Using business credit cards for a startup
29th November: Using business credit cards for a new business venture could be a good bet. However, we need to keep a few things in mind before proceeding ahead.
What makes business credit cards an alluring option–Business credit cards have been here for quite some time now. And the fact that they offer easy access to credit as compared to other funding resources does make them appear as a good option for usage in a startup.
Moreover, the applicant does not required to undergo a lengthy and tedious application process which normally involve long-term financial estimates. If you have a good credit score, you can also get the facility of making an online application for getting a business credit card. You might get these instantly in many cases.
You get a higher line of credit in case of business credit cards as compared to personal credit cards and the credit limits could be as much as around $20,000.
As your business expands, so does your credit limit going up to $100,000. No wonder, all these attractions have made business credit cards a favored option for majority of female entrepreneurs for funding a startup.
How safe business credit cards are–The point now is whether these credit cards are a safe option for a startup venture or not. Well, let us face the fact that business credit cards are not as safe as other personal credit cards or other business loans.
Remember, enticing offers do always come at a high price and the same holds true for business credit cards as well.
Let us see why such cards are not good for a startup—
• Business credit cards are not covered by consumer protections offered under the Credit CARD Act of 2009.
• No control on increases in interest rates in case of business credit cards.
So, credit card companies are at liberty to increase rates of interest whenever they deem fit.
• Late payments for bills of business credit cards by entrepreneurs could increase default interest rates to as much as around 29.9 percent on the current balance of credit card.
• Carrying high debt levels of credit card damage your credit scoring thus making you disqualified for getting other loans.