The plastic in your wallet can do more than buy your groceries, it could help you grow your business. But before you swipe your credit card, you should probably know the pro’s and con’s.
Differences Between Personal and Business Credit Cards
Before we look any further, we should differentiate between personal credit cards and cards tailored towards small businesses. The main difference between the two is whether the card qualifies under the Credit CARD Act of 2009. The act was put in place in order to protect personal credit card users from frequently changing interest rates and fees. Business cards however, are often not protected under the act meaning that it’s very important to make sure you do your research when choosing a business credit card.
On top of that, different credit cards have differences in the rewards that they offer after purchases. Personal credit cards have several different sets of benefits, ranging from cash, travel, etc. Business cards are more tailored, typically offering rewards focused around business purchases such as office supplies.
Similarities Between Personal and Business Credit Cards
Typically, both cards are lent to an individual, not to the business entity, meaning that individuals can be held personally liable for the debt. Contrary to the names of each card, business cards can be used for personal uses, likewise, personal cards can be used for business purchases. However, this is where the danger begins to arise.
Downsides to Credit Cards
When business owners begin to intertwine business with personal, it leads to confusion when it comes to budgeting as well as blurred the lines between your business matters and your personal matters. If the line becomes too blurred, issues can arise when businesses owe debts due to the fact that your personal goods are not separate from your business activities.
Not only that, “Credit card interest rates are much higher than traditional loans, which can make them a pricey form of debt that will drag the business down during tough times.” Cash Back Credit cards average 21% APR while Business Credit Cards Average 15% APR according to a report. The business credit card rate can furthermore alter without much forewarning as they are not covered under the Credit CARD Act of 2009.
Alternatives to Credit Cards
While credit cards offer easy and instantaneous money, there are definite considerations to be made before using them to finance your business. High APR’s, the risk of blurred lines when it comes to liability, and not having security of the APR with business credit cards should be taken into account when making your final decision. When considering alternatives for lending to help you grow your business, it seems either that they are either not lending or that the APR charged is enormous.
Kickfurther is the best method of obtaining small business lending for product based businesses. With the ability to create your own offer and set your own rate and duration, business owners counter the inconsistency of business credit cards. In addition to this, the rates are typically match personal credit cards with rates from 12% - 20% returned to businesses on Kickfurther however the funds from Kickfurther are completely separate from personal assets and liabilities. Credit cards also offer zero to no exposure to your business, only being viewed by those who qualify your card. Kickfurther on the other hand exposes you to over 5,000 unique individuals with disposable income as your offer funds. "Could not have asked for a better outcome for our first deal. We will definitely be back. This is a great tool to use in a startup's financing arsenal. Thanks!" - Paul Evans. As a final thought, Kickfurther gives business owners the opportunity to support the community that helped them get to the place they are instead of supporting big banks or credit card lenders.