Secured Business Credit Card

A secured business credit card gives a high degree of assurance for the issuer, making them easy to obtain. The service is offered in situations where the business wants to prevent spending beyond its means; this also means it is an ideal product for a business with poor credit who would otherwise be excluded from card holding.

This credit service can be provided by institutions other than banks, such as specialized card companies and other financial firms and is therefore easily obtained. What does all this mean, you might ask?  Well, among other things it means healthy competition and a wide variety of offers across the market with widely assorted interest rates.

Secured Business Credit CardOn the flip side of the coin, a secured business credit card is helpful for building up a positive credit score, and brings a great deal of convenience into your company’s day to day dealings. A word of caution however: make sure your business has a clear policy in place with regard to handling its funds.

Secured Business Credit Card

How it works:

Depending on the specifics of the secured business credit card you pick, there may be discounts or reward programs available, so do your shopping around. The chief difference is that, with a secured service, you decide how much money you anticipate you will use and then deposit that amount as security towards the card.

Example:  $10,000 towards the secured pledge would give you a spending limit of $10,000.

If for whatever reason your organization is unable to pay the balance promptly, the amount owing will then be taken from the security pledge.

Pros:
Using a secured business credit card has a number of benefits including:-

Reduces paperwork.
A secured business credit card is a great way to keep tabs on company spending habits and limit paper work, particularly the paper work associated with unnecessary cash handling, invoices, and expense reports.

Prevents expense account abuses.
Secured business credit card  are an ideal means by which  employee overspending can  be limited, reducing the company’s associated risk and preventing losses that might otherwise go unnoticed.

The possibility of interest on your security pledge.
Some institutions place the security pledge funds in a high interest savings account to provide better value to the consumer. These gems are rare though and might require some hunting and  negotiating.

Cons:
There are however some drawbacks to think about when looking at getting a secured business credit card, such as having to pay the security pledge up front.

Affordability.
If it is not feasible to spend a large quantity of money for activation, then paying down debts beforehand and saving for implementation of the new system is advisable.

High rates of interest.
Given their popularity in groups with high rates of defaulting, the interest rates tend to be less than competitive. Avoid this potential pitfall entirely by ensuring the account is paid in full in a timely manner.

Additional Fees.
Know all the details before you sign on the line, some cards can accumulate lengthy lists of transaction and other fees depending on the specifics of your agreement.

Whatever the credit product is, always read the fine print and know what you are signing up for.A secured business credit card has less risk than most credit cards for small business but it still requires thought.

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As we come to the end of 2011 I am hearing more and more stories about how hard it is to get credit. Whether you are looking for a loan from the bank or want to extend the limit on your credit card the rules and regulations are making it just about impossible to get any credit. In one crazy situation I heard about this week , the only way a bank would loan $10k was if the person could put down $10k into a secured credit card account.

If he had the money then he would not need to borrow it, my question is will this become the norm in 2012? The only way to get a business credit card will be to have the money already available. If that does happen what will it mean for your business? We all get credit cards so we can stretch payments for large expenses across a few months. Maybe you want to but a new piece of machinery or buy computers for the new sales guys and not have to burn through your cash stockpile to get them. That is exactly why companies have access to credit cards.

Secured Business Credit Cards are really only a starting point to build up some credit rating so you can then get a real credit card. That has always been conventional wisdom , secured cards lock up your capital and that is exactly what a new business does not need, but maybe in 2012 having to use secured cards will become a long term necessity rather than a short term solution.

credit card

credit card

Without access to credit how can any small business grow? The answer is , slowly, unless you can buy more stock or invest in new tools and ways to service your clients you can not grow. It sounds simplistic but that really is how simple it is. While the news is talking about how having no access to home loans is killing home owners, the lack of access to credit is killing small business.

If you have business credit cards then it is a wise idea to not rely on them too much in 2012 as no one knows when the companies will get cold feet and pull your access to credit out from under you. I hope it doesn’t happen to anyone else but it is best to be prepared just in case.

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Business Credit Cards – Do You Need Them

Once you start you own business it seems that business credit cards are the next stop. One of the reasons that banks and financial institutions want you to get new business credit cards is because there is because there is so much money to be made from them. A business card has different rules to your personal credit card, they will charge you an annual fee and the interest rate you pay will generally be higher.

Since we all have credit cards in our wallet it seems natural that you should get some for your business. Business credit cards don’t look any different to your personal credit card, which is why I always put a letter or some identifier on my business card. But does your business need them? There are two ways of thinking about credit.

