The Entrepreuneur and the Unsecured Credit Card
A Credit Article Contributed by Cathy Wilson
Unsecured Credit Cards and Your New Business
Congratulations! You just got funded to open your new business -- gourmet coffee shop or motorcycle chop shop, and the last thing you may be thinking of is unsecured credit cards. Chances are you got yourself a small business loan to get you started, and maybe you think it's going to be enough, but unfortunately it won't be long till you feel you need a credit card, preferably an unsecured credit card. Trouble is, you're already nicely in debt just starting your business.
It's your chance to build superior credit. What you need is a nice fresh little unsecured credit card... a friendly not-too-high credit line... and of course some certainty that you will be able to pay the balance.
Unsecured Credit 101 for the New Entrepreneur
What exactly IS an unsecured credit card, anyway?
Well, if you've been young and poor for very long, you've probably tried applying for a credit card already. If you have really bad credit (like you've missed a car payment or run up bills on another card), you may be asked to put some of your own hard-earned money into an account before you can get a card; that is a secured credit card.
The Main Difference between Secured Credit Cards and Unsecured Credit Cards is That You Put Money into an Account Toward the Secured Card.
It is a decent way to build credit. But an unsecured credit card is just a plain old credit card. Often it won't have a very high credit line on it, maybe as low as $500 available.
Why an Unsecured Credit Card If the Available Credit is So Low?
You do this so you can build good credit for your fine new business and here is how: you get this unsecured credit card and then YOU PAY OFF THE BALANCE EVERY MONTH.
It's easy! It's the easiest way in the world to build yourself in your new business some great credit. After all, you don't want to start your career in a deep hole of debt. With your unsecured credit card, you can charge a few things, pay the bill in full every month, and build up good credit. THAT's why you want an unsecured credit card.
Unsecured Credit Cards in the long Run
What you are really after is the ability to pay your way without running yourselves into the ground in debt. Still, you can use an unsecured credit card to help your new business become established. For example, it's the first of the month and you've paid the rent and utilities, but you don't know what is coming next. Just use your brand-spanking-new credit card to help with the day-to-day in a small and modest way. THEN when your first orders come in, pay that balance right off.
Unsecured Credit Cards As "Insurance"
And don't run up any more credit card bills until you are absolutely sure you can pay 'em off. Use that unsecured credit card for incidentals but only when you know the income from your new business will take care of it.
Pitfalls of the Unsecured Credit Card
You've got to realize that 50% of all new businesses fail because of too-high debt obligations. It's a nasty way of starting your future. Be smart. Think of your unsecured credit card as a tool to build good credit. It will stand you in good stead for your future.
