A secured business credit card is backed by a deposit and acts like a normal business credit card. Business owners with poor credit or limited credit will find it easier to qualify for a secured credit card when compared to an ordinary business credit card. Secured business cards can help you establish business and personal credit.
If you have less than perfect credit or a thin credit history but are looking for an unsecured line of credit, consider Fundbox. They offer no credit check business loans and business lines of credit of up to $100K. Prequalify online in minutes.
Best Secured Business Credit Card: Wells Fargo Business Secured Card
The Wells Fargo Business Secured Credit Card helps business owners with credit scores below 640 build personal and business credit. The card offers a maximum credit line of $25k, up to 10 employee cards, and rewards. The Wells Fargo card has rates starting at 16.15% and is one of the only secured business credit cards available nationwide.
If your credit score is above 640 (check here for free) you might qualify for an unsecured small business credit card. Read our article on the best small business credit cards to see a comparison of the top cards as well as our number one recommendation. If your score is below 640, keep reading for a look at the Wells Fargo Business Secured Credit Card.
Wells Fargo Business Secured Card: Costs, Terms, & Qualifications
|Wells Fargo Business Secured Credit Card|
|Credit Requirement||550+ personal credit score|
|Maximum Credit Line||Up to $25,000 (credit line equal to amount deposited in collateral account)|
|APR||16.15% current rate (prime rate + 11.90%)|
|Annual Fee||$25 per card|
|Number of Cards||Up to 10 employee cards ($25 per card annually)|
|Rewards Program||1 point or 1% cash back per dollar spent with no limit|
|Foreign Transaction Fee||None|
|Balance Transfers||Not permitted|
|Learn More||Visit Wells Fargo|
Alternatives to Secured Business Credit Cards
Secured business credit cards are a great option for business owners looking to build or reestablish their credit. However, since they require a deposit at least as large as your credit line they’re not helpful if you don’t have a lot of cash on hand. Instead, check out a short-term business loan below.
Best Secured Business Credit Card Alternatives
|Minimum Credit Score|
|Minimum Time in Business|
|Maximum Loan Amount|
Business secured cards and alternatives are most commonly used by business owners with poor or thin credit. However, recent changes to credit bureau reporting might have increased your personal credit score. Starting July 1, 2017, Experian, Equifax, and TransUnion will exclude records of civil judgments or tax liens that don’t have minimum identifying information. It’s important to check your credit score to see if yours has increased.
Why We Recommend The Wells Fargo Business Secured Card
The terms for the Wells Fargo Business Secured Card are favorable for a secured card. Wells Fargo typically approves most business owners with a credit score above 550 and you can deposit between $500 – $25k into your collateral account. The APR on this card is currently 16.15% and is significantly lower than many of the other secured cards available.
You can even enroll in a rewards program with the Wells Fargo Business Secured Card. Once enrolled, you can choose to either earn 1 point or 1% cash back per dollar spent. If you choose the points you can redeem them for gift cards, travel, and more. However, this Wells Fargo Rewards program is optional and costs $50 per year, waived the first year.
Additionally, the Wells Fargo Business Secured Card has a $25 annual fee per card, up to 10 employee cards max. Although, if you spend enough on the card the rewards points/cash back can offset the fees, and once you build your credit you can apply for an unsecured small business credit card with better terms.
Wells Fargo reports payments on this card to both the consumer and business credit bureaus such as Dun & Bradstreet. This means that if you regularly make timely payments, you can boost both your personal and business credit score. For more information on the types of business credit scores, you can read our ultimate business credit score guide.
Wells Fargo Business Secured Card Costs, Rates, & Fees
The Wells Fargo Business Secured Card’s APR is typically pegged to the prime rate plus 11.90% and is currently around 16.15%. However, since the APR is pegged it can change based on market conditions. Further, the Wells Fargo card has a cash advance fee equal to the prime rate plus 20.74% for each advance.
Your APR or cash advance fee can change without your knowledge. Business cards are not covered the Credit Card Accountability Responsibility and Disclosure Act (or CARD Act), which regulates interest rates and other fees on consumer credit cards. It’s therefore important to pay off your card balance in full each month, especially if you’re trying to better your business credit score.
The Wells Fargo Business Secured Card charges a $25 annual fee per card. It also has a $50 annual card fee to enroll in its rewards program. However, if you charge at least $7.5k to your card you’ll offset the annual fees with cash back or reward equivalents. The card doesn’t allow balance transfers and there are no foreign transaction fees.
Wells Fargo Business Secured Card Credit Line & Collateral
Secured credit cards require an initial deposit that becomes the collateral for your credit line. The possible credit line on a Wells Fargo Business Secured Card can range from $500-$25k. The initial deposit into your account will be your credit line. For example, if you deposit $1k initially, your monthly credit limit will be $1k.
When you open a secured business credit card with Wells Fargo you make an initial deposit into a collateral account. If you want to add funds later it’s treated as a credit line increase request and requires a credit check. If you want to withdraw funds from the account it will be treated as a cash advance and subject to cash advance fees.
