How can credit cards be used to start a business?

Expert Solution

Credit cards are the short term debt instruments offered to individuals and corporates based on the credit worthiness. The limit of usage shall be pre-fixed in this. The credit period differs from bank to bank and depending on the credit worthiness.

Though Credit cards are not a straight good source for funding a start of business, however, these shall be helpful incase of lower capital requirement. Also, the individual/firm on which the credit card is issued should ensure to maintain the creditworthiness.

The funding can be taken immediately and can be used for the starting of the business; However, one should keep in mind that the credit period on credit cards shall be very minimum, say 45 days to 60 days. Hence, it is very important for the business, to start generating cash flows from atleast first month, to repay the debt; Generally, the credit cards shall offer a benefit of making minimum amount as prerequisite and balance outstanding amount can be carried forward to a later period at a chargeable rate of interest depending on bank to bank. This gives a breathing space for the business, to remit the minimum payable amount and start repayaing balance depending on the cash flow, however, with additional interest component. Any default on credit card payment shall have significant impact on the creditworthiness and is a penable offence. Hence, the cash flow monitoring is of utmost important to ensure debt servicing.

jeff jeffy answered 1 year ago

Presently cyber crimes related to used of credit cards is increasing. Banks issued the credit cards without...

Presently cyber crimes related to used of credit cards is increasing. Banks issued the credit cards without much knowledge of financial position of the user. Later such people unable to pay the bill and default. Therefore, Credit Cards should only be restricted to people with income higher than the national average. Please discuss.

How can a small business check their credit?

which type if business would: small business loans be best suited for? business credit cards be...

which type if business would: small business loans be best suited for? business credit cards be best suited for? venture capitalist investment be best suited for?

Credit cards a. are a method of deferring payment, and people who have credit cards hold...

Credit cards a. are a method of deferring payment, and people who have credit cards hold less money on average. b. are a method of deferring payment, and people who have credit cards hold more money on average. c. are a medium of exchange, and people who have credit cards hold less money on average. d. are a medium of exchange, and people who have credit cards hold more money on average.

6. Special types of bank credit cards Many credit cards offer features that are tailored to...

6. Special types of bank credit cards Many credit cards offer features that are tailored to users’ preferences and lifestyles. In the following situations, identify which credit card is a good choice to achieve the user’s goal. Special Bank Credit Cards for Different Lifestyles and Preferences Carlos has a history of charging a lot on his credit card and doesn’t carry a high monthly balance. Carlos loves cars and plans to trade in his cars every two years, if not...

Suppose that there are 8 blue credit cards, 6 red credit cards and 4 blue debit...

Suppose that there are 8 blue credit cards, 6 red credit cards and 4 blue debit cards in a box. It is known that color and card type are to be independent when a card is selected at random from this box. a) How many red debit cards must be present? b) Suppose that, 6 cards are randomly selected in a row with replacement. What is the probability that 2 blue credit cards and 2 blue debit cards are selected?...

You have a friend that is about to start a small business using a credit card. They...

You have a friend that is about to start a small business using a credit card. They understand nothing about accounting and think they will have all of the information they will need to manage the company by keeping track of their credit card balance. Please explain to them what type of accounting information they will need to help them run the business.Be sure to use the terminology and information from the textbook

How can probability distribution be used in business management of firms?

Recording credit card and debit card sales Restaurants do a large volume of business with credit and debit cards. Suppose Summer,

Question Recording credit card and debit card sales Restaurants do a large volume of business with credit and debit cards. Suppose Summer,Sand, and Castles Resort restaurant had these transactions on January 28, 2018: National Express credit card sales $ 10,800 Value Card debit card sales 10,000. Requirements1. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee and deposits sales net of the fee. Journalize these sales transactions for the restaurant.2. Suppose Summer, Sand, and Castles Resort’s processor charges...

1. The business credit card is being used for business and personal expenses; list the business...

1. The business credit card is being used for business and personal expenses; list the business and then the personal expenses from the statement. Address the accounting and ethical reasons for this separation of expenses. 2. Dave takes advantage of cash discounts from vendors whenever possible. Address the business reason for this decision. Then, address the ethical ramifications if Dave would take the discount when paying outside the discount period.

Question