Startup entrepreneurs who are having a hard time getting money for their project may be tempted to borrow against their business credit cards, and sometimes this is the only option they have right away. The catch is that if you don't use your business credit cards wisely, you might fail at the business you've wanted to start for a long time. If you don't know how to handle your business credit card debts, they will just keep adding up.
There's no doubt that business credit cards are very easy to use. When you get a business credit card and it is approved, you get a guaranteed credit line that you can use almost anywhere and whenever you need it. Even if you don't have the cash, you can use your business credit card to buy what you need for the business. The convenience that business credit cards offer can also be a trap, and business credit cards can be dangerous if you don't use them carefully.
Even though you know that business credit cards can be dangerous, that doesn't mean you shouldn't use them to keep your business going. The best way to reduce the risk is to use the business credit card wisely, or within reasonable limits.
You might get carried away with the idea of making more money and having a better life if you start a new business. But wait! Have you ever thought about what you could do if things don't go the way you want them to? Remember that filing for bankruptcy is no longer a good idea. The laws on bankruptcy have changed recently, making it harder for people to get away from their creditors this way.
You can get out of the debt trap. You should keep track of what you buy with your business credit card. This is easy to do by logging into your account on the website of the company that gave you the business credit card. Then, you should figure out your payment plan ahead of time by estimating how much money you make each month and using that number to figure out how much you can pay toward your business credit card debt. Pay off the whole balance on your business credit card as often as you can. If that is hard to do, try to pay more than the minimum amount due each month. This is the only way to stay ahead of finance charges, late payment fees, and default APRs, which can hurt a lot. Unless you have already made plans to remove the personal guarantee you signed for your business, anything that happens to the business credit card account will affect your personal credit report.
Comparing trends in business credit card rates is not only important, but it can also teach you a lot. You need to learn about the float period on purchases, the fees for cash advances and late payments, the charges for going over your credit limit, the fees for transferring your balance, and the penalties for late payments. Then there are the annual fees. Some business credit cards have annual fees, while others do not. There are a lot of websites that talk about business credit cards and have a lot of information on them. If you know how to use your business credit cards right, they can help you pay for your business.