Wells Fargo Business Secured Card Rewards Program
The Wells Fargo Business Secured Card is one of the only business secured credit card we reviewed for this guide that offers a rewards program. For a $50 annual account fee (waived the first year), you can enroll in Wells Fargo’s Business Rewards Program. That fee covers the primary cardholder and all employee cards on the company account.
Once enrolled, you can choose to earn either rewards points or cash back. If you pick cash back you’ll earn 1% on all purchases as a statement credit to the account. If you pick points you’ll earn 1 point for every dollar spent on the card, redeemable for gift cards, hotels, and more. For information on the better option for you, read our article on points vs cash back.
Further, Wells Fargo offers bonus points or cash back for customers who regularly use the card. For every month that your total account finances at least $1k collectively, you can get 1k bonus points or a $10 statement credit. This can happen indefinitely and the threshold resets at the beginning of the new month.
If you’re looking for an unsecured business credit card with better rewards, check out the Chase Ink Cash card. The business credit card offers cash back between 1% – 5% as well as an introductory $300 statement credit. Business owners with a 690+ credit score can apply.
Wells Fargo Business Secured Employee Cards
Wells Fargo allows for up to 10 cards per Business Secured Card account. Your overall credit line will be allocated evenly across each of your cards. However, you can call Wells Fargo directly to set spending limits on each individual card. Each card costs $25 annually but the $50 annual fee for the rewards program covers all cards.
This means that it’s possible to offset your annual card fees with either cash back or rewards points. For example, if your employees together charge $1,000 to your account in one month, your business account gets $10 cash back or 1,000 points (worth $0.01 per point). The breakeven point is $7.5k for one card and even lower on a per-card basis the more cards you have.
How to Apply for a Wells Fargo Business Secured Card
You can apply for a Wells Fargo Business Secured Card online, over the phone, or in-person at a Wells Fargo branch. When you apply, you must provide both your SSN and your EIN if your business has one. Wells Fargo will typically pull your personal credit report and business credit report. However, there is no minimum credit score, making it a great credit card for startup businesses.
What is a Secured Credit Card?
A secured business credit card is a revolving line of credit designed for business owners with poor or limited credit. This means they typically can’t qualify for an unsecured business credit card and need a secured alternative. The credit limit on a secured business card is equal to the cash deposit held in a collateral account.
Many business owners who have been turned down for an unsecured business credit card can qualify for a secured credit card. This is because you have to put up a security deposit in a “collateral account” connected to the card. The lender therefore has a guaranty that they will be able to collect what is owed to them, meaning they can accept riskier borrowers with low credit.
Secured business credit cards are important for a couple of reasons. First, it can help establish or build both personal and business credit. Second, a secured business card helps separate your business and personal expenses along with a business checking account. This makes a secured business card a great option if you can’t qualify for a business credit card.
However, a viable alternative to secured business credit cards is to use a prepaid business card. However, prepaid cards cannot help you build credit, and you must use caution because some of them are riddled with fees. Let’s look at the differences between the two in greater detail.
Secured vs. Prepaid Business Credit Card
While a secured business credit card might seem similar to a prepaid credit card there are many differences. However, the number one difference between the two is that a secured business card acts like a line of credit while a prepaid business card acts like a debit card. This difference also changes the way deposits/collateral are treated.
For example, the initial deposit with a business secured card is used as collateral while the initial deposit with a prepaid business card is used to pay for the expenses. This means that with a secured credit card you pay your bill monthly just like any other business credit card. If you don’t pay the balance in full it’ll carry over with an APR charge.
A prepaid business card, on the other hand, when you make a purchase the expense is deducted from your deposit. For this reason, prepaid business credit cards don’t let you carry a balance and don’t help you build your credit. Still, they are a great option for managing employee expenses, among other things.
If you want to try out prepaid cards, give Bento for Business a try. You can manage where, when, and how much employees spend. Also, reporting on each employee card only takes seconds and can be integrated right into your accounting system, making paper employee spending reports a thing of the past. Try Bento free for 60 days and get your setup fees waived and 2 free cards.
Alternative Secured Business Credit Card Options
Wells Fargo is our recommended provider of secured business credit cards. Still, this doesn’t mean that they’re the only lender that offers business secured cards. Two other providers you might want to look at include both First National Bank and BBVA. Let’s take a look at each secured business credit card in a little more detail.
Secured Business Credit Card with Larger Limits: First National Bank
If you need a larger credit limit on your secured business credit card we recommend First National Bank. Their secured business credit card offers limits as high as $100,000. However, you’re required to put down a deposit equal to 110% of your credit line and the card comes with an annual fee of $39.00 and an APR that’s typically higher than Wells Fargo.
Secured Business Credit Card with a Free Rewards Program: BBVA
If you’re concerned with earning rewards you should consider BBVA. Once approved, they’ll enroll you into their rewards program for free and you can earn 1 Compass Rewards point for every $1 you spend. Like First National Bank, the BBVA card requires a 110% deposit and comes with an annual fee of $40, waived the first year.
