Secured Business Credit Card

Wednesday, June 13, 2012 at 3:24pm by Site Administrator

Secured Cards Help Build Your Credit History

Secured credit cards help individuals with poor or no credit build their credit history. Secured business credit cards help the business owner build credit for their business, as well. With a secured personal or business credit card, the card holder places funds into an account to “secure” the card. Secured credit cards help individuals and businesses build credit by providing an opportunity to make charges on the account, stay within charge limits and make payments on time. The individual or business continues to handle the secured card in a responsible manner. Over a period of time, with a good payment history, the individual or business is able to build a good credit history. Once a good credit history is established, the business is able to obtain a traditional credit card with better rates and more attractive offers.

Secured Business Credit Cards

Secured business credit cards help the business owner establish or re-establish credit for the business. However, the secured business card is different from an unsecured card. For example, the business owner must deposit funds into a special savings account for the account to establish a credit limit. Some secured card issuers allow the business credit equal to the amount of funds in the savings account. Other card issuers will extend additional credit beyond the amount of deposited funds.

Secured business cards generally require an application fee. Sometimes this fee is significant, perhaps $100 or more. Secured business cards may also charge a substantial monthly or annual fee. These business cards generally have a higher interest rate than unsecured cards. Banks that offer secured business credit cards include Orchard, Wells Fargo, CitiBank, Capital One, American Express and Bank of America, among others. Benefits for businesses having a secured business card include:

  • Theft protection
  • Purchase protection
  • Protection against unauthorized use of the card
  • Extended warranties
  • Travel and rental car insurance
  • Overdraft protection
  • Reporting and expense tracking

Secured business credit cards generally do not offer the business owner any rewards or perks for card usage. However, secured cards may offer discounts and specials to card holders on merchandise and services.

Alternatives to Secured Business Credit Cards

Secured business cards are not the only way to build or re-build a business’s credit. Starter business credit cards are also offered by various institutions. These starter business cards usually have a lower interest rate than secured cards. However, the business owner generally needs to have a good personal credit rating to qualify for a starter business credit card. Capital One, CitiBank and American Express all offer starter business credit cards to business owners with good personal credit.

Starter business cards may offer the business owner perks, such as cash back and reward points. Starter business cards often provide business owners with discounts for products and services. If the business owner has a good personal credit history, a starter business card may be preferred over a secured card for establishing business credit.

If the business owner has a longstanding relationship with a personal credit card issuer, and they have maintained a good payment history, the issuer will often provide a business credit card account for them. The credit card issuer may also offer to convert the personal account to a business account. If you have a long relationship with a credit card issuer on a personal credit card account, ask the bank about your options for obtaining a business credit card. Converting the personal account to a business account saves application fees and will usually provide the business owner with attractive rates on the business account.

Secured business credit cards are one option for helping businesses build credit. If you decide a secured business credit card is for you, shop around to obtain the best deal on the secured card. Many banks and financial institutions offer secured business credit cards. Shopping around will ensure you get the best secured card for your needs.

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