Using Credit Cards For a Start-Up Business?
Though using credit cards to start a business is one of the most popular ways to do so, it can also be risky, yet there are still many rewards available. Besides the obvious reward of a temporary means of capital until profits can cover costs, there are several other pluses to using a credit card for this purpose.
A very important aspect of using a credit card for a start-up business is that it can be used to buy immediate items that are needed to get the business on it's feet. For example, fax machines, printers, paper and pens. Just ask Sergey Brin and Larry Page the founders of Google, who frugally bought only second hand computers. Which, by the way, is another useful tip to maximize the benefits of using a credit card. Look for deals wherever you can in purchasing items for your small business. In this way you will keep your balance as low as possible and hopefully easier to pay off.
Those who benefit the best from using credit cards to start up their businesses are those who keep their day jobs. By doing this they have at their disposal a steady income to keep up with credit card payments.
Another advantage of using a credit card to start a business is the fact that it will save you time as opposed to applying for a loan and the whole process of getting approved. In the long run it is usually a lot easier and less time consuming to apply and be accepted for a credit card.
A lot of people find a huge benefit in keeping their personal and business finances separate through the use of credit cards. This gives those who would otherwise have to take out a second mortgage on their houses a better option that doesn't affect their personal assets quite as directly.
In order to keep the usefulness of the credit card, you must always remember to keep on top of payments. Minimum payments of course should be easily attainable, with a goal of paying even more. The best option with regards to repayment is to go above and beyond the minimum payments.
Another way to maximize usefulness is to shop around for the best offers. Key details that you should research in finding a business credit card are interest rates or their annual APR. Remember to check to see if the APR is only an introductory rate and if so how soon and how much does it go up? You will also want to find about any annual fees that may be required of you. How much are they? What kind of credit limit do they offer? Is their a grace period, and if so how long and what kind of penalties are applied? Are you able to take out cash withdrawals on the credit line? Can you transfer balances? Some also like to know if there are any rewards are offered, and if so what are they? By using these questions in finding an appropriate credit card for your business you can greatly increase the usefulness of this approach.
There are also a lot of companies that will offer extra benefits if you sign up with their credit card. You may or may not find that this makes it more useful for you to use a credit card to start your small business versus a conventional loan. Some of these benefits include unorthodox payment plans that sometimes can extend your payments on the card for up to three months. Of course there are also those nifty email alerts available with almost all plans.
Aside from all the bells and whistles it is important you minimize the risks involved in using credit cards to finance your small business. Researching the benefits is also a good way to do just that. Besides that you need to read the user's terms involved in the agreement, yes that means the fine print, too many have skipped over this to find themselves in a situation that could have otherwise been avoided. Protect your personal assets as well as possible, have any business partners who sign on accept part of the responsibility of the businesses debt.
In the end, credit cards to start up a new business may be the only option for some. Remember to research each credit offer and follow the above steps in order to minimize your risks and maximize your benefits, therefore making the overall usefulness of a credit card to finance a business increase.
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