Using a credit card?

[mikerichx3]

I was wondering since I don't have alot of capital and etc. Should I just use a credit card for customers parts for repairs. Is this a good idea, I really don't want to use my personal money that I need from day to day. Please help

[Harold Mansfield]

I was wondering since I don't have alot of capital and etc. Should I just use a credit card for customers parts for repairs. Is this a good idea, I really don't want to use my personal money that I need from day to day. Please help

You shouldn't mix business finds with personal funds anyway. If you have a business credit card I don't see the issue.
Even if you're using a personal credit card, just keep track of how much you're "Loaning" the business.
If you're running it as a Sole proprietor, still not seeing the issue.

When you're just starting out you do what you have to do, just keep records of what you're doing.

[Freelancier]

Just make sure you re-sell the part with a markup that accurately reflects the cost of the capital and the risk involved. A credit card may require a payment within 20 days of the purchase but the customer may not pay you for 40 days. There's a cost to that you have to include in your markup (in addition to the profit you want to make on the transaction).

[MohrCapital]

Hi Freelancer! Im new here, but I can definitely answer your question. Credit cards, or lines of credit, are essential to the success of any business. Every major player in any industry funds every new venture through business credit. What you should do with your business depends on your situation. Answer a couple of questions for me so I can help you out a little more:

1) What formation is your business?
2) Do you have business credit separate from your personal credit?
3) What interest rate does your credit card charge?
4) How fast will you recoup the money to pay back the debt? (Faster isn't always better depending on your goals)

[2for1Creditlines]

I was wondering since I don't have alot of capital and etc. Should I just use a credit card for customers parts for repairs. Is this a good idea, I really don't want to use my personal money that I need from day to day. Please help


If you know for a fact that your customer will pay as soon as the job is done, (and as suggested, you should mark up the cost) and you know you will pay your bills on time (and only YOU truly know this), then yes you should. This will actually benefit you in the long run as you are buying large items and paying them back on time, which builds up your credit history, makes you look like a good bet to the bank who issued the credit card, and will cause your levels to increase. If possible try to keep the total balances below 40% at all times, but if you can't in the beginning, that's fine.


The goal is to be able to go to a bank and obtain a line of credit, so you have dedicated capital for your business.
To do that, you will need to show a good payment track record (preferably no late payments), a history of large purchases and timely payback.


Access to a large amount of credit (or trade lines)
1 credit card would be 1 tradeline
3 credit cards is 3 tradelines
...the more you have access to, the more you will receive (which will only come when you make big payments and pay back on time)

A debt to credit ratio under 40%, preferably under 20%
Fewer than 7 credit inquiries in the past 30 days
Credit score of 650 - 700+

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[bgallegos]

If you can't pay back that credit card right away, I wouldn't use it for financing your business. One of the highest growth loan types from Lending Club is credit card consolidation loans. Interest rates on credit cards are astronomical, so if a business accumulates high credit card balances they usually take out a loan to pay that back, since the loan has a much lower rate than the card.

If you find that you're accumulating balances, why not take out a business loan in the first place so that your company has the working capital that it needs? You can usually pay back that loan early without penalties if you choose.


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[turboguy]

If you need to use the credit to obtain the parts then I would say no. If you carry a balance on your credit cards I would say no.

If you can pay the balance in full even it a customer takes a little extra time then I would say yes. I would however not mix personal and business on the same card. I don't think it is that big a deal if it isn't a business credit card but do make it a separate card.

Now in answering this let me say that we used to pay everything we buy with checks. Now we pay everything possible with a credit card. We do pay off the cards in full each month. NOW HERES WHY. The cards we use have 1% cash back. The first year we started doing this we got $ 8,000.00 in cash back.

[Fulcrum]

Now in answering this let me say that we used to pay everything we buy with checks. Now we pay everything possible with a credit card. We do pay off the cards in full each month. NOW HERES WHY. The cards we use have 1% cash back. The first year we started doing this we got $ 8,000.00 in cash back.

Must be nice. My cash back card is capped at $300.00 per year.

[Freelancier]

The cards we use have 1% cash back. The first year we started doing this we got $ 8,000.00 in cash back.Check out the CapitalOne SPARK business card, 2% back on everything for $60/year and I haven't found a cap yet. Everything that's not gas or travel goes on it if I can help it.