Business trips, subscriptions, money-making projects, some business expenses just can’t wait. But sometimes a cash flow shortage prevents you from making those necessary purchases – you know, the ones that will help grow your business, or simply keep it running smoothly.

That’s why we built a new kind of credit card just for the self-employed. Flexible repayment options let you manage your expenses better than ever. However…

With great lending power comes great responsibility.

To help our customers avoid debt traps, we’ve developed some unique features that keep you in control of your borrowing. Let’s take a moment to look at how to use a credit card responsibly and how Holvi helps you make informed decisions around borrowing money.

💳 Do freelancers need a separate credit card for business?

Maybe you’re already using your personal credit card for business purposes. While this is acceptable in a pinch, it doesn’t pay in the long run. How come?

By making business purchases on your personal credit card, you risk blurring your picture of business performance. When running the numbers and doing the books, you’ll be toggling back and forth between accounts and transfering data. This complicates an already difficult process.

Not only this, but your understanding of your own personal finances also suffers.

By paying expenses on a separate business credit card, you simplify bookkeeping and boost your understanding of business performance. No more twisting and turning money trails between your personal and business accounts.


Pro tip: How Holvi’s credit card makes bookkeeping easy

When you use your Holvi credit card, you’ll get a notification prompting you to snap a photo of your receipt and categorise the transaction. You can add VAT details and notes for tax time. Holvi stores these transaction details for easy accounting and tax returns.


📈 Smart credit card spending calls for planning

Even if crunching numbers isn’t your passion, it’s an essential part of running a successful operation.

  • What is your monthly income?
  • What about average monthly expenses?

Using a credit card becomes more fiscally responsible when you keep a close eye on income and can accurately estimate your revenue.

Actually, this is how we determine your eligibility for a credit line.

How banks determine your eligibility for a credit card

Ever wondered how banks decide what kind of credit offer to make you? When it comes to business credit cards, banks use something called an Expense to Income ratio (ETI). Although ETI is not the only factor used in determining eligibility, it’s a good starting point to understand the reasoning behind responsible credit.

Here’s how it works in a nutshell.

Assume you have an average monthly income of €4,000 and your average monthly expenses amount to €2,500. You’ll have an ETI ratio of 62.5%, because:

ETI: 2,500 / 4,000 = .625.

You’ll then have €1,500 left over for ‘other’ expenses. With these figures, you could happily apply for a credit line of €1,000 on a 1-month instalment plan with Holvi. After all, we know that whatever happens you’ll be able to repay at least €1,000 each month.

If you opt for a 3- or 6-month instalment plan, even better! It just means you’ll be spreading that €1,000 repayment over a longer period. Safe.

Your Debt to Income ratio (DTI) in this case would be 25%, because:

DTI: 1,000 / 4,000 = .25.

This is well within a responsible range – no chance of you defaulting on a credit payment. Generally speaking, most lenders do not allow a DTI above 36%.


Pro tip: Track income and expenses with Holvi

When you use Holvi for income (invoicing) and expenses (credit and debit card purchases), we show you a balance forecast based on upcoming ins and outs. This helps you pin down any fixed costs – like rent, utilities and SaaS subscriptions.

You can easily view your company’s financial situation, helping you make smarter borrowing decisions.


⚖️ How you repay your credit balance

When using a credit card, another core planning element is how you repay your credit balance.

Holvi offers a hybrid credit card, pairing the best parts of instalment credit and revolving credit. This is a unique offering – and we’ve developed it for a reason.

Our responsible credit card model

With Holvi credit, you can borrow money and repay it over time with scheduled, periodic payments – or you can pay it off by the end of the month, interest-free. This credit type involves the gradual reduction of your balance and eventual full repayment, ending the credit cycle.

Traditional instalment credit gives borrowers a lump sum, and fixed, scheduled payments are made until the loan is paid in full.

But here’s the twist!

Holvi credit cards also come with a personalised credit line, something usually associated with revolving credit cards. We offer credit lines between €1,000 – €5,000, based on your creditworthiness (explained above) and business needs.

Whenever you repay your credit balance, that amount becomes instantly available again. You can keep using your card to pay expenses and meet business needs, as long as you do not exceed your limit. What’s a key benefit of this model?

Predictable payment, easy budgeting

The biggest benefit of using instalment credit to pay off your credit balance is that monthly payments are automatically calculated for you and served up on a clear invoice.

With traditional revolving credit cards, you’ll get a lower minimum monthly payment with higher interest rates. That’s because the bank wants you to take your time paying off debt. The longer you take, the more you pay overall. This can make it hard to budget, and as you continue using your credit card for spending your debt can easily spiral out of control.

With Holvi credit, you’re provided a set monthly repayment amount for a stated period of time. 

When your balance is neatly split up into predictable instalments – 1, 3 or 6 months – it’s easy to plan and budget. 

There’s limited risk and temptation to spend irresponsibly. So you get the benefits of credit without the stress.


A note on interest

With Holvi’s credit card, you’ll only ever pay interest on what you owe – i.e., your remaining balance. No compound interest (or ‘interest on interest’). And interest payments actually decrease each month as you pay off your principal balance.


Our parting words of advice

We’ve designed our card to help you avoid debt traps and use credit responsibly. But at the end of the day, the onus is also on you to make responsible credit choices. That said, we do everything we can to keep you in the black.

Before issuing any credit card, we conduct an individual assessment in order to make you offer with a credit line and annual interest rate that suits your needs and capacity.

Acting responsibly means that we sometimes have to decline a credit card application. If this happens, don’t worry. There are ways to rapidly improve your credit score, and a negative credit decision does not prevent you from reapplying again later on.

Read more about Holvi’s credit card and join the waitlist here.