Guide | How to Get the Best Secured Business Credit Cards
Having a secured credit card for businesses definitely gives rise to mixed opinions. But if you’re looking to accrue better credit, a secured business credit card can be a great approach, particularly if you have had bad credit history in the past.
These are business credit cards without Social Security number requirements at application.
For small businesses with little or no credit history, a secured business credit card can help your business on its way to future growth.
Normal secured cards will require a comprehensive history and background check, meaning that you might struggle to get started with these kinds of cards if you haven’t developed credit history. Secure better terms quickly by developing your profile and reap the benefits of secured credit cards for your business.
Secured business credit cards can come from a variety of sources. This is this year's guide to getting a business secured credit card which suits your needs.
Here we will compare a few products to get you started on the road toward great long-term credit. Using the right business secured credit card, you too can enjoy the benefits of standard credit cards, which you might not otherwise qualify for.
The benefit of having a secured credit card for businesses is weighed up against collateral. In other words, your secured business credit card is “secured” because it requires a deposit. This can then be reclaimed in the event of non-payment. This also means you often start with quite a low credit limit – usually around $500.
Image Source: Pixabay.com
Because of the high rates and collateral aspects of these cards, good credit behavior is rewarded more quickly. Many cards we discuss here will even offer to return deposits after a certain amount of good repayments.
In this way, secured business credit cards differ from unsecured cards – the latter requires extensive credit history, while secured credit cards for your business will almost always be approved. They are business credit cards without a Social Security number requirement, making the application far simpler and more straightforward.
In every other sense, your secured business credit card will operate just like any other credit card. You’ll receive monthly bills to pay or incur interest. While you do this, however, you’ll be building a good credit history using your secured business credit card.
Look for a reputable source for your secured credit cards for your business, avoiding crazy annual fees or exorbitant interest rates. Build up good credit and ensure your business reaps the benefits. So will your personal finances, as your secured business credit card contributes to your personal credit history. This will make loans of all kinds in the future much less of a headache.
Here at AdvisoryHQ, we’ve done some research and have some questions you should ponder and answer before obtaining a secured credit card for your business. Below are the six questions we think are crucial to your quest.
What is your current credit rating?
Most of us prefer not to dwell on our credit history! You’re not alone. A bad credit score – or no credit history – often makes applying for credit tricky. Not so with a secured credit card for businesses. Having a secured credit card for businesses affects your credit rating in the same way as an unsecured card. It’s a great way to get started and build your business credit for the future.
The main upside of a secured business credit card over other kinds is that you have access to business credit cards without a Social Security number, making the process easier if you have bad credit to your name. This allows your business to operate separately from you and can help improve your personal credit history.
By making purchases and making repayments on time, you can quickly improve your credit rating; a business secured credit card offers your small business room to grow and acquire more credit in the future (if necessary!). But before embarking on the process of applying for secured credit cards for your business, be sure to check your credit (such as from annualcreditreport.com, endorsed by the FTC); it’s important to know where you’re starting from.
Once you take advantage of a secured credit card for businesses, you can certainly keep track of your purchasing history easily. Almost every card will offer online tracking. Some cards, like the Capital One Secured Card will even show you how your credit score is progressing with the Capital One Credit Tracker. Tools like these will help ensure that bad or no credit history is a thing of the past.
What secured business credit cards are out there?
Start out by comparing a few secured credit cards for your business. There are all sorts of companies offering these cards, but be careful to choose reputable sources. A card that is easily managed and offers what you need is essential. Here are a few of the most popular and highly recommended secured business credit card products on the market:
Image Source: Bank of America
- The Bank of America secured business credit card is a MasterCard, a business secured credit card with standard APR of 20.49%. It’s called the Cash Rewards for Business MasterCard® credit card and offers a good starting point for your credit creation.
Image Source: Wells Fargo
- The Wells Fargo secured business credit card is a comprehensive secured business credit card, offering purchasing rates of Prime + 9.90% and cash advance rates of Prime + 20.74%. They have a 21-day, interest-free grace period on purchases on secured credit cards for your business. These are great initial rates.
Image Source: Capital One
- The Capital One Secured MasterCard has a 24.99% variable APR and offers a flexible secured credit card for businesses. As mentioned, this card is particularly useful for the extra tools it brings with it for monitoring and managing your credit history.
Image Source: Chase
- The Chase secured business credit cards, known as Chase Ink Cash or Plus, are low interest rate cards. The Ink Chase secured business card will offer 0% APR on purchases and balance transfers for the first 12 months of your secured business credit card account, followed by a variable APR of 13.49% (depending on your credit history). The Plus has a variable APR from 15.49% (again, depending on credit history). These two options are both great for your small business.
What are the upfront fees and deposit?
An important thing to remember with a business secured credit card is that the larger your deposit, the more credit you are likely to receive. Though upfront credit lines tend to be small, our selected products mentioned each offer a different perspective on how far your credit could extend. Note that if you are transferring a balance from another secured business credit card, you will have to factor in a balance transfer fee – an additional cost to consider upfront.
