Financing with credit cards IS an option for the small business owner. Use with extreme caution.
When your name is on one list you are inundated with offers from aggressive credit card marketers. You get offers to pay one card with another. Do that more than once and a bad mark goes on your credit rating. Bank cards offer outlandish credit limits based partly on your longevity and your cash flow in the past. It is very tempting despite the extremely high rates. The major appeal is convenience.
One attraction is the ease with which you can arrange the line of credit. You can do most of the arranging without leaving your office. Another is the general acceptance by many of your suppliers. Then, there's the bonus of air miles and other perquisites.
Read the terms and conditions carefully and compare the interest rate in dollars, with your capacity to repay. The wise owner will realize that this form of financing should be restricted to short term emergency funding where there is a high probability the repayment funds will be available in the near future.
When you are able to clear the full amount owing each month, credit cards are a convenient method for many ongoing transactions outside of emergency situations. The transaction can be regular automatics or casual payments where cash and check payments are not available or convenient. Tracking expenditures is simplified by once-a-month batching on a spreadsheet.
Since some transactions are conducted over the internet, develop the habit of always checking for the padlock which appears at the bottom of your screen indicating a secure connection.
Extreme caution implies you conduct a thorough cost/benefit analysis. Accumulate fees and interest charges in a separate account for monthly, quarterly or annual review.
Stories from members will add great value to these maxims.
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