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Secured Business Credit Card: Tips How To Establish, Rebuild And Repair Your Corporate Credit  Small Business Videos RSS Feed  

A secured business credit card is a way to obtain a credit card and create a positive credit history. This helps the business move from a secured to an unsecured card at some point in the future. The security deposit establishes the credit limit for the secured card. A secured card requires that you provide collateral, which is usually in the form of a cash deposit into an interest-bearing savings account with the credit issuing bank. The money on deposit earns interest, but must remain in the account while you have the card. Your credit limit will range anywhere from 50% percent to 100% percent of your security deposit. Typically, the initial security deposit for a secured business credit card is higher than with a personal card because businesses are expected to have more expenses.
Interest rates are normally connected with the US Prime Rate, the common national rate standard. Interest is not charged if the balance is paid in full by the statement date. However, for cash advances, interest is charged from the time the advance is made to the time it is paid off.
Establishing a secured credit card helps the business owners to carry out the transactions easily and they also provide relief from carrying cash every time they have to travel. With the help of credit cards the business owner can also improve the business credit history. It is also critical for cash flow management because it provides access to a line of credit that can be used anytime a need arises. This means that your regular business operations will not have to stop while you wait for the cash flow to come in that you need to pay employees, pay for inventory, pay for advertising, and more. One drawback of a secured business credit card is that cash is tied up in a savings account with the issuing bank. Remember that the purpose of having a secured account is to either establish or rebuild a reputation for financial stability. The secured credit card is targeted specifically to people with bad credit.
Start your purchase with small amount on your secured credit card so you can pay off each month promptly. Pay the bill on time every month, in order to establish credit history on your business credit report. In the event that a secured card holder fails to make minimum monthly payments in a timely manner, the card issuer reserves the right to discontinue credit privileges and will use the funds in the savings account to pay off the balance, refund any remaining balance, and close the account. Payment history is the single biggest factor that the Fair Isaac Corporation looks at when calculating FICO scores. One missed payment can cost an individual credit points.
Whether it's a large amount of complimentary bonus rewards points or zero interest rates for a certain period of time, you may be enticed to apply for the product that doesn't fit your individual needs. The question is how to choose the card that is right for you. Make sure that you are actually working with a secured credit card company before you begin to provide them with personal information. This list of business credit cards offer you rewards and cash on what your business buys most. These credit cards also have great intro APR's and most have no annual fee. Ideally, you want to find secured credit with a grace period. A grace period means the time the credit card company gives you between when the credit is used and when interest is charged.
If credit problems have plagued your business in the past, a secured business credit card is a smart choice to improve your business credit and to support a sound financial program. Obtaining and wisely using a secured credit or debit card can help repair both one's credit and self-esteem following a financial disaster. With controlled spending and proper discipline, you should be able to repair your credit rating yourself and enjoy the benefits of 0% APR privileges. Avoid greedy card issuers who may charge exorbitant fees for helping you regain your financial freedom. As with any product or service, it always pays to shop around.

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