SAN MATEO, Calif., May 24, 2018 /PRNewswire/ -- On average, small business owners use twice as many personal credit cards than consumers, according to new data from Nav. Entrepreneurs also have nearly double the total credit limit when compared to consumers.
Nav, a free small business credit and financing platform used by over 380,000 small business owners, analyzed anonymized customer data to compare credit card usage between business owners and consumers.
According to its data from May 2017, Nav small business customers have an average of 4.78 personal credit cards. Meanwhile, Nav's consumer customers had an average of 2.32 credit cards, which is consistent with most data that shows the average American has two to three credit cards. The average total credit limit for business owners was $35,291 versus $18,401 for consumers.
"It can be hard for young businesses to get funding, so some small business owners are using personal credit cards to fund their startup costs and operations, but this can be a dangerous practice," said Gerri Detweiler, Nav's Education Director. "Maxing out your credit cards can kill your personal credit scores and you're missing out on an opportunity to build your business credit history."
Using personal credit cards to fund business expenses can wreak havoc on cash flow. According to CreditCards.com, the average credit card interest rate is 16.68%. And, if borrowers just pay the minimum amount due, the costs can really start to add up.
According to Detweiler, a good strategy for saving money and building business credit is to transfer business expenses from a personal credit card to a business credit card with zero percent APR on balance transfers.
Nav analyzed anonymized personal credit card usage data from 143,004 of its small business customers and 128,281 of its consumer customers. Business credit cards were excluded from the data.
Nav helps business owners get more funding, lower their costs and save time so they can create the business of their dreams. It gives free access to business credit scores, cash-flow analysis, and tools to help build business credit. Nav's online marketplace offers more than 100 financing products, including loans and credit cards, and uses a lender-neutral algorithm to help business owners find the best financing options for their needs before they apply. The company has offices in Silicon Valley and Salt Lake City. For more information visit: nav.com.