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Pros and cons of refinancing a business credit card

A small business in Kentucky may deal with major swings in financial matters in the early years of activity, and a business credit card could be an important tool for making it through leaner times. However, a credit card can be mishandled, resulting in growing debt. In some cases, refinancing offers the ability to reorganize financial details so that they are more manageable. However, it is important to evaluate both positive and negative factors before refinancing.

High levels of credit card debt can make it difficult to pay an entire balance, but making minimum payments from month to month can result in long-term debt. If a business has the resources needed to pay off a balance, this is ideal. The long-term interest savings can be dramatic. However, paying off the full debt could stretch the company's resources, leading to the need to again use the credit card. A refinance may make the most sense if there is a low-interest or zero-interest offer that provides a break from interest for a significant period of time. A balance transfer could result in a service fee, making it wise to review all costs associated with the refinance.

In some cases, the consolidation of several credit cards into one account may improve management for a company. Doing so with a card that offers better interest rates can also save money over time. However, it is important to set limits to avoid again accruing balances on the other cards.

A business with resources stretched to the point at which monthly payments can't be met might face difficulties in obtaining a refinance offer. In this case, it might be helpful to consider bankruptcy as an option for reorganizing or eliminating credit card debt. A lawyer may provide recommendations about the appropriate bankruptcy options in such a situation.

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