Are credit cards great, or what?


You can use them easily, anytime, for home or office, for whatever you need, and there is no paperwork to fill out, no pre-purchase approval required. For the busy entrepreneur, credit cards make business life easier.



Having at least one credit card is often an essential part of starting and growing a small business. After all, if you consider that the most common funding methods for new ventures are 1) friends, family, and 2) credit cards, having one makes a lot of sense.


There are plenty of other benefits to having a credit card, the most notable of which is ease. Having a credit card means that you do not need to apply for a loan, you do not need to make your case over and over to investors, and you do not need to put yourself out there in front of your friends and family. You can use your credit card whenever and however you’d like.


That said, there are some risks when it comes to relying on credit cards for funding your small business. Avoiding those issues is a matter of using your credit card wisely and carefully.


Having spent a decade as a practicing attorney who specialized in financial law, I have seen it all when it comes to credit cards. The good, the bad, and yes, the ugly. Here are then are some of the best tips I have for using credit cards the right way in business.


1. Avoid the credit card trap: The credit card trap is when you charge things you cannot afford and have no way to pay the cards off. It’s a trap because you can get yourself stuck in a cycle of high balances yet paying minimum payments that last a long time.


You’ve got to have a plan.


Before you make purchases, you must come up with a plan for exactly how and when you will pay off your balance. By getting yourself into a forward-thinking mentality early on, you will save yourself from feeling stuck and stressed later.


Added bonus: By paying the cards off on time per your plan, you will establish even better credit.


2. Use cards with a lower interest rate first: You should be making your biggest purchases on whichever card has the lowest interest rate. You will end up paying less in the long run by doing things this way. A lot of people overlook this strategy, but it will save you big bucks over time.


3. Know your credit card benefits: If you can, find a credit card with benefits that are useful to you and your business, such as travel miles if you travel for business. This will help you cut a few expenses here and there.


4. Be prudent and mindful: The best rule of thumb for having one or more credit cards is to simply be prudent, mindful, and to think rationally. Things can be very exciting when you are starting up your business, which means it can be easy to get carried away. One of the most important things to remember is to never think emotionally; do your best to always think rationally. Otherwise, you may have a hard time distinguishing between things that you want versus things that you need.


Remember, there is good debt and bad debt. Using a credit card to help you launch a business, and with a solid plan to pay off the balances in fairly short order is good debt. Charging a trip to Hawaii on a card with 18 percent interest because you are burned out is bad debt.


We like good debt. It helps us grow our businesses.


We don’t like bad debt because bad debt is, well, bad.



About Steve Strauss


Steve Strauss Headshot New.pngSteven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss


Web: or Twitter: @SteveStrauss

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Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice. Bank of America, N.A. Member FDIC.  ©2019 Bank of America Corporation

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