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

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The beauty of 0 percent APR business credit cards is that they allow business owners 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 this good thing is over 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

There are plenty of great 0 percent APR business credit cards. 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 13.49 percent to 19.49 percent thereafter. And, let’s say you 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

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. 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

The Wells Fargo Business Platinum Credit 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

The U.S. Bank Business Platinum Card offers 0 percent APR on balance transfers for 20 billing cycles. After that, the regular rate will increase to between 12.74 percent and 21.74 percent. The balance transfer fee is 3 percent.

Example:

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

$8,240 / 20 months = payments of $412

It may seem obvious to take the longest intro 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

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.

The bottom line

That zero-interest loan your business credit card granted you has conditions, like any other business loan. Take full advantage of those terms, but strategize your next move in advance. In short, when you realize your business credit card’s 0 percent introductory rate will soon adjust upward, don’t panic—plan!

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

Written by
Erica Sandberg
Credit And Money Management Expert Contributor
Erica Sandberg is a credit and money management expert who began her career at Consumer Credit Counseling Service (CCCS). There, she helped individuals and families overcome their debt issues and developed budgets, then transitioned into the agency’s primary media spokesperson.
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