Credit Cards

Tips on Using Your Credit Card
Whoa…is what you’re probably thinking after reading the headline.  I’m not going to use my credit card to invest in real estate!

But wait, there are ways to use this powerful form of leverage responsibly and profitably.

First of all, you need to be absolutely clear about your strategy and how the credit card will be used.  Meaning, this should be used as a short term form of financing.  Compared to 15% plus 3 points for Hard Money, or 9-10% on a Heloc, a low interest credit card can actually be a cheaper form of credit.

Here are a few pointers to keep I mind regarding the use of credit cards:

1.  Know the interest rate.  Call the company.  Sometimes you can get a promotional offer for a cash advance with a fixed rate for the life of the loan.  Other times you can get a low intro rate.  How about 0% for 12 months.  If you pay the card off in that period, you essentially have a free loan!
2.  Make sure you understand the minimum payment.  Even if you have a  0%, the company will usually require you to make a 2% payment of the total balance.
3.  Know the terms of the offer.  If you are late on the payment, you may end up with the rate jumping to the high teens or even 20%!  Make sure you keep track.
4.  Make sure you don’t have any existing balance on the card.  The card company will require you to pay on the highest interest portion of the balance first. So use a “clean” card.
5.  Make sure you know your numbers and have them factored into the overall deal.
 
Using a credit card can be a very smart way to finance rehab costs, or even down payment money.  Just make sure you have solid financial practices and know when and how you plan to pay off the card.

One smart way to use credit is to get Corporate Credit Cards for business use.  To learn more about Corporate Credit, and how you can access $200,000 in credit, Click here for Access.

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