Secured Business Credit Card versus Unsecured Business Credit Card

A history of bad credit can make it very difficult for business owners to apply for new accounts.  Whether you’re applying for a business loan or a business credit card, you may find that it’s a lot more difficult to get approved for the best deals because of bad credit.  Nevertheless, there are business credit cards that are especially offered for people with imperfect credit rating.  These credit cards are meant to help entrepreneurs to get the financial assistance and to give them a chance to rebuild their damaged credit.  There are two types of business credit cards for bad credit - the secured business credit cards and the unsecured business credit cards.  What are their differences and which one should you choose?The Difference Between a Secured and an Unsecured Credit CardA secured credit card requires the applicant to submit a security deposit in his account.  This deposit cannot be withdrawn and would only be used in case the business credit card holder fails to keep up with his payments.  Thus, the credit card company is confident that should the card holder defaults on his debts, they can simply use the security deposit to pay for the unpaid charges.Understandably, the credit limit given would also depend on the amount of money deposited by the credit card holder.  A security deposit usually ranges from a low of $300 to $1,000 or more.  Consequently, if you’ve only submitted $500 as security deposit, your credit line may also be limited to An $500 only.What about an unsecured credit card?  As its name implies, it does not require any form of security from an applicant.  Nevertheless, because of the high risk involved, credit card companies also charge higher interest rates and more expensive penalty fees for these cards.  Of course, such charges can be avoided by paying off monthly charges in full and submitting payments on time.  Which One to Choose?If you intend to use your business credit card on huge expenses each month, a secured credit card may not be a practical choice for you since your credit line is subjected to the amount of your security deposit.  In this case, an unsecured card would give you the freedom to use your card even for large purchases.  As long as you can pay off these charges on time, you should have no problem using an unsecured business credit card.  On the other hand, if you intend to use your business credit card only for emergency expenses, a secured credit card is a good choice because it minimizes your risk of debt and overspending.  When choosing a secured credit card, see to it that the card regularly reports all your payments to the credit bureaus so you can improve your credit history at the same time.  Take note that not all secured credit cards provide this service so you’ll want to make sure that your preferred business credit card does offer this very important feature.