- The Bank of America secured business credit card requires a minimum security deposit of $300 to open an account. However, after 12 months your business secured credit card is reviewed and you may succeed in having this deposit returned. There is no annual fee.
- The Wells Fargo secured business credit card has a $25 annual fee. All foreign transactions are free, however!
- The Capital One Secured MasterCard has no annual fee, unlike the Wells Fargo secured business credit card, and will require a $9, $99, or $200 deposit depending on your credit history.
- The Chase secured business credit card has two possible options. For the Ink, there is no annual fee. For the Plus, there is a $95 annual fee, but a lot more benefits are to be had when you use this secured credit card for your business. Neither card has any foreign transaction fees!
What credit limit do you need?
While you may start out with a very low credit line, remember that many of these products will reassess your ability to repay a line of credit. The longer you faithfully repay your monthly bills, the more you will receive. Here are the listings of how much you can expect for each product:
- The Bank of America secured business credit card offers credit up to $4,900, determined by income, deposit amount, and your ability to pay.
- The Wells Fargo secured business credit card will vary from $500 to $25,000 in credit, depending on your initial deposit.
- The Capital One Secured MasterCard has the benefit of a higher credit limit than the security deposit required upfront. It offers $200 upfront regardless of deposit amount. However, you may not be able to qualify for this secured credit card for businesses if you have had a bankruptcy, if you have high rent, or if lack a checking or savings account.
- The Chase secured business credit card options offer credit up to $25,000 (and sometimes more). This is very dependent on your history and deposit size and is assessed on an individual basis.
What rewards and benefits are there?
Another great benefit of secured credit cards for your business is the potential to earn from purchases through rewards. Because these cater to businesses specifically, they often offer rewards for business-specific purchases, like office equipment or hotel bookings. They all offer insurance components as well, so research carefully what bonus aspects will help your business thrive! Here are some great associated rewards of each product:
- The Bank of America secured business credit card offers 1% cash back on purchases, 2% on restaurant purchases, and 3% on gas station and office supplies. You can redeem this after earning $25. The Bank of America secured business credit card is currently offering a $200 statement of credit as a bonus once you make $500 worth of purchases in the first 60 days of your secured business credit card account.
- The Wells Fargo secured business credit card allows you to enroll in their rewards program for only $50 per year. This is waived for your the first year. Once you’re enrolled, you can earn either rewards points or cash back. Points can be redeemed for gift cards or travel goodies, giving you more for your purchasing power. You can have up to 10 secured business credit cards for your business.
- The Capital One Secured MasterCard doesn’t offer quite a rewards program, one of the main cons of this secured business credit card.
- The Chase secured business credit card offers $300 bonus cash back after $3,000 of purchases in the first three months with the Ink Cash secured business credit card. Earn 5% cash back on office supplies and phone, internet, and TV services for the first $25,000 spent each year on your secured business credit cards. There is also 1% unlimited cash back on all purchases so that your business secured credit card will work harder for you.
The Plus is truly a points bonanza secured credit card for businesses. It offers 60,000 bonus points on your secured business credit card after spending $5,000 in the first three months. You can also earn 5 points per $1 on the first $50,000 spent in office supplies, cable/internet, TV, and so on, with 2 points for every dollar spent in gas and hotels, and 1 point per $1 on all other purchases. The Chase secured business credit card really works hard on rewards for its customers.
What’s the potential for upgrading?
Once you have a secured business credit card, it’s just a matter of time before you build great credit.
This means an upgrade or increased line of credit could be in the cards, depending on the supplier. Speaking of which, make sure your card issuer is reporting your business secured credit card activity to a credit bureau, rewarding your good credit activity. All of these will do just that:
- The Bank of America secured business credit card doesn’t offer any special upgrades; however, your account will be reviewed after 12 months. At this review, your secured business credit cards may be offered a better credit limit.
- The Wells Fargo secured business credit card account will be periodically reviewed, which assesses your potential to upgrade to an unsecured card or a higher limit on your secured business credit card.
- The Capital One Secured MasterCard is one of the tougher secured business credit cards for which to be approved. However, if you are, you can get access to a higher credit line on your secured business credit card after your first five monthly payments.
- The Chase secured business credit card rewards good credit activity and offers a large amount of credit upfront depending on your history. Upgrading from the Ink to the Plus Chase secured business credit card can be really worthwhile for any small business wanting to make the most of its purchasing. This is a secured credit card for businesses on the rise!
Use these key questions and product comparisons to start your business off with a secured business credit card. You might consider throwing out the entire pursuit of credit, but this may stifle business growth further down the line.
A secured business credit card can ease you into a credit history to be proud of. It can be impossible for your business to secure rented cars or hotel rooms if your personal history gets in the way.
Use secured credit cards for business to build on the benefits of having a line of credit. Choose wisely!
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.