Credit card usage in the United States is substantial Many s

Credit card usage in the United States is substantial. Many startup companies use   E credit cards as a way to help meet short-term financial needs. The most common forms of debt for startups are use of credit cards and loans from relatives.
Suppose that you start up Fantastic Sandwich Shop. You invested your savings of $20,000 and borrowed $70,000 from your relatives. Although sales in the first few months are good, you see that you may not have sufficient cash to pay expenses and maintain your inventory at acceptable levels, at least in the short term. You decide you may need to use one or more credit cards to fund the possible cash shortfall.

Instructions
(a) Go to the Internet and find two sources that provide insight into how to compare credit card terms.
(b) Develop a list, in descending order of importance, as to what features are most impor- tant to you in selecting a credit card for your business.
(c) Examine the features of your present credit card. (If you do not have a credit card, select a likely one online for this exercise.) Given your analysis above, what are the three major disadvantages of your present credit car

Solution

a.Go to the Internet and find two sources that provide insight into how to compare credit card terms.

Ans:

1.Cash Limit:

First We need to compare the Maximum amount that can be given by to us ,The credit limit granted by issuer must be sufficient for our needs , Compare the different cards and choose the best among the all.

2.Interest Rate:

We must see the second objective is to reduce the maintenance cost or interest burden when making the payment after the due date. t is playing the major rule for using the credit card as some banks charging more interest depends on the card

3.Repayment Period:

It is very Important in order the use the credit card because we need the cash to repay the amount and we use based on the expected cash flows.

b) Develop a list, in descending order of importance, as to what features are most important to you in selecting a credit card for your business.

Ans:

Whenever we choosing the credit card we must compare the different features and benefits from one to another card in order to use the card cost economically

The features and Benefits are

1.It is safer than cash

2.Earn Reward Points

3.Enhance credit rating

4.Use worldwide as a single card and single pay

5.Use Now and Pay later

6.Free Interest Period

7.Repayment period

8.Minimum repay balance

9.Amount granted

10.Interest Rates

c) Examine the features of your present credit card. (If you do not have a credit card, select a likely one online for this exercise.) Given your analysis above, what are the three major disadvantages of your present credit card

Ans:

Special charges and Other fees:

Credit card issuer charging special charges heavily such as conversion of used amount into Equal Monthly Instalments charging 3% as Processing fees and Annual Maintenance Fees

Credit progress damage:

Failed Credits will leads damage the credit report even if it is mistake of Issuer as result of untimely credit

Paying High Rate of interest:

Card issuers charges more interest compared to other normal Loans

Fraud Cases:

Sometimes it is hacked by unknown persons which results in serious cases and very tricky situations to get back the money and sometimes are non recoverable. It will eat huge time both mentally and Physically.