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Credit Card Financing: Proceed With Caution

One potentially risky way to finance your business is to use your personal credit cards.

The obvious drawback is the high interest rate; if you use the card for cash advances rather than to buy equipment, the rates are even higher.

Some entrepreneurs take advantage of low-interest credit card offers they receive in the mail, transferring balances from one card to another as soon as interest rates rise (typically after six months). If you use this strategy, keep a close eye on when the rate will increase. Sometimes you can get the bank to extend the low introductory rate over the phone.

Experts advise using credit card financing as a last resort because interest rates are higher than any other type of financing. However, if you are good at juggling payments, your start-up needs are low, and you are confident you'll be able to pay the money back fairly quickly, this could be the route to take.

Excerpted from Start Your Own Business: The Only Start-Up Guide You'll Ever Need

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