Regardless of the nature of your business, it is almost impossible to get by without some kind of credit card. The number of cut price services available online that will only accept this form of payment have made it an essential modern-day tool for every small business.
This is where the secured credit card can prove to be a real lifesaver. Regardless of the credit rating of the owner or the business itself, the lender who issues a secured credit card knows their money is guaranteed because they are always holding sufficient collateral to cover whatever has been spent. The disadvantage is that cards tend to be somewhat more expensive, attracting higher interest rates for purchases and higher annual fees than other non-secured credit cards.
You will only ever be able to borrow as much as you are able to deposit, so your credit limit really depends on how much ‘spare’ cash you are able to obtain. The more cash you have, the higher you limit will be. Without the ability to pay such a deposit, you are unlikely to find a card issuer who will deal with you.
Although the cost may be higher at the start, this does not have to be the case forever. Some companies will allow you to convert your account into the regular unsecured kind after a certain amount of time, refunding your deposit and even lowering your interest rates at the same time.
Although there is a price to pay, small business secured credit cards also carry a number of benefits that can offset some of these costs. These can include extended warranties on certain items of business equipment, free travel insurance and free insurance when renting certain cards. Depending on the nature of your small business, such benefits can easily compensate for the increased cost of the card in the first place.
- Small Business Secured Credit Cards (2010taxes.org)
- Ways to Negotiate Credit Card Debt (debt-consolidation-2u.com)