A huge lurer of the farrier lifestyle is uncomplicated freedom–not having to deal with stuff like business suits, power lunches and board meetings. For some shoers, that list includes credit cards, as in “never had one, never will.”
But wait. What if credit cards lined your pockets with a couple hundred extra bucks a year from lower supply costs? What if they knocked a couple grand off the price of a new rig, earned you a cash rebate at the end of the year or earned some free airline tickets? Okay, now that you’re listening...
Good, Bad Candidates
Farriers with the discipline to pay off their entire credit card balance every month should consider buying inventory and making other major purchases on plastic. Today’s ultra-competitive credit card industry caters to consumers. Taking the time to select the proper cards and then using them wisely can pay off big on cash-back offers, incentive programs and extended payment periods.
Farriers who are the least bit tempted to let credit card balances ride for months should stay away from credit. Hardly anybody can absorb the 18 percent or more interest rates that creditors sock to people carrying long-term balances.
Pick A Card
Sifting through the throng of available cards can be painstaking, but is critical. Choosing credit that fits your business style and lifestyle requires reading a lot of fine print on the backs of offers.
Look for customer perks like no annual fee, grace periods and generous rebate offers. Many enticing offers are dressed up nicely on the envelope and in big print up front, only to fall apart under the magnifying glass.
For example, one card offers a 2 percent cash back bonus on all purchases, but further scrutiny reveals that getting the rebate requires carrying a large balance that more than offsets the rebate. That’s a deal all right, but only for the card company!
Be on guard for interest rates that soar after a low-interest introductory period for 6 or 12 months. But remember, on-time payment negates any interest-rate worries because interest kicks in only on overdue balances. When a card company allows, take advantage of the lower introductory rate–usually 6 to 8 percent–and then pay it off and cancel the card at the end of the introductory period before the interest rate climbs.
Get Card Rebates
Cards issued by automakers, airlines and other companies often have the best incentive and rebate offers. Financing a new rig or truck on a car-company card can save thousands over the length of the deal, and using an airline card racks up free flying miles.
Horseshoe supplier Bob Schantz of Foristell, Mo., used a card issued by General Motors to save $2,500 on his new GM pickup truck. The truck’s big price tag earned Schantz the card’s maximum annual $500 cash back rebate over the 5-year financing agreement.
Similarly, farrier Steve Eastman of Great Falls, Mont., flies free to half of the American Farrier’s Association annual conventions he attends thanks to the free mileage earned from horseshoeing and personal purchases made on his Northwest Airlines credit card.
Advanced credit users can mix and match multiple cards for every credit purchase to maximize cash rebates and payment periods. Juggling several cards isn’t as tricky as it sounds, but it does require monitoring and added paperwork.
Don’t walk away from card offers that come close to meeting your requirements. These days many card companies will waive annual fees, lower interest rates several points, raise credit limits and enhance payback programs just to get your business. Drive a hard bargain until a company “bites” on favorable terms.
Whenever possible, charges should be timed to reap maximum advantages from credit cards. Shoeing supply purchases made a day or two after a billing period ends don’t need to be paid for nearly 60 days; the new 30-day billing period plus the ensuing 30-day payment grace period. That’s two months to juggle other expenses and allow your money to earn interest in the bank or money market account. Just be prepared to pay off the whole credit balance when the time comes.
Schantz says you can enjoy the payment flexibility credit cards provide. “If you work with your accountant and figure out how much you need to buy every month or two in order to have your inventory properly stocked and you make your purchases one or two days after the closing date, you’ll have 45 to 60 days to make the payment for these items to the credit card people,” Schantz says. “So you’re able to ride on their money for a while.”
To stop cardholders from riding on their money, some card companies have started charging interest from the date of purchase or 30 days after the date of purchase rather than from the end of each billing period. Make sure you know when your billing period starts and ends so that you have a card that doesn’t charge interest on purchases made during these periods.
Weighing heavily into the credit equation are supplier volume discounts. If your business allows for several major horseshoeing supply purchases rather than many smaller supply purchases, savings from volume discounts made on a credit card can be substantial.
“I like to buy in the spring and then again in the fall,” says Red Renchin of Mequon, Wis. “I empty out my truck and go to the supplier and buy enough supplies to last me through the whole shoeing season. Six months worth of supplies can earn me a significant volume discount, even when it’s a big check to write at one time.”
Even farriers bent on simplicity or steeped in tradition should open an eye to the good business sense of buying on plastic.
Yes, purchasing on credit requires some up-front scouring to get the best deals and adds some monthly paperwork and money management. But nobody is blind to the idea of squeezing more money from what they already earn.