the card you have, so I’ll use some examples. There are plenty of great 0 percent APR business credit cards and you could have any one of them. But let’s say you have the Ink Business Cash® Credit Card, which comes with a 0 percent APR on purchases for 12 months and a regular variable APR of 13.24 percent to 19.24 percent thereafter.

I’ll imagine you will owe $8,000 when the introductory rate expires.

Using a credit card payoff calculator, you’ll know how much the debt will cost you under certain payment scenarios (assuming an 18 percent APR):

Time frame Monthly payments Total interest paid
12 months $733 $801
6 months $1,404 $425
3 months $2,747 $241

As you can see, I didn’t give a scenario where you would pay the balance off over more than one year because in normal circumstances (when interest is applied) credit card debt is not meant to be long-term. If you want to finance something for more than a year, a loan is usually the more appropriate choice.

Avoid using the credit card as you are paying the balance off. You won’t get the 0 percent APR on any new purchases so the regular APR will be applied to anything you buy. Do pick up the phone, though, and ask the card issuer to lower the new rate. Negotiate! The worst that can happen is they deny your request and the best is you pay less in fees.

2. Transfer the balance to a new 0% APR card

The other option is to use a business credit card balance transfer. This method can buy you more time, though there is an upfront fee–generally 3 percent to 5 percent of the transferred amount. You also have to approach this realistically and strategically. Most issuers require applicants to have credit scores that are at least 670, too.

However, by opening another business balance transfer card and shifting the remaining outstanding balance to the new card, you’ll enjoy that 0 percent intro APR again. Here are just two examples of how it can work for you:

Wells Fargo Business Platinum Credit Card

This card offers a 0 percent APR on balance transfers for nine months. After that, the APR will increase to between prime rate + 7.99 percent and prime rate + 17.99 percent. The balance transfer fee is 4 percent.

Example:

$8,000 balance + $320 fee = $8,320

$8,320 / 9 months = payments of $925

U.S. Bank Business Platinum Card

This card offers 0 percent APR on balance transfers for 15 billing cycles. After that, the regular rate will increase to between 11.99 percent and 20.99 percent. The balance transfer fee is 3 percent.

Example:

$8,000 balance + $240 fee = $8,240

$8,240 / 15 months = payments of $550

It may seem obvious to take the longest 0 percent APR period you can get, but that’s not necessarily the best idea. You may not need that much time and the rewards may be better on one card over the other. So research the offer that best serves you, not just for this circumstance but on into the future.

If you choose to use a balance transfer card, be conscious of making your payments on time. If you’re late, the deal can expire prematurely and you’ll have paid the transfer fee for nothing.

Make a plan for after the balance is repaid

Moving forward, it’s a good idea to get the best small business card for you and your company and to use it effectively. It might be a 0 percent APR card, and in that case, plan ahead for the upcoming rate increase. Mark your calendar with the date it will rise and prepare to zero it out before it does.

Once the regular rate of interest does go into effect, keep revolving debt to a minimum. Paying the entire bill during the interest-free grace period is great because the 25 or 30 day loan will be free, but there’s nothing wrong with charging an expensive purchase and paying it off in a few installments. Yes, you’ll be charged financing fees, but they won’t be too much if you pay it off within a few months.

In short: when a credit card’s introductory rate will soon adjust upward, don’t panic—plan!

The information about the Wells Fargo Business Platinum Credit Card and the U.S. Bank Business Platinum Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.