Using Credit Cards to Finance Your New Business
Credit cards can easily supply small, growing businesses easy money. But some very serious risks also come with them.
There are personal credit cards, and there are cards custom made for small companies. Each one has rewards and benefits. There is more protection provided by the government for people who own personal credit cards, while business cards could have increased limits and rewards like office supplies that are affordable and custom made for owners of businesses.
Don’t get fooled into thinking you should make use of a business card with the business, because no matter what, you’ll damage your personal finances if the bills fail to get paid.
In addition to giving required money to new businesses, credit cards may also increase credit scores for business owners and businesses both , which will depend on if payments are made promptly. In addition, there are exclusive perks and rewards like gas that’s available at discounted charges, cash, and even airline miles.
The money is also a whole lot easier to come across, which will certainly aid you in a pinch.
When it comes to record keeping business owners may get the assistance they require by using business credit cards for daily costs in the business, which will help them separate personal and business finances, make business financial reports, and keep close track of personnel spending.
Credit card interest rates are way higher than old fashioned loans, which may make them a costly type of debt that will hurt the business during difficult times.
It’s no wonder that for each $1,000 in credit card debt that a small company takes on, it’s chances of lasting for an extended time period reduces by more than 2%, which was discovered by the Ewing Marion Kauffman Foundation.
For a new company, it is important to tap personal funds, friends, family and other investors to stay away from gathering up a lot of credit card debt. The earnings of a young business will become swallowed up by such high interest debt.
Getting behind on payments and you’ll probably mess up your credit score, making your chances to take out loans as the company grows slim. An overdue payment on a small company credit card also will get you reported to a business credit agency.
Here are some additional tips for using credit cards to finance your new business:
- Go and visit review websites including CreditCards.com, CardRatings.com, and Bankrate.com that hand out online tools to examine rewards programs, interest rates, and annual fees.
- If you do not closely examine the fine print and ask a lot of questions you might get burned on a small business credit card. Such cards aren’t protected by the 2009 Credit Card Accountability, Responsibility and Disclosure Act. As arbitrary interest rate improves the law keeps customers safe from such tactics.
- It may be much better to charge purchases on the personal plastic rather than a business card if you think you will not have the ability to pay them off in just one billing period.
- Avoid paying too much attention to annual charges. Take a look at employee expense tracking, concierge service, baggage insurance, and also having access to airline clubs.
- Try to find the business cards that have the most impressive rewards to make something back on the business’ purchases.
- Utilize introductory zero-percent rates on both balance transfers and purchases.
- For different kinds of transactions you should make use of different kinds of cards. A business-rewards credit card for example, will most likely be good for daily charges, while a zero-interest personal card will likely be good for funding.