What is a secured business credit card?

Secured credit cards are designed for people with low credit scores. It’s possible to want some financing for your business, but because your credit scores are low, you don’t qualify for a lot of things. With secured credit cards, good credit history can be built by the cardholder if used responsibly. However, a deposit is paid to the card issuer in case of default.

Credit cards are essential to business owners as it is very profitable to carry out business activities. They make a lot of things natural and possible such as purchasing items for the business, purchasing valuable assets for the company, building credit scores and credit history, etc. However, it’s impossible to get credit cards with bad or zero credit scores. With secured credit cards, security deposit assures lenders that you can pay them back, despite the bad credit.

Secured business credit cards require collateral upfront or a token amount of deposit. There are two ways to go about it. It is either issuer gives you the card, or you send the money to them later. However, only a few issuers do this. The majority demand your bank details so you can link your bank account, and the money will be deducted directly.

You can use a secured credit card for anything the regular credit card is used for, such as paying bills, making purchases, and making withdrawals. You mustn’t make any late payment because your payment history will be sent to the major credit bureaus. If your account remains good with no late payment for some time, your credit scores will be increased with credit history built.

How it works

After getting the card, most issuers give you a credit that is equal to your deposit. The usual practice is then to increase it per time for a given period. If you can pay your monthly bills before the due time, you can build credit over time. With this, the chances are that you will qualify for an unsecured credit card.

It is recommended that you keep your balances below 20% of your credit limit. This practice is needful because your credit scores may be negatively affected if the balance reported in credit bureaus is close to your credit limits. And that is a step farther from you getting an unsecured credit card.

How much will a security deposit cost me?

There is no fixed amount as the amount will vary per lender. But most lenders require a minimum of $500. However, this is not the standard; some would go lower than this. This amount might be huge to many, but this type of card is recommended more for business with bad credit than an individual. It means some people won’t find it suitable. For instance, if you have gambling issues, you like to play online blackjacks, live Texas Hold’em, and the likes, the recommendation is a NO.

What are the risks involved?

Typically, secured credit cards are more like regular credit cards. There is a slight difference when it comes to credit reporting and fees. Secured credit cards have relatively high Annual Percentage Rate (APR), and annual fees. Endeavor not to miss a payment or half payment, which can put you in a dangerously expensive spot.

If you are unable to pay your monthly bills, you will draw late fees to your total balance. And if you are unable to pay your debts, you might end up being a defaulter. This practice will undoubtedly harm your credit score because your late payment will be reported to credit agencies.


Bad, nonexistent credit and low credit scores are real, and it’s not a shame. However, you don’t have to remain like that; you can rebuild your credit by using secured business credit cards. You indeed need to have some amount at hand for the deposit. But once you have a positive payment history, you will qualify for unsecured credit cards.