Overview: The Basics of a Business Secured Credit Card
Bad credit can happen to anyone. Whether you have had a difficult time raising your credit score due to financial problems or you have not had enough opportunities to build business credit, there are ways to get business credit cards for bad credit.
While it will be important that you build business credit in the future, the reality is that you may need a secured business credit card sooner rather than later.
The good news is there are options. Many of the business secured credit cards we will feature throughout this article even help those who are in the process of establishing business credit for the first time.
Although you may not have as many options when you search for business credit cards for bad credit, there are enough for you to comfortably get your company started.
Throughout this article, we will answer many of the most frequently asked questions, including the following:
- What is the best secured business credit card for me?
- How do I eventually build business credit?
- Why is it harder to secure business credit cards for bad credit?
Before we begin, take a deep breath, relax, and understand that establishing business credit is possible when you find the right business secured credit card.
Our goal is to show you some of the options out there so you have a stronger understanding of the opportunities that exist. Don’t be hard on yourself for having a low credit score. We are here to show you that your dreams can still become a reality.
What Is a Secured Business Credit Card Anyway?
A secured business credit card is a particularly valuable tool for business owners because it offers several ways to keep your business afloat.
One of the many positives of business secured credit card is that the security deposit you place at the beginning will serve as your credit limit. Credit card companies make this your original credit limit because it proves you are capable of paying this amount each month.
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Essentially, this credit limit prevents you from overspending on your business secured credit card. Once you start spending more than you can pay back, your credit score will continue to fall. If you make each payment on time, however, you will be able to build business credit. Additionally, business credit cards for bad credit allow you to increase your credit limit when you contribute more money, allowing you to meet all your business needs.
Another positive of a secured business credit card is, typically, inexpensive fee structures. If you are in the process of establishing business credit, this fee structure is perfect for you. A business secured credit card will not charge you unnecessary fees simply to make more money. Instead, they keep their fees low in order to help their customers build business credit.
With that said, secured business credit cards for bad credit are generally worthwhile for any new business owner hoping to build business credit. Once you have decided that a secured business credit card is right for you, the next step is to find one that meets your current needs. For the sake of convenience, we will offer some examples of the best business secured credit cards available today.
Business Credit Cards for Bad Credit: Capital One Spark Classic for Business
The first example of an outstanding bad credit business credit card we will discuss is the Capital One Spark Classic for Business. In some ways, the Capital One Spark Classic for Business can be considered among the business credit cards for fair credit since you should have a credit score of 625 or above.
Any score below 650 is often considered poor, but those of you with a 625 or lower should look at options other than this one.
If you do have a credit score of 625 or above, however, the Capital One Spark Class might be the perfect secured business credit card for you. As previously mentioned, many bad credit business credit cards try to reduce their fees to help you in establishing business credit. With this Capital One Care, you will have $0 in annual fees.
Another positive of looking at business credit cards for fair credit instead of just bad credit business credit cards is that you can earn up to 1% cash back on all purchases.
Getting cash back on purchases will be especially helpful as you continue to expand your credit limit and your number of purchases increases. As long as you can make your payments on time, this business secured credit card will help you build business credit.
On the other hand, there are some cons associated with the Capital One Spark Classic for Business. For instance, it comes with a high interest rate, around 23.24% variable APR. Additionally, if you miss a payment, you will be charged a late payment fee of up to $39. Business credit cards for fair credit will often come with higher interest rates than those for good credit, but if this interest rate is too high, it is best to keep looking. There are plenty of secured business credit cards with lower interest rates than this one.
Business Credit Cards for Bad Credit: Wells Fargo Business Secured Credit Card
One of the best small business credit cards for bad credit is the Wells Fargo Business Secured Credit Card. Part of the reason this business credit card for bad credit is so appealing is that it comes with a much lower interest rate than the Capital One Card mentioned above. The interest rate for this secured business credit card is simply the prime rate plus 9.9% APR.
For those who do not know, the prime rate is an index that is 3% above the federal funds rate set by the Federal Reserve. This means that credit card rates will go up whenever the prime rate goes up. While this might sound scary, 9.9% APR plus the prime rate will always come in far below the 23.24% required by the Capital One card.
Another positive about this business credit card for bad credit is that it offers customers a 21-day grace period on purchases. This will be especially helpful when you are just getting started and need to purchase some of the more expensive essentials. Additionally, you have a choice between receiving 1% cash back or one point for every dollar you spend. Either way, you will benefit from this business secured credit card’s rewards program.
