Using credit cards to start a business?

andy013

Hey, recently I've been thinking about using credit cards to start my own business. I'm thinking about getting out 10 credit cards with a £5000 limit. This will give me £45000 to start my business. I will ask each card to be paid off at specific dates throughout each month. I can transfer the extra 5k between them and keep them all paid until I make enough money back through my business.

My question: Is this possible? Are there any problems with this idea?

asandwhen

You cant pay credit card bills by credit card usually - If you apply for too many cards at the same time you will damage your credit rating - It is unlikely that you will get 10 cards all offering you 5k

andy013

If I apply for all the credit cards at the same time then I'll get them (I'll apply for around 30 and then hopefully 10 will accept) - I know my credit rating will be damaged at first but by paying off the credit cards each month then my credit rating will improve.

wigginsmum

Why not get a business loan instead? You'd be daft to attempt this with the credit cards; I can see it getting REALLY icky.

andy013

I would never be accepted for a 50k loan. Plus, this way I can wait as long as I like before paying it off, with no interest

wigginsmum

I think you'd be heading for disaster if you do this, but it's your choice. How are you going to raise the minimum repayment each month? If I were you, I'd look at why you wouldn't be accepted for a loan and consider carefully if it's because your plan isn't viable.

andy013

I don't think I'd be accepted for a loan because of my age (19) and my current employment status (part-time + full time student). Every month I would pay each 5000 with another card and then use that to pay the next card. I know it sounds crazy, I've been thinking about it for a while and I want to be absolutely sure before I take the jump.

wigginsmum

It doesn't work like that; you can't pay credit cards with credit cards. You'll need a minimum of £1000/month clear in cash to meet the repayments. Don't do it - you're at the start of your life and you don't want to screw up your credit score for pie in the sky before you've even started. Just enjoy your time as a student - time to fret about business when you're in the real world

andy013

I could take the money out in cash advances and then pay the credit cards back that way.

I knew someone would bring up the age thing and that's why I didn't mention it in my first post. I appreciate your advice but it's my decision to do what I want with my life.

wigginsmum

You pay the highest possible rate of interest on cash advances and they are the section of your debt which gets repaid last, thereby incurring the most possible interest and profit for the CC companies. And once the interest free period is over and you can't balance transfer any further, you'll really be up there without a paddle.

Look, it's no skin off my nose what you do - you're right, it's your life. You asked for an opinion on potential problems; I gave it. As someone who has had skyhigh credit cards in the past, do you think I might know a little bit of what I'm talking about? I'd say exactly the same if you were proposing this at 40 - it's not an age thing, it's a common sense thing.

andy013

Okay, let’s say that I get some cards that are interest free on cash advances.

Once the interest free period is over it won't matter. I will be paying off ALL of what I owe each month, then withdrawing it again to pay off all of the next card.

wigginsmum wrote:

you're at the start of your life and you don't want to screw up your credit score for pie in the sky before you've even started. Just enjoy your time as a student - time to fret about business when you're in the real world

You'd say this to a 40 year old!? Btw, I found your "in the real world" comment offensive. Just because I'm a student doesn’t mean I don't live in the real world and I don't know what's going on around me.

I appreciate that you might have had bad experiences with credit cards in the past. I understand that you are advising against it and as I said I fully appreciate your advice. Obviously as someone who has had debt troubles you're not going to advise anyone to take out 10 credit cards. Look, I don't want you to start convincing me that it's a bad idea based on your personal experiences. I want the facts.