Rutgers–Camden Finance Expert Dr. Shweta Srinivasan Shares Insights on Credit Card Strategies for Small Businesses
Shweta Srinivasan, Ph.D., Assistant Professor of Finance at the Rutgers School of Business–Camden, recently shared her expertise with WalletHub, offering guidance on how entrepreneurs can use credit cards strategically to finance their businesses.
In her expert commentary, Srinivasan explained that business credit cards can serve as an important source of short-term financing, particularly for new business owners who may find it easier and faster to qualify for a credit card than a traditional business loan. Credit cards can provide valuable liquidity for unexpected expenses without requiring extensive collateral.
However, she cautioned that credit cards should be used thoughtfully. Because they typically carry higher interest rates that compound daily, they can become significantly more expensive than traditional business loans, which generally offer lower rates and monthly compounding. She also noted that credit card interest rates can fluctuate with changing economic conditions, making borrowing costs less predictable. Missing payments can further increase interest rates and create a cycle of mounting debt.
Srinivasan also highlighted the benefits of introductory 0% APR offers, which many business credit cards provide for 12 to 18 months. While these promotions can be advantageous, she emphasized the importance of planning ahead for when the promotional period ends, especially if significant purchases coincide with the return to standard interest rates.
Ultimately, Srinivasan advises business owners to match their financing strategy to their needs. Credit cards can be an effective solution for short-term or unexpected expenses, while larger, planned investments are often better financed through traditional business loans that offer more competitive and predictable borrowing costs.
Congratulations to Dr. Srinivasan on being recognized as a trusted financial expert by WalletHub.