As previously mentioned, the amount of money you are willing to deposit influences your credit limit on business secured credit cards. The great thing about this business credit card for bad credit is that you can secure a wide credit line, from anywhere between $500 and $25,000. The more you are willing to deposit, the more you will be able to purchase on your card while getting cash back. This will all depend on your current finances and business needs.
One of the only cons of this business credit card for bad credit is that it charges an annual fee. The annual fee is set at $25, but it will rise to $50 after the first year to enroll in the rewards program. If the rewards program is worthwhile based on the amount you purchase, you will be stuck with the $50 annual fee.
It will be important to remember when weighing the pros and cons of various small business credit cards for bad credit that an annual fee is not always a deal breaker. In the long run, $50 each year is better than a much higher interest fee. By keeping your interest rates low, you will have a far easier time establishing business credit with your secured business credit card.
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Business Credit Cards for Bad Credit: BBVA Compass Business Secured Visa Credit Card
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One of the final business credit cards for bad credit we will discuss in this article is the BBVA Compass Business Secured Visa Credit Card. In many ways, this secured business credit card is similar to the Wells Fargo Business Secured Credit Card mentioned above, but there are a few differences that should be mentioned.
A positive of this business secured credit card is that when you enroll in the rewards program, there is no extra fee. This is different from the Wells Fargo Business Card, which increases your annual rate due to a rewards enrollment.
The BBVA Compass offers one point for every dollar you spend and gives you different categories to choose from. On some of your purchases, you will even earn double or triple points. Since there is no enrollment fee, you will be able to reap all the rewards of this secured business credit card.
The interest rate, however, is slightly higher than the Wells Fargo Business Card. For this bad credit business credit card, you will face interest fees of 16.49%, or 12.99% plus the WSJ Prime. The WSJ Prime, or Wall Street Journal Prime, is the most widely quoted measure of the prime rate, and it has stayed roughly the same throughout 2016, around 3.5%. This could change, however, depending on changes made by the Federal Reserve Board.
If you do decide to get one of these small business credit cards for bad credit, you will be charged an annual fee of $40. Additionally, unlike the two cards mentioned above, your credit line will only be 90% of your deposit. If you need to make several purchases and cannot afford to only use 90% of your deposit, you will either have to look for another secured business credit card or simply increase your deposit so you can buy as much as you need.
Essentially, the BBVA Compass Secured Business Visa Credit Card is perfect for business owners who spend a lot of money on just one category. Since the rewards program offers double and triple points, you can receive far more cash back on things you have to buy, like gas or groceries.
If that sounds like you, this may be the perfect business secured credit card to meet your business needs.
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Conclusion: Business Credit Cards for Bad Credit Are Out There
Like any type of credit card, a secured business credit card is often trickier to get when you have bad credit. The reason is obvious: credit card companies fear that you will not be able to pay them back in time. Someone with a bad credit score is seen as a greater liability than someone who has built up a strong credit score over time.
The reality, however, is that not all of us have great credit scores. Whether we are building credit for the first time or we have come into financial difficulties, our credit scores will greatly influence our future financial status, but they should not slow us down completely.
That is why business credit cards for bad credit exist: so we can continue to carry out our dreams while also establishing business credit for the future.
One of the many perks of opening a business secured credit card is that it prevents you from spending too much at any given time. Those who have suffered from bad credit due too many purchases will appreciate this.
Since business credit cards for bad credit only allow you to spend the amount (or even less than the amount) of your deposit, you will never spend more than you should when using your business card. This is one of the security features associated with business secured credit cards.
Over time, this is how you will build business credit. Since secured business credit cards do not charge high annual fees and because you are only allowed to spend a certain amount each month, you will be able to make each of your payments. By paying your bills on time, you will build business credit for the future.
Therefore, it is a good idea of open a business secured credit card even if you do not need to make too many purchases. So long as you are making regular payments, your credit score will grow.
The most important thing to take from all of this is that business credit cards for bad credit are out there, and they come with a lot of perks.
Consider what makes the most sense to you. If you are looking for a strong rewards program in order to get cash back on all of your purchases, search for bad credit business credit cards that do not charge enrollment fees while also offering triple points.
On the other hand, if you are simply looking for a low interest rate, make sure the annual fees are low and you can increase your credit line over time.
Although searching for business credit cards for bad credit may be painful at times, you should always remember that securing one brings you a step closer to turning your dreams into a reality. Go ahead and start your business.
Begin to make your purchases. Regardless of your credit score, you will find the secured business credit card that is right for you. With a little perseverance, your business will be up and running in no time.
AdvisoryHQ (AHQ) Disclaimer: Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info. Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.