Posts Tagged ‘business secured credit card’

Obtaining a business secured credit card is not an option for many businesses. Some business owners may need the backing of a secured credit card especially, if they are new to the business industry or just starting out and want to get a handle on finances. They usually go to a local bank or their personal bank where they have developed a community relationship. In any case, the bank or lending institution usually requires some kind of collateral. This is to ensure the bank of some type of repayment in the event your business folds or you default on your payments. This can be equipment, deeds to land or property or any asset that is equal to or greater than your line of credit.

It is important for business owners who have this type of business card to read and understand all the fine print. This is one type of loan, which you cannot afford, to default on. You have put something of value up for collateral and you could risk losing it all, if you do not make timely payments. Besides, having a business secured credit card does have it advantages. First, you can enjoy lower interest rates than the average unsecured business card. This is because your card is backed by some type of collateral. Secondly, you have asset that you can use repeatedly to borrow money against if the need ever arose. Once you have maintained a satisfactory credit history with your bank or lending institution, chances are you may be approved for a unsecured business credit card. This means that you have proved your creditworthiness and have applied with all the stipulations that were set up on your account.

Many banks offer great deals on business secured credit cards. Offers of interest free introductory periods, no penalty balance transfers, and cash backs rewards on purchases at certain merchants are great business incentives. Many companies order extra credit cards for their employees as a way to cut down on unnecessary expenses. Each card has its own spending limitation that can be easily calculated into the business expenditures. If you are considering adding money to your credit card you could end up paying a higher interest rate. Check to see if this applies to you.

Whether or not you decide to take on a business secured credit card depends on what your business needs are. Many new companies may decide that they need the stability of a business secured credit card to help them establish credibility, while others may decide that this option is not necessary for them at the appointed time in question. Researching your options and imposing wise business strategies make good business sense.

If you have a bad credit history or no credit history at all, a secured credit card is perhaps the best card for you.

What is a Secured Credit Card?

A secured credit card, commonly misspelled as secure credit card (without the ‘d’), is a type of credit card that requires the card holder to deposit a certain amount, typically 100 to 200 percent of the total credit desired. This type of credit card is often used by those who have poor credit record and want to rebuild it. It’s used by new cardholders to create a good credit history the first time. Most credit card companies offer this type of card for such purpose.

This type of credit card is generally offered by Visa and MasterCard. Another popular card that belongs to this type is the Orchard Bank secured credit card. You can check on each detail by visiting their official websites.

Why Secure?

The term secure or secured is taken from the credit card provider’s perspective and not from the cardholder’s. A secured credit card would need a deposit or collateral that the bank will temporarily ‘own’ as a guarantee for any loaned or borrowed money. Given this characteristic, banks and credit card companies issue a secured credit card especially to those who don’t have any credit profile or those that have bad credit standing. This gives them the opportunity to lessen the risk of not having to recoup their capital when lending money.

The security deposit left in the hands of the bank or credit card companies would usually equal or exceed the credit limit imposed on the credit card. This is the method they use to lessen payment delinquencies from cardholders. This is because a cardholder would feel like losing something when the balance is not paid on time.

Regular payment is still required from the cardholder if there’s any outstanding credit card balance. In most cases, the security deposit will be left untouched for a missed one or two payment. The moment the cardholder defaults, the card issuer would then recover all the cost and fees from the deposit.

Note that the features of secured credit card offered may vary. Some may have fees or other policies that are different from others. That is why when applying for a secured credit card, you have to understand the terms and conditions completely to make sure you get the best secured credit card that fits your needs.

More on Secure Credit Card

Completely different from the ones discussed above, a secure credit card can also be perceived from a transaction perspective. Cardholders always seek the best security whenever using their credit card online or in person. Generally having brand or name attached to the card, would assure you of having better credit card security. This is because most known brand would invest in tightening their cards’ security feature and provide services such as on-call support for lost/stolen credit cards, and the like. Online merchants also partner with different security companies to ensure that every transaction happening on their site is secured.