Beware of secured business credit cards

Sunday, October 10th, 2010
Updated: October 10th, 2010
The content is accurate at the time of publication and is subject to change.

Small businesses are the first casualties of a damaged credit history and find it impossible to get a business credit card that is unsecured. Most often small businesses use personal cards as they are left with no other choice. In such cases, when things go wrong in small business transactions, it has a direct bearing on the credit history of the individual.

Though the secured business credit card is the best option, practically, it is not viable as banks firm up the lending criteria if it is for business purposes. Though some issuers may have withdrawn cards from their portfolios, there could be many others. Interested parties could search online for secured cards or consult with their respective banks.

The biggest disadvantage businesses face with regard to the secured card is the collateral (deposit) that is required by the bank. While it might sound like a much better option instead of having to part with a personal asset, it could create problem where cash flow is not very good. The cash that is deposited as collateral gets stuck and cannot be accessed until the closure of the card or until the business shifts to an unsecured card. For small businesses requiring $10,000 as credit for instance, the deposit required would be the equivalent amount.

Businesses get tied up when the cash is blocked in this manner and they lose opportunities to secure good deals due to the cash deficit. Cash-strapped small businesses do not possess that kind of cash flow and rely on credit due to this fact. But the banks are in a safe position due to the collateral they demand from small businesses, especially since the failure rate with these small businesses is quite high.

New businesses that do not have a credit history also use secured credit cards since they are ineligible to use unsecured cards. Higher interest rates as well as other additional fees are levied on secured credit cards when compared to the unsecured cards. This could be a setback for new businesses that have just launched. Some banks have started issuance of the “starter business cards” that are much more appropriate than the secured cards.

Customers having secured business card are at a disadvantage as the interest rates and fees are very high and are also less competitive. But for businesses that need to work on their bad credit history there are very few viable options. However, there is one other option, which is the CSI global secure MasterCard. This is a good option for small businesses that seek the secured credit card.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

Latest Secured Credit Card News

Sunday, March 1st, 2020

Secured credit cards are credit cards that are supported by a money deposit of about $200-$1000 paid upfront. This amount is used as collateral for issuers and usually equals to the future credit line. This type of card can be extremely welcome if you are a beginner at credit issues or for some reason have to rebuild your credit almost from scratch.

Sunday, February 9th, 2020

Are you new to finance and want to find out what to start building your credit history with? Or maybe you’ve had hard times under your belt and now have to rebuild your credit score bit by bit? Then, probably you’ve already stumbled on some information about secured credit cards and prepaid cards.

Thursday, October 25th, 2018

Secured credit cards have been increasing in popularity over the last several years, and for good reason. For folks who have no credit history, limited credit history, or a poor credit score, a secured card offers a path toward financial wellness and a healthy credit score.

Wednesday, December 6th, 2017

Anyone with a credit card, debit card, prepaid card, or secured credit card will be able to pay for transit tickets in London and other major cities without having to deal with paper tickets or cash, thanks to innovative new payment solutions from Visa.

Wednesday, July 5th, 2017

Young people often get a bad reputation for being irresponsible with money, but a recent survey shows that in fact, today’s young folks may actually be savvier and more responsible with credit than their parents.

Horizon Card Services Group One Freedom Card
Copyright © 2001-2024 All Rights Reserved.

See the credit card's terms and conditions on the online application page. Note that this website may be compensated by credit card issuers when the visitor applies for a card through the links on this website. We do our best to maintain all information accurate and up to date. However, we do not warrant the credit card information won't change. Click the "Apply Online" button and review the current info on the secure credit card terms page.

Information in these articles is brought to you by Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles.

The webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the website are property of their respective owners.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult a card's issuing bank for terms & conditions. makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that may be compensated by the credit card issuers when the readers apply for a credit card through this site. is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. does not review or list all available financial or credit offers.

You've successfully subscribed!

Please specify the following:All these fields are optional

Thank you for providing this information! We will make sure our letters are useful for You.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.