Listening to a lot of successful business people they speak a lot about “leveraging your money” not having it tied up in business expenses and financing things that can be financed reasonably. Our last 4 years in business everything has been paid up front (which im sure many of you including me do) but with getting tons of 0% APR 15mon cards it has got me thinking about how smart business owners may choose run their companies. Do any of you guys use these cards to their advantage to “leverage their money”? Not only does it keep you from having your money tied up, it helps build your credit score!
Doing this can be a HUGE ADVANTAGE to your business.
Doing this can be a HUGE DISASTER to your business.
It all depends on you.
If you’re honestly and truly meticulous regarding your record keeping and finances. Do it. But do it slowly Start with 1 or 2 cards. But check the accounts online every day. Open every piece of mail they send. One late payment or one oversight regarding the terms of the agreement, it can go from good to bad quickly. If the terms are violated any interest charges are usually applied retroactively to the start of the 0% interest promotion. And they’ll jack the rate up to the highest percentage allowed by law.
Basically, you don’t want to put a $10K capital purchase onto a card at 0% and then get surprised by a technicality and suddenly that $10K is paying 28%.
Since you’re accustomed to paying cash for everything, if I were in your shoes I’d not only look for cards with 0%, but also cards with rewards program. Most cards don’t accumulate interest if the balance is paid off within 30 days. If you can find a card giving 2% cash back on purchases, use it for everything, and then pay it off immediately. $5K a month in purchases (of anything - not just business expenses) puts $100 a month in your pocket. It’s free money IF you can play by their rules.
Personally I use 1 card almost exclusively. I put everything I possibly can onto it, and then every day or 2 I log into the site and pay off what I’ve charged. Just for the cash back.
I once had a boss that would use his credit cards, pay them off before interest showed up, and cash in the rewards points for gift cards.
He would then do a raffle the last friday of every month with all the employees for the gift card. He got stuff like Red Lobster, Movie passes, dunkin donuts, outback steakhouse…etc. He would also give them out at holiday parties, and if you had done something outstanding. If you think about it, it didn’t cost him a thing, but we all thought he was very generous and it was a great boost for morale.
From time to time there are cards and offers that can be exploited for unbelievable results. These loopholes are eventually closed, but until they are it’s a lot of fun.
I didn’t pay for airfare for years just by using points from cards that cost me next to nothing to accumulate.