I put $5,000 of inventory on my business card to restock before the holidays. Card's at 24.99%. If I pay it down $500 a month, what did that stock really cost me?
Numbers shared: $5,000 on the card, 24.99% APR, paying $500 a month, no new charges
At $500 a month it takes 12 months to clear, and that $5,000 of stock ends up costing you $5,665.78. The extra $665.78 is interest, and it comes straight out of your margin.
Financing stock is a cost of goods
24.99% a year is about 2.1% a month. On $5,000 that's $104.13 in interest the first month, before a single item sells.
Every month the balance sits there, interest gets added to what that inventory cost you. If the stock moves slow, the card keeps charging while it sits on the shelf.
That's why the payment speed matters as much as the rate: same card, same stock, different real cost.
| $500 a month | $1,000 a month | |
|---|---|---|
| Months to $0 | 12 | 6 |
| Interest paid | $665.78 | $337 |
| What the stock really cost | $5,665.78 | $5,337 |
Price your products off the real cost, not the sticker cost. Which paydown fits your cash flow is your call.
Ten minutes with your last statement and your sales.
- Add up the interest your card charged last month (it's its own line on the statement).
- Divide it across the units you bought with that card.
- Add that to each item's cost and check your markup still works.
A second set of eyes
SCORE and your local Small Business Development Center offer free one-on-one help with cash flow and financing questions.
How we did the math: Simplified: interest charged monthly at APR/12 (real cards compound daily, slightly more), one APR, no new charges, fees or promo rates, same payment every month.
✓ Reviewed by Censi · Example · Education only
This is education, not personalized financial, tax or legal advice. You make the call; for your exact situation, a licensed pro can confirm.