Why entrepreneurs should use cards over cash

Evan's wallet

This post is brought to you by the new American Express Business Gold Rewards Card. Views below are 100% my own.

I love my credit card.

Whenever I’m paying for something I always choose credit over debit, cheque, or cash.

I actually very rarely carry much cash on me and tend to avoid places that don’t accept credit cards.

Here’s why:

1. Bookkeeping

This is the most important reason for me.

I value my time and you should too.

My bookkeeping takes me 15 minutes every quarter.

Because all my expenses are on my credit card I just have to log into my online banking, download my statements, and import them into my accounting software.

The software automatically recognizes and categorizes all the expenses from places I’ve already bought from before (at least 90% of my purchases) and all that’s left is for me to assign categories to the suppliers I’m using for the first time.

Huge. Time. Saver.

2. Cash Flow

I don’t recommend funding your business on credit cards.

The interest rates are crazy high and you should pay off the full balance every month.

You should only spend what you know you can afford and pay back.

That being said, why not give yourself an extra month to pay it back?

Cash flow is more important than profitability for startup entrepreneurs.

It’s easy to be profitable and go bankrupt because your customers are taking too long to pay you.

Your expenses are going out and the revenue isn’t coming in fast enough.

If you pay off the full balance each month there is no financial penalty.

So give yourself an extra month of cash to ease the burden!

3. Rewards

Most credit cards have a rewards program attached to them.

Here’s a chance to get free stuff when you’re buying the things you need to buy anyway.

I’ve gotten free trips, extra cash in my pocket, free insurance packages, and lots of other bonuses just from making purchases on my credit card.

Every time I make a vacation plan a good chunk (or all) of it is already paid for thanks for the rewards I’ve earned on my credit card.

4. Credit Score

Having a credit card and paying off the full balance every month does wonders for your credit score.

Last December I sold my house and moved into a new apartment – I was able to get a 10% discount on my monthly rent because I have an exceptional credit score.

The owner said he’d rather have a great tenant who is reliable and who he knows will pay than worry about sketchy tenants who might skip town on him.

Thank you credit cards!

:)

I’d honestly use credit cards for all my purchases just for the bookkeeping advantage but the other bonuses make it a no-brainer.

How to Choose

Here are a few things to look at when picking your next credit card:

a) Import / export statements

I haven’t really seen a credit card that doesn’t allow you to export your statements and most software packages allow for all the major credit cards… but double-check just in case.

b) Credit limit

Understand how much you need and how much the companies are offering. You can negotiate a higher limit if you have a good credit history. If you don’t it’s time to start building it up! This will help you in both your business and your personal life. Note: Some credit cards have a dynamic credit limit – you don’t have to negotiate, it adjusts automatically based on your spending habits.

c) Rewards

Depending on how much you’re spending and the lifestyle you lead there is a rewards program for you. Some are geared towards getting cash back. Others are for travel. Others are specifically for small business owners. Do your homework and find the one that’s best for you.

d) Fees

Some credit cards come with annual fees. For me, the fee is the last thing I look at. I know I’m getting way more value in return than what I’m paying. I also always choose credit cards that have annual fees. The benefits you get with them are just way too valuable. It’s spending pennies to get dollars back.

e) Interest rates

I’m hesitant to even include this on the list. The interest rate shouldn’t matter because you shouldn’t be keeping a balance. Pay off your credit card bills in full every month and don’t spend more than what you can afford. Another option could be to go with a charge card where you can’t carry a balance from month to month.

What do you think?

How do you use credit cards?

Do you have a question about credit cards that I can help answer?

Leave a comment below! I look forward to hearing from you.

Cheers,

Evan

Believe.

Sponsored by American Express

This post is sponsored by American Express. They reached out to me because they wanted my thoughts on credit cards and I thought it would be a valuable post to share with you. All the views expressed above are my own and they didn’t tell me what to write. I really do love credit cards as a tool to help entrepreneurs and I use mine daily.

The Newly Refreshed American Express Business Gold Rewards Card

The newly refreshed American Express Business Gold Rewards Card provides unique and flexible ways to make your business spending work for you. You can earn 1 Membership Rewards point for every dollar in purchases charged to your Card. You can also earn 1 extra Membership Rewards point for every dollar charged to the Card at the 3 suppliers you pick from the Your 3 Suppliers Program for Business list of participating American Express merchants. Learn more by visiting this website.

About the Author

I #Believe in entrepreneurs.

3 Responses to “Why entrepreneurs should use cards over cash”

  1. I agree and very well said. To be honest cards have pretty much took over in my opinion as well. I wouldn’t be shocked to see cash obsolete in the future. What do you think?

  2. This is one of the most interesting and valuable posts on credit cards I’ve read, though I’m not surprised it’s from you.

    I particularly liked your take on easy bookkeeping and interest rates not mattering if you develop the habit of promptly taking care of the balance and living within one’s means.

    Interestingly, one of my clients just told me the story of why he uses Amex over other cards, and the story went like this:

    “Well, I signed up because every other place makes me jump through a lot of hoops to get a classy card with my *business name* on the card, and that makes a huge difference when you’re paying for things.

    A company branded card generates buzz and interest and does some marketing for me every time I use it.

    And I stayed with them because their customer service for businesses is great. Once I went to rent a car and I wanted it to go on my ‘business’ card, and I didn’t realize there was an up-front deposit on the car – it caught me by surprise when my card was near it’s limit. I made a quick call to Amex on the spot, and they extended my limit immediately, and I got the car and continued smoothly about my business.

    That’s why I love Amex for businesses.”

    The story above really opened my eyes to some of the positive sides of American Express, where I’d never even considered them before… and on the *same day* my client told me this story, you post an article about credit cards.

    It’s a sign! lol!

    #believe

  3. […] Because all my expenses are on my credit card I just have to log into my online banking, download my statements, and import them into my accounting software.The software automatically recognizes and categorizes all the expenses from places I’ve already bought from before (at least 90% of my purchases) and all that’s left is for me to assign categories to the suppliers I’m using for the first time.Last December I sold my house and moved into a new apartment – I was able to get a 10% discount on my monthly rent because I have an exceptional credit score.The owner said he’d rather have a great tenant who is reliable and who he knows will pay than worry about sketchy tenants who might skip town on him. Read full article […]

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