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Every business owner gets the idea—pay off your credit card balances on time, every time, or you could end up in a serious hole of debt. Plus, derogatory marks on your personal credit card that come from not paying your balance in full on time are certainly not ideal, either.
Of course, paying off all your balances on time and in full every single month is the goal, but what if it’s not quite realistic?
Though it’s not ideal, having to carry a credit card balance certainly isn’t the end of the world. And this is especially true if you’re smart about how you carry your credit card balance.
Let’s take a look at situations in which it’s totally okay to carry a credit card balance:
The long and short of it?
Not carrying a credit card balance is ideal, but having to carry a credit card balance is sometimes an unavoidable reality.
If you have to carry a credit card balance, then it’s important you’re strategic about it. Carrying a credit card balance from month-to-month during a 0% intro APR period won’t cost you a single cent or a single credit score point—as long as you’re smart about it.
Find your perfect 0% intro APR card, and learn the four ultimate steps to carrying a smart credit card balance by reading the full article.
As you likely already know, carrying a credit card balance is best to avoid if you can.
To be clear, carrying a credit card balance can have a lot of adverse effects on your personal financial health and your business’s financial health.
Let’s take a look a look at the general consequences of not paying off your credit card bills in full:
It bears repeating—when you carry a credit card balance, it can end up costing you a lot.
In order to discourage carrying a balance, credit cards come with high APRs on any balance you carry from month to month. At their lowest, credit cards’ base APRs are in the low teens, and at their highest, they can be in the 30s.
As such, if you carry a credit card balance, you can end up accumulating a huge sum of interest you’ll need to pay off along with your original balance.
Even more, if you don’t pay off your credit card balance in full, your personal credit score—and potentially even your business credit score—could suffer accordingly.
If you carry a credit card balance from month to month, it could result in what credit bureaus call “derogatory marks.” This means that they’ll report your activities to credit bureaus, and negative activities, like carrying a balance, will affect your credit score negatively.
Nevertheless, never carrying a credit card balance is much easier said than done. Sometimes business owners simply have to carry a credit card balance.
And that’s totally fine.
That said, though carrying a credit card balance might be necessary, it’s crucial to do it with a plan in place to make sure your personal and business finances come out of it as unscathed as possible.
Let’s take a look at your ultimate game plan for carrying a smart credit card balance:
First and foremost, if you’ll need to carry a credit card balance in the near future, you should find and apply for a credit card with a 0% intro APR period.
What is a 0% intro APR period, you ask? Well, a 0% intro APR period is a perk that many business credit cards offer during your first months as a cardholder. For however long your 0% intro APR period is, your credit card will have a 0% intro APR. After your interest-free months are up, a variable APR sets in at a rate depending on your creditworthiness. This rate will also vary with the market, so be sure to see the issuer’s terms and conditions for the latest APR information.
This means that you’ll be able to carry a balance from month-to-month without accumulating a single cent of interest. Of course, there are some stipulations to this perk—you’ll need to still make your minimum payments on time, and you can’t go over your approved credit limit. If you make a late payment or outspend your credit line, you could forfeit your intro period.
That said, 0% intro APR periods are still an amazing choice for business owners who need to make a big ticket investment and pay it off gradually over a few months. Here are some of the best business credit cards on the market for 0% intro APR periods:
The American Express Blue Business Plus credit card offers one of the longest 0% intro periods on the market. With this business credit card you’ll have a staggering 12 months of a 0% APR on any balance you carry from month to month as long as you make your minimum monthly payments on time.
On top of the money you’ll save in avoided interest, you’ll also be able to earn rewards points with the Blue Business Plus:
Plus, the Blue Business Plus will only report your activities to business credit bureaus. As such, your personal credit score won’t suffer if you have to use a high percentage of your available credit.
The best part?
You won’t have to pay an annual fee to be able to access all of the perks that the Blue Business Plus.
What could be better than free earnings for simply investing in your business?
Next up on our list of top 0% intro APR cards is the American Express SimplyCash Plus business credit card. This is another cash back card with a 15-month intro APR period along with plenty of cash back rewards.
With its substantial sustained rewards and industry-leading 0% intro APR period, the SimplyCash is still a main contender for the best 0% intro APR business credit card out there.
As for sustained rewards, the SimplyCash Plus offers both high returns and flexibility for your business spending.
To top it all off, despite the substantial returns this card offers, you won’t have to pay an annual fee to become a SimplyCash Plus cardholder.
The next top 0% intro APR period card on our list is the Chase Ink Business Cash. Though its 0% intro APR period—at 12 months—doesn’t quite measure up to the Blue Business Plus or the SimplyCash Plus 15-month 0% intro APR period, the Ink Cash offers a few perks that could potentially turn a blind eye to those three extra interest-free months.
When you spend with the Ink Cash, you’ll not only get access to a welcome bonus in the form of a 0% intro period, you’ll also have an opportunity to access a welcome bonus of cold, hard cash. If you spend $3,000 during your first three months with the card, you’ll earn a welcome bonus to the tune of $500 cash back.
The Ink Cash also delivers when it comes to sustained rewards:
All of these rewards, along with the second longest 0% intro APR period on the market, are available for no annual fee at all.
As long as you follow a few guidelines, it’s totally okay to carry a credit card balance during a 0% intro APR period. Let’s take a look at four things you’ll need to be diligent about while you carry a credit card balance during a 0% intro APR period:
Be sure to be especially diligent with punctual monthly payments when you have to carry a credit card balance on a 0% intro APR card—if you miss one, you could forfeit months worth of no-interest credit card balances.
If you spend a huge portion of your available credit while carrying a credit card balance, you could end up dinging your credit score for having a high credit utilization ratio. Credit bureaus and lenders recommend that you keep your balance under 30% of your available credit, so always make sure to be conscious of how much of your available credit your balance is occupying.
Sometimes, just like not carrying a credit card balance at all, not having a credit card balance that’s above 30% of your available credit isn’t quite feasible. If this is the case, it’s best to have this balance on a business credit card that doesn’t report to personal credit bureaus. The Blue Business Plus, for instance, will only report your activity to business credit bureaus.
So, if you have a credit utilization of over 30% on your Blue Business Plus, then only your business score will suffer. Though it’s not great to have any of your credit scores lowered, then your business credit score is probably the wiser choice to sacrifice. Buy and large, it’s your personal credit score that you’ll really want to preserve.
If none of the first three guidelines is possible for you to follow, then it’s time for you to step back and make a decision.
Which will you prioritize—financing your business as you need to with a 0% intro APR card, or preserving your personal credit score?
While some business owners might dive into carrying a balance of more than 30% of their available credit on a 0% intro APR card that reports to personal credit bureaus, others might be more cautious with their personal credit scores.
Either choice is valid—just make sure it’s intentional and you know what you’re getting yourself into.
So, what’s the bottom line for having to carry a credit card balance?
If you’re careful and savvy about it, then a credit card balance is certainly not the end of the world. In fact, if you can carry one without accumulating interest and without dinging your credit scores, a credit card balance could even be a valuable funding source for your business.
As long as you have your game plan set for carrying a credit card balance, what many might consider a financial no-no could be a one-way ticket to growing your business.
Need help finding the best credit card for your business? Take our short quiz.