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There are numerous reasons to have a dedicated business credit card for your company. Credit cards for business help you separate personal and business spending, which can be immensely helpful when getting your business expenses organized for tax time. Further, many of the top cards offer consumer protections, rewards programs, sign-up bonuses, special interest rates and travel perks.
Unfortunately, unsecured business credit cards tend to require good credit, so not everyone can qualify for the best offers. For those with poor credit, it’s common to be unable to qualify for any unsecured credit card at all.
If you haven’t established your credit or your credit is damaged, you may consider a secured business credit card where a cash deposit acts as collateral for the credit line. While secured business cards tend to offer fewer benefits than those that are unsecured, they can help you secure a line of credit and build a positive credit history over time.
Best secured business credit cards
First National Bank of Omaha Business Edition® Secured Mastercard®*: Best business card for flexible credit limits
This secured business credit card is for applicants with bad credit who need access to an especially large credit line. To get it, you’ll have to open a First National Bank of Omaha savings account with at least $2,000, which will serve as collateral for your charges. If you have more cash to put down, you can deposit up to $100,000 to secure your line of credit, and the limit you receive will be 110 percent of your security deposit. There is a $39 annual fee for this card.
While there’s no rewards program, this card does have the Mastercard Easy Savings program, so you can save on purchases with automatic rebates from over 40,000 participating merchants when you use the card for qualifying purchases. With this secured business credit card, your credit activity will be reported to the consumer credit reporting agencies.
Keep in mind this card comes with a 22.49 percent variable APR. If you can’t manage to pay your balance off in full each month, you’ll face hefty interest charges.
Union Bank® Business Secured Visa® Credit Card*: Best for low APR
With the Union Bank Business Secured Visa Credit Card, you can receive a credit limit from $500 to $25,000 depending on your security deposit. Although it does not come with a rewards program, this card does have a few perks such as enrollment in Visa SavingsEdge. Also note that a $30 annual fee applies.
The primary benefit of this card is the low interest rate, at 16.99 percent variable. If you plan on rolling balances over from month to month, that rate will be instrumental in keeping costs low.
Further, your credit activity will be reported to the consumer credit reporting agencies.
Bank of America® Business Advantage Unlimited Cash Rewards Secured credit card*: Best for cash back
With Bank of America’s Business secured credit card, cardholders can work on building their credit history while earning unlimited 1.5 percent cash back on all purchases, every swipe. And to make unlimited cash back even more appealing, there’s no annual fee, no annual cap and your rewards never expire.
Upon approval, your credit line will be equal to your deposit amount. But keep in mind there is a $1,000 minimum security deposit required in order to secure a line of credit.
In line with the First National Bank of Omaha Business Edition Secured Mastercard, the Bank of America Business Advantage Unlimited Cash Rewards Secured card also comes with a rather hefty interest rate at 25.24 percent variable.
Pros and cons of secured business credit cards
Just by looking at the card options above, you can probably see where secured business credit cards come up short (aside from there being limited options to begin with). With that being said, having a secured card for business is often better than the alternative — which is no business credit card at all.
Consider the main advantages and disadvantages of secured business credit cards before you sign up.
- Secured business credit cards can help you establish or build your credit
- A secured business card can help you track your business expenses in one place
- Some cards in this niche offer valuable perks and rewards
- You have to secure your line of credit with a cash deposit
- Secured business credit cards often come with low credit limits due to the collateral requirement
- Annual fees, foreign transaction fees and other fees can apply
Who are secured business credit cards best for?
If you’re a small business owner with poor credit, a secured business credit card may be all you can qualify for right now. While secured business credit cards don’t come with the same level of rewards and cardholder perks as unsecured credit cards for small business, they can give you the opportunity to either build or repair a credit history or form a valuable relationship with the issuer. After that, you may upgrade to a business credit card that does not require a security deposit, and you can reclaim the money held in deposit.
With that being said, it’s important to make sure you can spare the capital required to secure a line of credit with a secured business credit card. You may not have much cash to put down, and even if you do, you may not want to have your excess cash tied up for a lengthy period of time.
With all this in mind, secured business credit cards are best for:
- Business owners with poor credit who want the chance to start rebuilding their credit scores
- Small business owners who can afford to have cash tied up in a security deposit
- Business owners who need to have a credit card they can use for business purchases made in-person or online
How to choose a secured business credit card
Before applying for a secured business credit card, review the terms, requirements and benefits. The APR and fees should be reasonable for you. If a card you’re considering offers a rewards program, it should be easy to manage and one that you will use for your business.
Want to build your credit with the three major credit reporting agencies? Make sure the issuer reports to them. Because most business cards review consumer credit reports as a contingency for qualification, making sure your credit file is filled with positive data will be essential for ensuring your options are open in the future.
How to use a secured business credit card
When you are creating or repairing your credit history or forming a relationship with the issuer, it is essential that you treat your secured business credit card carefully. Use credit responsibly by following these steps:
- Only charge purchases you can afford to repay. That way, you won’t get started in a cycle of debt or wind up paying a ton of money in interest charges.
- Pay your credit card bill on time, every time. By avoiding late payments, you can prove your creditworthiness and boost your credit score over time.
- Keep your revolving debt to less than 30 percent of your available credit. Keeping your credit utilization low can also improve your credit score.
In the event you fall behind and cannot make your payments, contact the credit card issuer immediately. You may be able to work out a plan so that you keep the account in good standing. If you do not pay as agreed, the issuer can claim the amount that’s owed from the cash held in deposit.
The following questions and answers can help you understand more about secured business credit cards.
There are a few issuers that extend unsecured business credit cards to people with bad credit. However, they tend to charge fees and lack in terms of rewards and perks.
There is no law that says you have to use a business card to pay for your company’s expenses. Often, personal credit cards can be a fine alternative. If you do use a personal card for your business, make sure all of your expenses are separate from your personal costs. After building your credit with the personal card, a greater variety of business card options will be available to you.
If you do get a secured credit card, whether it’s a business or a personal card, the money you put down as collateral will be freed up when you close the account with no balance due. Some credit card issuers will convert a secured account into an unsecured account after you use the card responsibly for a certain time frame, so the security deposit will be returned to you after the transition.
The information about the First National Bank of Omaha Business Edition® Secured Mastercard®, the Union Bank® Business Secured Visa® Credit Card and the Bank of America® Business Advantage Unlimited Cash Rewards Secured credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.