Using credit card to finance business – credit card series

by Ashvini on May 11, 2011 · 6 comments

in Credit Card Series

Credit card a plus if used in the right sense. There are plenty of business activities that you can support, if you use your credit card properly.
In the post about disadvantages of using credit card for your business, I talked about how using a credit card in an incorrect manner lead to huge losses for your business and liabilities as well.

Credit card rates in India normally range for 30-40% annually and 20-30% globally making credit card one of the most costliest sources of fund. An overused , maxed out card can blow a hole in your finances.

In this post , I am going to show you some of the ways you can use credit card to not only fund your business but also increase productivity as well.

  1. Credit card may be used to fund your short term needs

  2. The best use of credit card is to not roll the credit over to next billing cycle. A rolling balance makes you liable to pay 1-3% on total outstanding monthly. The best use is then to use it in such a way that you are able to pay the card balance in time. You may use CC for e.g. when you are expecting a customer payment to happen before your billing cycle so that you can pay back in time. In short term, it is the most convenient way to fund any activity. Just don’t forget the payment

  3. Use credit card in emergency

  4. Sometimes, you need urgently to pay for something and searching for an ATM is not an option. It may be used for repair of a broken down, an urgent flight or immediate medical expense. Normally, you might have another card(a debit which can be used to withdraw cash) but if it is too urgent , use your credit card without a thought. After all it is for your convenience.

  5. Use when you don’t have other options

  6. Let me take an example. Almost all the website take credit card. If you have a bank account and no credit card, you might find purchase on internet almost impossible. Also a transfer from a bank account might not be instantaneous. If your business needs something immediately, you should go ahead and use your credit card. In this way your work will not be hampered and you can make most of your card

  7. Use to gain side benefits

  8. You should use your credit card for buying personal goods(assuming you are allowed or your card is a personal card) whenever possible. When you book an airline ticket for e.g., you might get a lot of additional miles, if your card supports that. You may use these miles to upgrade yourself to a business class seat or buy additional tickets for your family members.
    In addition to that a lot of card companies provide additional points for every purchase. You can use these points later on for your own personal use.

  9. Use when you don’t have any spare cash

  10. It is extremely unlikely but sometimes you do not have enough cash to cover all the immediate expenses. A credit card can be used to cover the situation at that time. However you have to be careful not to overuse the card as there are huge fees involved in overdraft. So use your credit card only when situation becomes unavoidable.

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{ 6 comments… read them below or add one }

Veronica Cervera October 28, 2011 at 7:45 pm

Many experts do not advise the use of credit card and has to be avoided at all costs – be it for business or personal use. It does not make sense to use it, the fact that it carries more than usual high interest rates. Carrying one around may not be a good idea as well as one may get tempted to use it inappropriately.


Ramon Morales September 26, 2011 at 3:09 pm

make sure to those credit card holders to pay their bills on time, because if not, your interest will just get bigger and bigger.

credit card is very useful. but we should use it in proper way.


Dan O'Neil July 20, 2011 at 11:21 am

Having done this the wrong way in a previous business and had the wonderful experience of the fall out that comes because of making poor decisions, my current thinking is that we should use cash wherever possible.

If you use any form of virtual payment, you don’t connect to the amount of money you are paying out – if you use cash, you can see it and feel it as you pass it over.

I think credit cards are great for times when you must have them, however if you don’t pay it off, you quickly fall into the trap of increasing the balance… then they offer you an increased limit and you reach that… it becomes a nightmare!

If at all possible use cash, or be super disciplined and pay off the card every month, without fail!


Ashvini Kumar Saxena July 20, 2011 at 2:36 pm

Hi Dan,

Thanks for adding your point of view to the discussion. Credit card can become nightmare if not properly used. Infact once I had huge expenses and little salary to earn, I went through really troubled times. I use cash whenever I can and now I am into blogging full time, I am more careful with it.

Thanks once again for comments. Do keep coming back.


Brian Satterlee May 12, 2011 at 4:16 am

Ok, serious now… Credit cards are best used for gluing together to make model houses. On the other hand, you could use them to pump up your AP if you have a big AR to keep well funded. However, a credit card is a spending tool and not a loan… You should pay them off monthly. Good luck!


Ashvini Kumar Saxena May 12, 2011 at 11:55 am

Credit cards if used judiciously can work great for our business. Thanks for your comments Brian.


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