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Handling Credit Cards Smartly in a Startup

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As a brand new business, it’s tough to get the funding you need. With many traditional business loans out of reach, it’s common to turn to easier credit lines- like business credit cards- to help you stretch your limited funds and achieve your goals. Credit can quickly become a debt-trap, however, if you don’t use it correctly. We’ve assembled some top tips to help you achieve those goals.

Weigh Risk and Benefit

Using a credit card can be a smart business tool, but not if you don’t thoroughly understand the product. Business credit cards offer small startups two key benefits:

  • Quick access to cash in a tight spot
  • The ability to build a credit history

However, a negative credit history is worse than none at all! You will need to pay down your used balance in a timely manner, or run the risk of entering a debt trap. It’s important to look at paying down the whole balance used monthly, rather than the minimum payment, so you don’t get caught paying hundreds (or even thousands) of dollars of interest over time.


It’s also important to realize that one of the reasons credit cards are accessible to higher-risk entities, like startups, is because they carry greater interest rates than traditional loans. It’s always worth looking at some alternative funding sources that could yield a more favored rate. Purchase order financing, for example, exists to help small businesses stretch their funding in that critical gap between ordering products and clients settling the final bill. You might be surprised what you qualify for!

Pay Bills on Time (and Don’t Get Taken by Surprise)!

The single most critical thing you can do to manage a business credit card well is pay the whole amount due monthly. This can easily get out-of-hand if you’re not tracking your spending during the month, and budgeting for it. Rather view the card as a stop-gap way to leverage money fast in a situation where you know the income is coming, rather than ‘free money’ to spend as you want.

Split Personal Expenses

You would be surprised (and horrified) how many entrepreneurs start blurring the line between business and personal. Not only does this muddy your expense tracking, it can easily tip your credit usage over the repayable point. It also makes you look like a disorganized business person who doesn’t take their role as owner seriously. Keep it aside for inventory, quick cash flow correction, and office supplies, not that must-have new toy you spotted.

Find the Right Card

Don’t just settle for any credit card! Make sure you’re choosing one with the right balance of interest rate, annual fees, and other aspects so that it can serve as a tool, not a money sink. You may even want to consider a charge card above a traditional credit card line.


Using a credit card in a startup can be a great way to stretch a limited budget further, and iron out the kinks of incoming cash flow. Provided you keep your credit utilization to a minimum, it will also help you build a solid credit history that will open other doors for your business, too. 


Kossi Adzo is the editor and author of He is software engineer. Innovation, Businesses and companies are his passion. He filled several patents in IT & Communication technologies. He manages the technical operations at

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