Secured Business Credit Cards: What They Are & Best Options

If you’ve been comparing business credit cards online, there’s a decent chance you’ve come across some secured business credit cards. If you aren’t sure what “secured” means or how to compare secured cards to other business credit cards, we’re here to help.

Conventional wisdom dictates that you’ll have a difficult time accessing credit — including business credit cards — after declaring a bankruptcy (or if your credit score is terrible). While there’s some truth to that, that statement doesn’t take into account the credit cards of last resort: secured business credit cards.

Below, we’ll take a look at what secured business credit cards are, where you can find them, and what they offer.

What Is A Secured Credit Card?

Have you ever lent yourself money? The concept sounds kind of absurd, and in a way it is. The justification for secured credit cards is simple, actually. These cards address a very specific conundrum: banks can’t afford to extend risky borrowers a line of credit, but businesses often can’t rebuild their credit scores unless they have access to a line of credit.

Secured credit cards require you to put down a security deposit when you sign up for them. The bank will then use that security deposit to establish your credit limit. So if you put $200 down, you’ll have a $200 credit limit. If you’re lucky, the bank will apply a small multiplier to your deposit; in those cases, your $200 might buy you, say, a $240 credit limit.

Why would you do that? The security deposit removes the risk from the bank, and the cardholder is able to access rewards and perks similar to those they would get with unsecured business credit cards. In many cases, the bank will forgo checking your credit at all (or if they do, it will probably just be to confirm your identity).

More importantly, a secured business credit card becomes an easy way to repair your credit. Just be aware that banks aren’t always consistent about how they report business credit card activity. Some will report to a consumer credit bureau. Some will report to business credit bureaus. Some will report to both. Some will report to neither. Be sure to find out before you sign up.

How Are Secured Cards Different From Unsecured Cards?

It’s simple: Secured cards require a security deposit, while unsecured cards do not. That’s because unsecured credit cards are typically issued to those who have been deemed a low risk of default, and the borrower is borrowing against his or her good credit standing. The secured credit card user typically lacks this standing and thus is required to put down a security deposit.

Not sure what your credit score is? Here are some ways to check your credit score for free.

The Best Secured Credit Cards

Think a secured credit card is right for you? Here are, in our opinion, a few of the best secured credit cards out there.

Best For Low Security Deposit

Capital One’s Secured Mastercard doesn’t come with many frills, but it is one of the cheapest ways to have a secured card. For a security deposit of $49, $99, or $200 (depending on your credit), Capital One will extend you a $200 credit line. If you make your payments on time five months in a row, you can qualify for a high credit limit. Most secured cards don’t let you borrow above the amount of your security deposit, so the Secured Mastercard is a pretty solid deal.

There’s no reward program, but the card does come with basic features like auto rental collision damage coverage. There are are also no foreign transaction fees, so you can safely use it on your international business trips.

Want to learn more? Visit our full review.

Best For No Annual Fee

The Citi Secured Mastercard is admirable for its simplicity. In fact, the card is so simple that it’s hard to find much to say about it!

Citi’s Secured Mastercard requires a security deposit for the amount of your credit limit. The minimum deposit is $200 while the maximum is $2,500. The card carries no annual fee, and while there are no rewards to earn with your spending, you’ll get identity theft protection and purchase protection.

Unfortunately for you business travelers, the card carries a 3% foreign transaction fee.

Best For No Credit Check

The OpenSky Secured Visa is a card you can get without any credit check at all. In fact, you don’t even need a bank account to qualify!

While the card does carry a $35 annual fee and a 3% foreign transaction fee, the card’s APR is a variable 19.64% — lower than that of most of the other cards featured here. Plus, there’s a 25-day grace period at the start of each billing period in which you can avoid interest on purchases if you pay off your card in full.

In order to use your OpenSky Secured Visa, you’ll need to pay a minimum security deposit of $200. The maximum deposit is $3,000.

Best For Cash Back Rewards

The Discover it Secured card offers some great rewards for a secured credit card. You can earn 2% cash back at gas stations and restaurants up to the first $1,000 spent each quarter and 1% cash back on all other purchases. If your business expenses are concentrated in the 2% cash back categories and you need a secured credit card, you’re in luck!

What’s more, Discover will match any rewards earned during your first 12 months. During your account’s first year, you’ll be earning double cash back, giving you 4% cash back at gas stations and restaurants and 2% back everywhere else. As for the security deposit, the minimum deposit is $200 and the maximum is $2,500.

