When you’re a young entrepreneur with plenty of business plans for the near future, it’s a necessity to have your own credit card. However, it’s not all sunshine and rainbows when it comes to credit cards. Who doesn’t know a friend or family suffering from financial debt?
First-time cardholders or not, below are simple guidelines to remember and live by for both business and personal use:
1) Open a current account: To use your credit card more efficiently for business purposes, opening a current account in your bank is essential. This gives you easy banking access, and hassle-free transactions whenever and wherever you are.
2) Pick the right kind of credit card: Banks offer different types of credit cards, so make sure to review specifics and only pick the one that works best for your business, and not for your personal use. Consider long-term funding.
3) Maintain a good credit score: You might not need a loan now, but if you’re an entrepreneur who’s starting literally from scratch, the best way to make sure your application for a loan will run smoothly, is to ensure an excellent credit score. This is proof that you’re always able to pay back what you owe. That is why you have to:
4) Prioritize monthly payments: Don’t slack on this. Ever. The pit of debt is so easy to fall into, so avoid it the best you can. Dodge the debt bullet and pay—even just a little—above the minimum requirement fee every month.
5) Keep banking statements: If you receive these via snail mail, compile in a folder and store that folder in a safe place. If you prefer receiving it through email, make sure you actually save a copy and keep a record of your statements. Organising your statements will help you keep a better eye on your money. You can also spot extra costs or additional charges here so it’ll be easier for you to control your spending next time.
6) Minimize leisure spending: Your spending habits should be in line with the way you manage your money for your business. Don’t use your credit card for things that are considered “wants” and not “needs.” Start working on ironing out your own spending habits while it’s still early. If you think it’ll prove helpful, you could download a personal finance app for your smartphone to track your income and expenses.
7) You’re NEVER too young to be Financially-Savvy: Taking control of your credit card use, and finances in general, is something that you do NOW—not tomorrow, not next week, not after you’ve entered and triumphed over a midlife crisis. The earlier you build strong money principles and stick by them, the better your financial situation will be as you go forward in your personal life and future business ventures.
Your credit card can be your best friend if you treat it wisely. Credit card use doesn’t have to be risky, and you certainly won’t have to fall into the same trap as some people you know. Teach yourself to use your little plastic card to your advantage. This is also a chance for you to prove you are a wise spender, which bodes well for your businesses and future, as a young entrepreneur.
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This article is exclusively written for RaketScience.com by MoneyMax.ph, the Philippines’ leading financial comparison portal which helps Filipino consumers make the right financial decisions as they settle on the best credit card, home loan, broadband plan, and more—fast, comprehensive, and free. Visit Money Max blog for more financial tips and advice.
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