Balance transfers from personal to business cards
Small-business owners can get perks, but still assume liability
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Dear Your Business Credit,
I have two credit cards in my name that I use solely for my business use. The business is an LLC. Are there credit card companies that will allow me to transfer the balance from my personal card to a new LLC card? - Michael
Keeping your business and personal finances separate, as you are doing, is very smart. It will help you to maintain the protections of your LLC.
The good news is you should be able to move your balance to a business card. It should be easy to find one that will allow you to do so, as long as there aren’t any problems with your personal credit profile that would discourage a credit card company from wanting to grant you a card.
“If you want to transfer your balance from your personal card to your LLC card, simply do a balance transfer,” said Eric N. Klein, an attorney in Boca Raton, Florida, with expertise in credit-related matters, in an email.
As Klein explained, you would need to do a paper transfer, using a transfer check, or do an online transfer. “The best way to do this is to take advantage of a 0 percent balance transfer,” he said.
Moving the balance from one of your personal cards to a business card could come with some benefits you aren’t getting from your personal cards. For instance, some business cards offer rewards that are valuable to businesses.
Putting the balance on a business card could also help you build business credit. That’s always helpful in the event you want to borrow again in the future and could help you obtain lower interest rates.
You didn’t mention whether you have obtained the new small-business card or not. Before you select a business card, I’d pay close attention to which ones offer the best perks and interest rates. There are many business cards available. Many offer rewards tailored to specific types of business purchases, such as gasoline, office supplies or airline tickets. Choosing one that rewards you for the purchases you already make can put money back in your pocket.
Your card options will be dictated by your personal credit profile, as I discussed in a recent column, “How to qualify for credit as a small-business owner.” If your personal credit has been hurt by high credit utilization, you may want to postpone applying for a business credit card until you can pay down debt and improve your credit profile somewhat – unless you have been offered an interest rate so low it behooves you to take advantage of it now.
A word of caution: Many people think that by putting charges on a business credit card, they are protecting themselves from personal liability for the debt. That is a misconception. You will generally be personally responsible for any debts on a small-business credit card.
As Klein notes, “Generally, if your LLC were to obtain a credit card, the bank would likely require you to sign as a guarantor.”
As a result, I never recommend borrowing more on a small-business credit card than you can personally afford to pay back. It can be challenging to fund most of your growth out of cash flow, but it will keep you from getting in over your head in debt – and ultimately help you build a stronger, more disciplined business.
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