If you’re interested, check out our full Discover it Secured review.

Best For Building Business Credit

The Wells Fargo Business Secured Credit Card reports to the big three credit bureaus (Experian, Equifax, and TransUnion) and lets you make a large security deposit to borrow from.

If you want to get a jumpstart on rewards programs but are being held back by poor credit, the Wells Fargo Business Secured Credit Card is a pretty good compromise. Just be aware that enrollment into the rewards programs is optional and may carry an additional fee depending on current promotions.

Wells Fargo will set your credit limit equal to the security deposit you give them, ranging from $500 to $25,000. You can have up to 10 cards on one account, though each card will cost you an extra $25/year. This card also has no foreign transaction fees.

Best For Travel Rewards

The Business Edition Secured Visa is offered through a number of different banks (First National Bank, or Cathay Bank, for example), but regardless of the issuer, there are usually a number of features in common.

The Business Edition Secured Visa card gives you a lot of flexibility over the size of your deposit, which can be anywhere from $2,000 to $100,000. In return, you’ll get 110% of your deposit as a credit line ($2,200 – $110,000).

This card uses the Visa Savings Edge program which offers rebates at a number of different retailers, gas stations, and restaurants. Additionally, the card comes with cell phone protection, luggage protection insurance, and hotel discount programs when you pay the corresponding bills with your card. The card gives you a nice array of travel benefits for a secured card. There is, however, a 3% foreign transaction fee.

Secured Business Credit Cards: Best Practices

Now that we’ve gone over some of the best options in the secured credit card space, let’s discuss best practices for using a secured credit card.

Don’t Get A Secured Card Unless You Need One

There may be a few rare cases where this is untrue, but for the most part, a secured credit card is a good option only when unsecured credit cards are unavailable to you.

Secured business credit cards come with all the same risks of unsecured business credit cards. Business credit cards aren’t governed by the same regulations that consumer credit cards are. That means you’ll need to be on guard for surprise rate changes, floating due dates, and fast and loose terms of service.

The less scrupulous secured credit cards providers know that you probably have poor credit and will try to take advantage of your lack of options.

If possible, you want to select a card that has a low annual fee or no fee at all. These fees are common even with unsecured business credit cards, but they can end up being quite high. Be especially wary of annual fees over $40.

While APRs on secured cards are often higher, there are secured credit cards with rates in the single digits. On the high end, however, are APRs over 30 percent. You’ll want to stay away from those. If you don’t plan on carrying a balance, this isn’t as big a deal, but you should still avoid high rates if you can. Emergencies happen, after all.

Some secured business credit cards do offer rewards similar to many of their unsecured counterparts. At the same time, your selection of cards will be limited. There just isn’t the same level of demand for secured business credit cards as unsecured ones.

How To Use A Secured Credit Card

Secured business credit cards usually have very low credit limits, so it’s difficult to get yourself into too much trouble by using them. That said, you should use your secured card judiciously, avoiding spending more in a month than you can pay off that month to avoid accruing interest.

As for what you should spend it on, that depends on the type of card you get. Some cards return a small amount of cashback for every purchase you make. Others use a multi-tiered system that might reward telecommunication expenses at 3 points per dollar and general expenses at 1 point per dollar. You’ll get a better return on your investment if you use the card for purchases that maximize your reward points or cash back.

How Long Should You Have A Secured Business Credit Card?

The answer is no longer than you need to. You should expect to have to use a secured business credit card for about a year.

If you’re able to keep up with your payments, that deposit is eventually returned to you. In some cases, you may be automatically upgraded to an unsecured card when your credit improves (but not always, so keep an eye on your credit rating).

In the event that the issuing bank doesn’t offer you a new card, don’t be afraid to ask to be promoted to an unsecured card.

Are Secured Business Credit Cards The Only Options If You Have Bad Credit?

Not necessarily. A lot of banks will offer high-interest unsecured credit cards with very low credit lines to businesses and individuals with poor credit. Depending on the APRs, credit limits, and fees, they may or may not offer you a better deal than you’d get with an unsecured card.

If you seek to improve your credit, here are some ways you can do exactly that.

Final Thoughts

A secured business credit card should primarily be viewed as a road back to decent credit health. Remember, however, that it isn’t necessarily the best or only path you can take. Some banks also offer high-interest, low-limit unsecured credit cards to customers with poor credit. Avoid offers that pile on the fees, and you should be back to normal unsecured credit card usage in no time.

Looking for a good unsecured card instead? Check out our best business credit card guide.