The Battle between Secured vs Unsecured Business Credit Cards

Suffering from bad credit history can be a major setback especially for someone who wants to start a business. Many business credit card companies require good or excellent credit history to grant an approval. If you’re a new business owner who is in need of a small business credit card, you have two choices to consider.

First, you may apply for a secured business credit card or get an unsecured business credit card that accepts average credit. It is understandable that the interest rate would be slightly higher than business credit cards for good credit. Still, even with poor credit history, you should not settle for business credit cards with unfair rates and conditions.

Before sending your application to any business credit card company, do careful research. You should be able to discover a business credit card that offers a reasonable deal. This article talks about the basic facts about a secured business credit card and an unsecured business credit card. Knowing the basic should help you make a better decision for your specific business needs.

The Difference between a Secured and an Unsecured Credit Card

A secured credit card for business works like any secured credit card. It requires the cardholder to submit an advance security deposit in his/her account in order to get approved. The amount of security deposit often determines the amount of credit limit that will be provided. The security deposit will be used in case the cardholder fails to keep up with credit card payments. A business credit card may require 100% to 200% of the credit limit depending on the business credit card holder’s demand.

If you prefer a business credit card with a high credit limit, be prepared to save a higher security deposit as well. You will to save sufficient amount of fund to get started. One disadvantage is that most business owners have a limited budget and may not have the available cash to submit as security deposit.
In this case, you may consider applying for an unsecured business credit card since it does not require the submission of a security deposit. Expect to be charged with much higher interest rates and fees because of the higher risk involve to the credit card issuer.

Which One Is Best For My Business?

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Business credit cards for bad credit have advantages and disadvantages. You need to weigh your options carefully before making a final choice. Whether you choose to get a secured or a non-secured credit card for business, it’s important to remember that you have a serious responsibility to your credit card company.

In order to build a good credit history for your business, you need to be consistent in managing all your business transactions including your business credit card account. Apart from being a timely payer, you need to closely monitor your credit card use and use your business credit card strictly for official business expenses.