Taking Advantage of Promotional Rates
One of the easiest places to find funding for your small business is credit cards. Credit cards are a great source of funding for small businesses that require a short-term float. And with numerous promotional low interest rate deals, managed correctly, credit cards can be a relatively inexpensive source of funding.

Credit card companies often offer low interest promotional credit card rates that allow you to maintain a preferential promotional rate until the card is paid off. Why not take advantage of these lower interest rates and transfer your high interest credit card balances to cards with lower rates? The promotional rate credit card then behaves more like a long term low-interest debt than a credit card. Why keep debt on a high interest credit card at 27 or 28 percent interest when you can take advantage of low-interest promotional rates and pay much less?

Using credit cards to float your company and manage debt can be a savvy financial solution, but only with proper consideration. Make sure that you can meet the cash flow obligations to pay off your credit cards, or you may lose valuable promotional rates. When signing on to promotional credit card deals, make sure to evaluate the promotion, taking special care to note the terms and duration of the promotion.

Cash Advances
If you’re small business needs a small amount of cash––say $1,000––taking out a cash advance on your credit card may not make sense. If the cash advance fee is $100, you’ll be paying 10 percent on that money. And if you take out several cash advances, those fees can really add up.

But if you strategize your cash advances, and take out one large lump sum––around $20,000, for example––a $100 fee seems more reasonable. Either way, you’ll need to repay that money in accordance with the terms of the card.

Credit Card Payment and Management
Take advantage of promotional credit card rates, but make sure to keep track of your payment responsibilities. If you fail to keep up with your credit card payments the card company will consider you defaulting on the terms of your card and may remove your promotional rates. Suddenly, what was initially an inexpensive source of funds, becomes an expensive financial burden.

One easy way to avoid defaulting on your credit card payments is to automate your payments. Most credit card companies allow clients to automate their payments. By setting up an automated system in which the minimum payment is made each month, you preserve your low-interest promotional rates and extend the benefit.

Questions about this article? Visit the 247advisor.com forum for free, expert advice.

© Copyright 247advisor.com

Top of Page