If your business is not clearing its credit card balance every month and is paying a high interest rate, then a balance transfer could save money and free up cash flow.
Find out what your options are, how to do a balance transfer for a business, and alternative options.
In this guide
- Business balance transfer options are limited. Expect reduced, but rarely 0% p.a. rates, with shorter introductory periods compared to what's available for personal cards.
- Banks require applicants to have a registered ABN/ACN.
- Requirements differ for GST registration, trading history, and minimum annual turnover.
A balance transfer can be of substantial benefit to a business. These are some of the main benefits.
- Improved cash flow. With interest rates on business credit cards typically around 20% p.a. or higher, carrying a balance uses up cash that could otherwise have been deployed towards growth activities such as marketing and hiring. As many seasoned business pros would say: turnover is vanity, profit is sanity, and cash flow is king.
- Simplification of your business finances. One of the most overlooked benefits of a balance transfer is how it can simplify your finances. If you have multiple accounts, you could balance transfer them to a single card, take advantage of the lower interest rate, and have fewer payments to manage and reconcile (assuming you close your old cards once the balance transfer has been processed).
- Improved business credit score. Several factors are involved in the calculation of your business credit score — which is not the same as your personal credit score — including repayment history, how long a line of credit has been open, credit utilisation, etc. If you get a new card, your overall credit utilisation ratio will improve, to the benefit of your credit score. With an improved credit score, your business can access cheaper finance in future.
What to expect
This is what you can expect when comparing business balance transfer offers.
Rates and fees
- Not so much choice. While the banks are very competitive with each other to attract new personal customers with balance transfers, the same cannot be said for businesses. Only a small number of banks offer business balance transfer credit cards.
- Lower interest, but probably not 0%. Interest rates on business balance transfers are lower than the standard rate applied to purchases and cash advances, but 0% p.a. is the exception rather than the rule.
- Shorter introductory periods. Introductory periods on business balance transfers are on average shorter than those for personal balance transfers. 12 months, for example, is about standard.
- Possible balance transfer fee. The balance transfer fee is a way for the bank to recoup some of their up-front costs and is commonplace among personal balance transfer cards. For business balance transfers — which typically have a low interest rate as opposed to zero interest — balance transfer fees are not as common. However, it's still worth checking before applying, especially if you are making a large balance transfer since it could bring forward a one-off payment you would rather avoid.
- A limit on how much you can transfer. You cannot balance transfer more than your credit limit. Many banks apply a limit that specifically applies to balance transfers, which is usually a percentage of your credit limit. Being allowed to use 80 - 90% of your credit limit for balance transfers is typical, but it varies between banks.
Banks have different criteria for business applications and often require additional proof.
- Status. Most business credit cards are for sole traders, partnerships, or companies, or trustees of an eligible trust.
- ABN or ACN. To get a business card, you'll need a registered ABN or ACN.
- Registered for GST. You may be required to have been registered for GST.
- Trading history. It's unlikely that startups with no trading history will be eligible for any business credit card.
- Minimum annual turnover. Some banks will require a minimum turnover per year. A decreasing trend may impact likelihood of approval.
- Your accountant's details. Some banks will ask for your accountant's contact details in case they need to verify income, etc.
- Residency. Business credit cards are typically for citizens and permanent residents.
- Reconciled accounts. In addition, you may need to provide an export of data from your accounting package.
If you have multiple credit cards already, it may be worth enquiring with your bank about a balance transfer even if not advertised on their website. The main benefit of balance transfer for existing customers is not having to go through an application.
Banks that offer business balance transfers
The following banks have advertised balance transfer rates for their business credit cards and is not exhaustive.
Your business has run up a balance of $10,000 on a business credit card with an interest rate of 19.99% p.a. and want to do a balance transfer at 4.99% p.a. for 12 months.
On your current card with a 19.99% p.a. interest rate:
- Monthly interest = $10,000 x (19.99% ÷ 12) = $166.58
- Total interest over 12 months = $166.58 x 12 = $1,999.04
With the balance transfer card at 4.99% p.a.:
- Monthly interest = $10,000 x (4.99% ÷ 12) = $41.58
- Total interest over 12 months = $41.58 x 12 = $499.04
By transferring the balance, your business could potentially save $1,500 ($1,999.04 - $499.04) in interest over the 12-month introductory balance transfer period.
If you don't meet the criteria for a business balance transfer card, you could consider applying for a business loan instead.
Many lenders, and especially the non-bank lenders that have come to prominence in the market, use a proprietary scoring algorithm to determine interest rates, the amount of credit extended, etc. If you have good credit, interest rates can be competitive with what you'd get from a balance transfer.
Some lenders can process an application and disburse funds in 3 days, which compares favourably with business credit card applications that can take much longer. Be aware that some loans charge an establishment fee.
Can you transfer a business credit card balance to a personal credit card?
No. You cannot transfer a business credit card balance to a personal credit card.
Can you transfer a personal credit card balance to a business credit card?
No. You cannot transfer a personal credit card balance to a business credit card.
Can you transfer an overseas credit card balance to a business credit card?
No. You cannot transfer an overseas credit card balance to a business credit card.
Can you balance transfer between business credit cards at the same bank?
No. You cannot balance transfer between business credit cards at the same bank.