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:
TL;DR: When Is It 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.
The Rundown on Having to Carry a Credit Card Balance
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:
1. It can cost you . . . a lot.
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.
2. It can seriously ding your personal credit score.
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.
3. It’s not ideal, but sometimes it’s necessary.
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:
Need to Carry a Credit Card Balance? Look for Cards with a 0% Intro APR Period
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
With the American Express Blue Business Plus 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:
- For the first $50,000 your spend annually, you’ll see a return of 2 points per dollar.
- After that $50,000 cap, you’ll continue to earn 1 point per dollar you spend, with no limit to how many points you can earn at this rate.
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?
The American Express Blue Business Cash
Next up on our list of top 0% intro APR cards is the Blue Business Cash credit card. This is another cash back card with a 12-month intro APR period along with plenty of cash back rewards.
With its substantial sustained rewards and industry-leading 0% intro APR period, the Blue Business Cash is still a main contender for the best 0% intro APR business credit card out there.
As for sustained rewards, the Blue Business Cash offers 2% back on all eligible purchases on the first $50,000 each calendar year, then 1% back on all purchases after.
Plus, for a limited time, you can earn up to $300 back to boost your business by earning $100 in the form of statement credits at each of the following merchants: Dell Technologies, DocuSign or FedEx after you make an eligible purchase on your new card within the first 3 months.
To top it all off, despite the substantial returns this card offers, you won’t have to pay an annual fee to become a Blue Business Cash Plus cardholder.
The Chase Ink Business Cash
The next top 0% intro APR period card on our list is the Chase Ink Business Cash. It has a long 0% intro APR period of 12 months and offers a few perks that really make a difference.
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:
- For its top earning category, you’ll get 5% cash back for the first $25,000 you spend annually at office supply stores and on cell phone, landline, internet, and cable TV services.
- For the Ink Cash’s middle tier of cash back rewards, you’ll earn 2% cash back for the first $25,000 you spend at gas stations and restaurants every year.
- Outside of those categories and beyond their spending caps, you’ll earn an unlimited 1% cash back on every dollar you spend with the Ink Cash.
All of these rewards, along with the second longest 0% intro APR period on the market, are available for no annual fee at all.
Things to Keep in Mind if You Carry a Credit Card Balance During a 0% Intro APR Period
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:
1. Always make your minimum payments on time, no matter what.
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.
2. Avoid utilizing over 30% of your credit potential.
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.
3. If you have to utilize over 30% of your available credit, try to do it on a 0% intro APR card that doesn’t report to personal credit bureaus, like the Blue Business Plus.
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.
4. Otherwise, you’ll need to decide if you want to prioritize financing your business or preserving your credit score.
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.
The Endgame for Having to Carry a Credit Card Balance
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.