Many of us have used credit cards to finance the operation or certain investments in the business. That practice has pros and cons. Some of the pros of funding a business with credit cards include the following:
Quick access to funds: Credit cards can provide a business with quick access to funds, which can be useful in emergencies or when a business needs to make a large purchase quickly.
Flexibility: Credit cards can be used for various expenses, from inventory to equipment to rent, providing a business with great flexibility.
Rewards and cashback: Many credit cards offer rewards and cashback for purchases, which can provide a business with a way to earn additional income.
Some of the cons of financing a business with credit cards include the following:
High-interest rates: Credit cards often have much higher interest rates than other forms of financing, which can lead to a business paying more in interest over time.
Risk of overspending: Credit cards can be easy to use, leading to business overspending and financial trouble.
Potential damage to credit score: Missed or late payments on a business credit card can damage the business’s credit score, limiting future access to credit.
There is nothing wrong with funding a business with credit cards; just be innovative and strategic with that financial tool.
List of the credit cards I’m using now: