Best Worldwide Secured Business Credit Cards

Gaining a substantial credit limit for your business can help smooth over your cash flow or pay for large purchases. However, if you do not have a good credit score, what other options are open to you?

A secured credit card account could offer your business a lifeline, raising your score with credit bureaus once you have placed a security deposit.

In this article, we will review the best secured credit cards for your business, examining the advantages and disadvantages of using secured cards in your business.

What Is a Secured Business Credit Card?

A secured business credit card is a business credit card that is tailored to new businesses or those with a poor credit history.

The main difference between a secured card and a credit card is that a secured card requires a security deposit.

If you cannot secure a standard unsecured credit card to make purchases, a secured credit card can help you to build your credit rating and place your business in a better position. The deposit amount acts as collateral and offers confidence to the provider although cannot be used to pay for purchases.

How Do Secured Credit Cards Work?

Secured business credit cards work in a similar way to a standard unsecured credit card. The card can be used to make purchases for the business, both in-person as well as online. 

However, a secured credit card requires a deposit of cash before the card can be used. A deposit is required so that the provider can safeguard their own interest when you have a poor credit score or an unproven credit history. The card issuer holds onto this deposit and is returned to you whenever you close the account.

Deposits are stated by the provider although can be tailored to what your business needs. Whatever amount of cash you deposit will reflect your credit card credit limit with minimal deposits typically reaching £500.

You can then make purchases and pay off the balance as you would when using a business credit card. Over time, your credit history will improve when you manage the account correctly and responsibly.

What Happens to My Security Deposit?

The provider keeps your security deposit and will return it to you when the secured card account is closed.

When you purchase items with the secured card, you cannot assume that the deposit will pay for those items. You will be billed separately for your purchases and must pay for those purchases on time.

If you decide to close your secured card account in the future, you will receive the deposit from the provider as long as there is no money owed. 

Some providers will transfer your secured card to an unsecured card at this point, returning your security deposit in the process. How much deposit you receive will depend on your credit balance.

Why Would I Need a Secured Business Credit Card?

You need a secured credit card to develop and improve your credit rating if you are a new business with no previous debt. An unsecured credit card or business loan provider will want to see that you have acted responsibly with money in the past, paying your repayments on time and clearing all money owed after a set period.

If you have a poor credit history due to past problems with money, a secured business credit card can also provide a benefit if you act responsibly. Over time, your credit score will improve and additional financial options may become available to you.

What Is the Difference Between a Secured Card and an Unsecured Card?

The main difference between a secured card and an unsecured card is that you need to place a deposit to obtain a secured card.

Secured cards are usually tailored for businesses with a poor credit history or new businesses that do not yet have a credit history. The available credit limit will typically reflect the cash amount deposited.

Unsecured credit cards are usually for businesses with a good credit score and a proven financial history. No deposit is required to obtain an unsecured card and the credit limit is dependent on the creditworthiness of the applicant. Of course, you could have more than one credit card.

Do Secured Cards Cost Money?

Secured cards will require a security deposit when opening the account. The provider may require a minimal deposit for the secured card, although you can increase the deposit substantially. 

However, the amount of deposit placed into your secured card account will reflect the spending limit on the card.

In addition to the deposit, secured cards may incur interest or fees. For example, monthly maintenance fees or other annual fees may be charged. Hidden fees could also be applicable, such as late fees if you have not paid the necessary repayment on time.

Furthermore, some providers may require interest charges, calculating interest rates against the purchases made with the secured card.

What Are the Advantages of a Secured Credit Card?

A secured business credit card can open up several advantages for your business:

1. New Businesses

A new business will have an unproven financial track record and may struggle to secure a standard business credit card. A secured card is easier to apply for and offers a greater acceptance rate for new businesses, allowing a new business to prove its worth.

2. Improved Credit Score

When used responsibly for online and in-person purchases, a secured business credit card can improve your credit score. You can use a secured card as a temporary measure to improve your credit rating and open up greater opportunities for your business in the future.

3. Rewards

Some providers offer rewards for using a secured business credit card. This may be in the form of a bonus reward scheme where points are earned for every purchase made, or a discount scheme where you can gain discounted purchases from certain retailers.

4. Benefits

In addition to rewards, some providers may offer benefits with secured business credit card usage. For example, you may gain travel insurance as a benefit with your card.

What Are the Disadvantages of a Secured Credit Card?

In addition to the benefits a secured business credit card can delver, there are some disadvantages to be aware of: 

1. Deposit

You must secure your secured business credit card with a substantial deposit. This is the main difference between a secured credit card and a standard credit card as it safeguards the provider’s interests in the event of a default. You may need to deposit at least £500 or even £1,500 to secure a secured business credit card.

2. Spending Limits

Your card spending limit will depend on the amount of cash deposited and will usually match the deposit. So, if you deposit £1,000, your credit limit will be £1,000. Some providers will increase this slightly, although other providers will not.

3. Interest

Your secured business credit card may require interest to be paid on the purchases made. The amount of interest will vary.

4. Fees

There are fees to pay when using a secured business credit card, such as a monthly or annual fee. Depending on the provider you choose and the terms of the credit card, the fees could be substantial.

5. Penalties

If you pay instalments late, you may be charged a penalty fee that can accumulate and become a substantial amount.

What Is a Good Credit Score?

The number considered a good credit score will vary according to the credit rating agency used. Two of the major credit rating agencies in the UK are Experian and Equifax, although there are other providers that you could consider.

Experian

• Fair: 721 – 880
• Good: 881 – 960
• Excellent: 961 – 999

A good credit score by Experian is considered between 881 – 960, with a rating above this considered to be excellent. A fair rating by Experian is deemed to be 721 – 880. A number at 720 or less is thought to be a poor credit score.

Equifax

• Fair: 380 – 419
• Good: 420 – 465
• Excellent: 466 – 700

Equifax considers a good credit rating to be based between 420 – 465. A score above 466 is excellent whilst a fair credit score is 380 – 419. A credit score less than 380 is deemed to be a poor credit score.

How Can I Build My Credit Score?

Build your credit score by never missing a repayment and ensuring that all debt is repaid in full, reducing your debt level as much as possible in the process. Any credit score can be improved if you change the way that you manage your finances, with changes required consistently across a 12 month period.

Additional tools are available to help you to build your credit faster, however. Gaining a secured credit card is one method to build your credit, placing a deposit with the provider so you can secure a credit card. When used responsibly, your secured credit card can help you to increase your credit limit dramatically.

At a Glance, Pros and Cons

For a succinct overview of the pros and cons of a secured business credit card, look no further than this section:

Pros

✔️ Improving your credit score — A secured business credit card can be used to help improve your credit rating, particularly if you are a new business or a business with a bad credit score.

✔️ Reward schemes — Some providers will offer rewards schemes with a secured business credit card, ensuring that you earn points on your business purchases.

✔️ Easy to secure — As you are paying a deposit when applying for a secured business credit card, you will find the application process simple and easy to secure a card.

✔️ Additional benefits — Other benefits, such as insurance or legal advice, may be added to your secured business credit card package.

Cons

❌️ Depositing cash — A significant limitation of a secured business credit card is the need to deposit cash.

❌️ Unsatisfactory spending limits — Whilst a standard credit card may allow a generous spending limit, a secured business credit card will provide a spending limit that typically matches the cash deposited.

❌️ Fees — Fees are typically charged if you do not make the required payment on time. There may also be a monthly or an annual fee to pay to the provider.

❌️ Time — Whilst a secured business credit card can help you to improve your credit rating, it can take a long time for your credit rating to improve.

Best Secured Credit Cards — Reviews

Here are the best secured cards available:

1. Capital One Platinum Secured Credit Card — Best Overall

Features:

• Zero annual fee
• 30.74% APR interest on transfers and purchases
• £200 security deposit required

The Capital One Platinum secured credit card is our overall favourite choice. You will pay no annual fee, although a minimum security deposit of £200 is required when the account is set up.

When a purchase or a transfer is made, you will be charged 30.74% APR. However, no transfer fee is applicable.

However, within 6 months, this secured card could help you increase your credit score by 35 points.

2. Chime Credit Builder — Best for No Annual Fees

Features:

• Zero annual or hidden fees
• No interest applicable
• No minimum cash deposit
• Secure 24/7 support

The Chime Credit Builder secured credit card is a great card option if you want to build your credit score and pay no annual fee. You could raise your credit score by 30 points in one year using this credit card issuer.

In addition to no annual fee payable, you will also face zero interest on purchases. You can deposit any amount of cash into your account with no minimum required. 

Furthermore, 24/7 support is available from the card issuer when you obtain a Chime Credit Builder secured credit card.

3. First Progress Platinum Elite Mastercard — Best for Bad Credit

Features:

• £29 annual fee
• 25.24% APR (variable)
• Minimum £200 deposit required
• No minimum credit score required

The First Progress Platinum Elite Mastercard is a secured credit card with a difference. There is no minimum credit score required when applying for this card so it is perfect for businesses with a bad credit history.

You will pay an annual fee of £29 to use this secured card, with a minimum security deposit of £200 required. 

In addition, any purchases made using these secured cards will incur interest of 25.24% APR (variable).

4. Capital One Quicksilver Secured — Best for Unlimited Cash Back

Features:

• Zero annual fee
• 30.74% APR (variable)
• 1.5% cash back on purchases
• 5% cash back on hotels and rental cars
• £200 minimum security deposit

The Capital One Quicksilver secured credit card is the best choice in attaining high levels of unlimited cash back.

You will pay zero annual fees and all purchases will be subject to interest rates of 30.74% APR (variable). Additionally, you will need to pay a security deposit amount of £200.

High levels of cash back will be obtained when making purchases with the Capital One Quicksilver secured card, gaining 1.5% cash back on all purchases.

You can also acquire cashback of 5% when you make purchases for hotel accommodation and for rental cars.

5. OpenSky Secured Visa — Best for Higher Credit Limits

Features:

• £35 annual fee
• 25.64% APR (variable)
• Minimum security deposit: £200
• Maximum security deposit: £3,000

The OpenSky secured credit card is a good choice if you are looking to place a high security deposit of up to £3,000. The minimum amount of cash you can deposit, however, is £200.

You will pay an annual fee of £35 to use the OpenSky secured credit card, and you will be charged an interest rate of 25.64% APR (variable) on purchases.

Leading Secured Credit Cards for Businesses: The Verdict

Our favourite secured credit card is the Capital One Platinum secured credit card, requiring no annual fee and a cash deposit of £200. In return, you will receive a credit line and an interest rate of 30.74% APR (variable) and is much easier to secure in contrast to unsecured credit cards.

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