Alert! Are you going to use your credit card to finance your business?
It is normal that when you want to finance your own business and do not have capital for it, look for alternatives such as business loans or personal loans.
That is acceptable if you have a good payment plan and the responsibility to comply; However, the worst idea you can have is to use your credit card to finance a business , and the interest rate of a card is not the same as the one you could get through a specialized loan.
You put your credit history at risk
Obtaining credit for your business is not easy especially when you are undertaking. It is important to have clear interest rates and evaluate alternatives. Credit cards have small print, do not forget to be attentive to it.
If you fall behind on your credit card payments , the interest you must pay will not only affect your company, but you as a person. Learn to keep accounts separate.
If you suffer any imbalance in your business, there will be delays with the payment of credit cards that will affect your credit history and your registration in the risk centers , damaging your capacity for the next credits.
The interest rate can be double that of a loan
Credit cards are not necessarily low interest rates when compared with a loan.
The loans start at levels of 30% annual interest while a card can easily double this figure, notoriously affecting the liquidity of your business.
Credit card conditions may change
Read the fine print of credit card contracts. It is important before venturing to use this means to finance your own business.
In the contracts it is usually indicated that the conditions of the cards can vary at any time (monthly charges or interest rates) so the total amount of the credit you used could be subject to subsequent variations increasing the amount you must pay monthly according to the installments in which you have divided your consumption.
And if you already decided to use your credit card …
Keep in mind that in order not to harm your income or those of your business you must use the credit card responsibly and when necessary.
Also never spend more than you can pay in the next 60 days – forget about the available credit limit, it is often exaggerated many times. Finally, always pay the maximum amount possible each month so that your debt decreases soon and you can have liquidity again.