Top 4 Things to Think About Before Using Credit Card Loan to Start A Business

0
251
credit-card
Credit: Pixabay

By: Ana Margarita Olar | Executivechronicles.com

Many people want to start their own business but they don’t have the financial capacity, to begin with. So many people are lured into applying for a credit card. They wanted to “conveniently” start their business.

But the question is do you really know enough to use the credit card to your business advantage?

Credit Card

DISCERN BETWEEN A CREDIT CARD AND A PERSONAL CARD

Yes, a credit card is a fast way to get money for a business. Along with benefits come serious risks and financial dangers. Basically, there are personal credits cards and business credit cards. The government provides more protection for personal credit card holders while business credit cards have higher credit limits and rewards.

You have to remember that failure to pay your credit card bills on time causes you to incur a penalty which can offset any discount or rewards you may have when using the card.

CREDIT CARDS PROVIDES CASHFLOW AND IMPROVE CREDIT SCORES

Another benefit of having a business credit card is that it provides cash flow for the business and increases credit scores for businesses. There are also perks such as rewards points and discounts.

But all of these benefits and perks are true if and only if you pay your bills on time. Being delinquent on payment will cause some serious financial hazards on both on your personal and business finances.

CONSIDER THAT INTEREST RATES BY CREDIT CARS ARE MUCH HIGHER COMPARED WITH TRADITIONAL LOANS.

If you are considering using a credit card for a business loan, be sure that you have other financial resources aside from your business.

Because of a high-interest rate, a credit card debt can drag your business down during hard and trying times. Before choosing a credit card, review sites such as CardRatings.com and CreditCards.com to get an idea and compare interest rates, annual fees, and other charges.

CONSIDER YOUR PERSONALITY

Reflect on your personality, and reflect on your actual business cash flow. Do you really have the capacity and the self-discipline to pay your bills and interest rates on time? Or do you have the tendency to use your credit card for personal expenses such as mindless shopping? Only you knew yourself indulgence or self-discipline so only you can decide whether to file for a business credit card or not.

Having a business credit card can is a useful tool to help finance your business but you also have to try other financial resources. Ask from friends, relatives, and other lending institutions. You can still finance your business and avoid debt and piles of interest and penalties.