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Obtaining a Secured Business Credit Card

By Edited Nov 13, 2013 0 0

Are you trying to find a secured business credit card to make purchases for your company? There are many people in exactly the same situation and it can be difficult, if you own a small business, to estimate all of your expenses each month. It is important that you compare all of the choices that are available when you are looking at the different secured business credit cards so that your business will get the most benefit out of the one that you choose to sign up for. There are quite a few options with this type of card and there are a few things that you will need to be aware of when you are trying to obtain credit for your business through a bank or other financial institution.

When you are signing up for a secured small business credit card you will need to know a couple of things that are important. You will be able to help your business establish credit without having to be personally liable for the credit that you obtain. To be approved for that credit you will probably be asked to make a deposit or use some of the cash assets of the business to secure the credit line that you want to obtain. This is a security for the bank that is giving your business the credit. It will ensure that if your business is unable to pay back the balance that is owed on the card they will already have the money for it. Some business owners struggle with this idea a little bit, so it is important to provide a proper explanation.

When you first started your business up you should have set up a business bank account for the company. This is an account separate from your personal checking and savings account. This account is where you will keep the revenue that your company produces and you will pay out the money that the company owes from this account. This is also the account where you will need to have money that the bank can hold for a secure business credit card. This gives you a line of credit that is secured by the assets you hold in the bank.

If the bank that you have set up this account with offers a secured business credit card you may want to start your search there. They will already have all of the records that are needed and will know the financial history of your company. You should check into all of the options they have when it comes to getting a business credit card, but hold off on signing up with their card until you have explored all of the available options. This way you will be sure to get the best possible card for your business. For me personally, I always try to do business locally, and that also includes my bank which is a local regional bank.

There are a couple of things that should be looked at when you are trying to narrow down your search for this type of secured credit card. One thing to be clear on is if your business will have to pay an annual fee for using the card that you are interested in. There are cards available that you do not have to pay an annual fee for, and they may also offer everything else that you are looking for. If you are working with your local bank and they do charge a fee tell them you really want to do business locally with them and ask them to waive this fee. A local bank generally has more leeway to do these sorts of things than does a giant national bank like Wells Fargo, Citibank, or American Express.

You will want to find out what the APR is going to be for the card that you select as well. A lot of cards will offer an introductory APR but the rate will increase after a certain period of time, so it is important to find out if that rate is going to rise and if so how much. Secured business cards usually have a reasonable rate because there is less risk for the bank of default.

Transaction fees are another important factor to consider. If your business is going to be making a lot of transactions on the secured business credit card then you will not want to have to pay a fee for every purchase that is made. Be sure that you check to see if these fees apply to the card that you want to sign up for. Generally, these types of fees cannot be waived, so make sure that if this is going to be an issue and you will be using your credit card a lot, that the card you choose has now fees or very low fees.

Once you have narrowed down your search and chosen the card that you think will be a good match for your business you will want to start trying to plan the items that you will need to purchase using the business credit card. This will help you keep the balance that you owe down. You should try as hard as you possibly can to only make purchases that you will be able to pay off each month. This is just good business practice. You will not want to carry any high balances. It is recommended that you keep your balance under ten percent of your available credit in order to have a good credit standing. Remember that you will be building your business credit with you use of the secured business credit card and carrying a high balance will reflect negatively on your credit. On the other hand you do need to use your card. Make sure that you use the card at least two times per month for a business purchase so that you will be able to show that the card is actively being used. This will help your business credit as well.

If you want to establish or build up credit for your business a secured small business credit card can help you to achieve that goal. Be sure that you have money in your business account to use as security for the credit card that you want to obtain. If you look at the options available when it comes to different business credit cards then you are sure to find one that will work for your business perfectly.





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