Business Credit Cards

If you have cards you are more likely to use them, so having no access to quick credit reduces temptation
Having a credit card that you use sensibly will improve your company (and personal) credit score which will help when you need to take out a company loan.
Both are correct, when you have a credit card it can be tempting to buy items that you would not normally or maybe go out for dinner at a time when you would not if you couldn’t charge it. But having a credit card that you manage correctly, make regular payments and never miss one, will help improve your credit score. Your credit score will greatly affect the interest rate you pay when you take out any loans.

The other thing to consider is that it is much easier to get a business credit card or a business loan when you are not desperate for one. You also do not have to use a card just because you have it, if you can be sure that you will either not use it or pay off the full balance then having a credit card for business trips or emergencies does indeed make sense.

Credit Card Fees
You need to know that having a card from American express, Citibank or bank of America for your business will require you to pay annual fees. The credit card companies will often waive the charges in the first year so that you get used to using the card and then by the time you get to year two you pay the fees without a second thought. Before you sign up for any credit cards you must think about the fees and the interest rates that you will be charged.

Secured Credit Cards Are A Business Option
One option you may want to consider is getting a secured credit card for your business. You do have to deposit money with the bank, so it ties up some of your capital, and that is used as teh credit limit for your card. You get the benefit of helping your credit score without the risk of over spending. You can only spend up to the amount you deposited so there is no fear of a credit card bill that your company can not afford to pay off.

Use Credit To Grow Your Business
While you may not think you need a credit card or any kinds of loan right now, there may well come a time when your business will need credit and you will be able to get it far easier if you already have a credit history. While I do not love the idea of running up credit card bills I do appreciate that I need my credit score to be as high as possible so that when I need to take out a mortgage or loan I can save money on the interest rate. Business credit cards are a neccessity not an option in my business opinion.

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Everyone Should Start With A Secured Credit Card

Getting your first full time job is an exciting time for everyone and before you know it you start to get your own mail about credit cards, car loans, mortgages and all the other financial things that go into being an adult. It seems like you are not an adult until you have your own credit card, of course the flyers from the bank make it all seem so easy to do. Fill out this form and you are guaranteed your very own credit card in just 14 -21 business days.

The day most teenagers recieve a credit card is the day when trouble starts. When you are in school you learn history, math, geography and maybe you take a business class or two. These classes are all vitally important and may seem to equip you for work, they teach you nothing about real world economics. As we use checkbooks less and less , England is aiming to phase out checkbooks altogether by 2015, there is no real physical trail of what we are spending. If the shop accepts the credit card that is all that matters isn’t it?

credit cards for teenagers

credit cards for teenagers

Credit Cards Are Not Real Money
A credit card is basically a chance for you to get a short term loan when you need it without having to fill in paperwork all the time. You need a tank of gas but don’t get paid for a month, put it onto a credit card. It sounds so easy doesn’t it? The bit that people do not think of is that they still have to pay for the gas. Using a card just defers the payment until the bill comes in. People will often make purchases with credit cards that they would not make if it required cash. While it may feel like you are spending real money at the time, the minute the bill from the card company drops on your doormat it will seem very real.

Secured Credit Cards Teach Fiscal Control
Your own money is used to secure the credit card, so if you don’t pay the bill they still have your money. You can not run your bill up above the amount of cash you deposit, so the actual exposure for you is nothing more than the original deposit. You can see how this is the perfect solution for teenagers. A parent could set up a card with two hundred dollars and give it to their son or daughter. There is little to no real financial risk but the teenager learns how to manage a credit card.

By limiting their exposure to real financial problems you are protecting your son or daughters future but they are still in control of how they spend their money. After a year of two of using a secured credit card sensibly they can jump to a real card and the chances are that they will never go crazy with it. Unlimited credit and lack of impulse control are what causes the real money problems with teenagers. You may not be able to teach them to manage their temprements easily but you can make sure that they do not have access to unlimited credit.

Carrot or Stick
One other thing that I have seen used is the carrot approach. For each month that the bills are paid in full a specified amount is paid into a savings account, with a bonus if they hit it for all 12 months. The stick is that they not only dont get the payment into savings but they will pay interest on the amount that is left on the card. Make sure they understand that they are paying twice and the meal they bought when they couldnt really afford it may have only cost $20 but in reality it has cost a lot more due to the interest and the loss of the carrot payment.

If your monthly carrot payment is $50 then that one meal which they now can’t pay off could well cost them $80+ , sitting down and looking at the math of the situation should scare them into paying the full bill the following month.

Bad Credit Score
It can be hard for a teenager or young adult to realize the implications of a bad credit score. Missing a few payments on a credit card doesn’t seem to be the worst thing that could happen does it? Of course the reality of those missed payments are higher interest rates on car loans, mortgages and store cards. Their car insurance cost may go up and the same goes for home insurance. All because of a few missed credit card payments.

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