Overall, a secured business credit card is a good option if you’re a business owner with bad or thin credit. Business secured cards offer business owners a chance to build their business and personal credit scores. What’s more, you can even earn cash back or rewards points by using a secured business credit card.
What is a Secured Credit Card?
A secured business credit card is designed for business owners who can’t qualify for an ordinary business credit card due to bad or limited credit history. By making timely payments every month on a secured business credit card, you can build up your credit and eventually “graduate” to an unsecured, ordinary business credit card.
Almost anyone can qualify for a secured credit card because you have to put up a security deposit in a “collateral account” connected to the card. Your credit limit is the amount of money you put up as security. For example, if you deposit $2,000 in your collateral account, your credit limit on the card will be $2,000. This accomplishes two things. It forces you to only make business expenses that you can afford, and it protects the card issuer in the event of default.
An alternative to secured credit cards for those with poor credit is to use a prepaid debit card. However, prepaid cards cannot help you build credit, and you must use caution because many of them are riddled with fees. If you are considering the prepaid route, we like the Bluebird card from American Express because it has the lowest fees.
Why We Recommend Wells Fargo’s Secured Business Credit Card
We like the Wells Fargo business secured credit card because it has a rewards program, a low APR, and a high credit line, all of which are atypical for a secured credit card.
To begin with, there are several secured consumer credit cards, but Wells Fargo is one of the few banks offering a secured business credit card. Having a secured business credit card is important for a couple different reasons. First, it can help you establish or build up your business credit score (in addition to your personal credit score), which comes in handy when applying for a business loan. Second, a secured business card helps you separate your business and personal expenses because it can only be used for business purposes.
The terms for this Wells Fargo card are pretty favorable for a secured card. Wells Fargo gives you the option to pay $50 per year (waived the first year) to enroll in its rewards program. Once enrolled, you can choose to earn either rewards points or cash back, redeemable for gift cards, travel, and more. The APR on this card is 13.15 %, significantly lower than the 16 % average for secured credit cards. Lastly, you can get a credit line as low as $500 and as high as $25,000, depending on how much cash you have on hand to deposit.
On the downside, you have to pay both an annual fee of $25 per card and an annual $50 rewards fee if you want to earn rewards or cash back. That can be tough for a small business that is already struggling from poor credit, especially one that’s planning on issuing several employee cards. However, if you spend enough on the card each year, the rewards points/cash back will offset the fees. If you’re diligent about making timely payments, you can eventually graduate to an unsecured card, which offers many more perks than a secured card.
How to Apply
You can apply for a Wells Fargo Secured Business Credit Card by phone or in person at a Wells Fargo branch.
When you apply, you must provide both your SSN and your EIN if your business has one. Wells Fargo will pull your personal and business credit history. Even though they do a credit check as part of the application process, Wells Fargo doesn’t require a minimum credit score to qualify for the secured business credit card.
Wells Fargo reports payments on this card to both the consumer and business credit bureaus. If you regularly make timely payments, you can boost both your personal and business credit score.
Credit Line/Security Deposit
Secured credit cards require an initial deposit that becomes the basis for your credit line. The credit line on a Wells Fargo secured business card can range from $500 to $25,000,
When you open a secured business credit card, Wells Fargo will open an associated collateral account for you. The initial deposit in your collateral account will be your credit line. For example, if you deposit $1,000 in your account, your monthly credit limit will be $1,000.
Make sure you choose your deposit amount carefully. If you want to add more funds later, this will be treated as a request to increase your credit line and requires a second credit check. If you want to withdraw funds from the account, this will be treated as a cash advance and subjects you to a higher 23.99 % APR.
Most secured cards work the same way as Wells Fargo, but a few will limit your credit line to a percentage of your deposit. For example, BBVA Compass’ secured business credit card extends you a credit line that is 90 % of the deposit in your collateral account.
Rewards Points/Cash Back
These days, most people won’t even consider an unsecured credit card if doesn’t offer a rewards programs. Now, secured cards are catching on to the trend. For a $50 annual fee that’s waived the first year, you can enroll in Wells Fargo’s Business Rewards Program. That fee covers the primary cardholder and all employee cards on the company account. Once enrolled, you can choose to earn either rewards points or cash back.
Cash back means that you earn $1 for every $100 spent on the card. Points means you earn 1 point for every $1 spent on the card. We recommend choosing points over cash back for this card because it offers more flexibility. You can redeem points for gift cards, hotels, travel, or if nothing strikes your fancy on the rewards catalogue, trade in your points for a statement credit.
Choosing points also makes you eligible for rewards bonuses. Every month that your company as a whole (including all employee spending) spends at least $1,000 on the card, you get 1000 bonus points. You also get a 10 % points bonus whenever you redeem your points online (e.g. get 2,500 points added to your account when you redeem 25,000 points)
There are two caveats to choosing points, however. The first is that their value will vary based on what you redeem them for (e.g. gift cards, travel, etc.). The second is that Wells Fargo business rewards points expire after 3 years, but cash back never expires.
APR and Balance Transfers
It is always wise to pay off your credit card balance in full every month. This goes for everyone but is especially advisable for someone who’s trying to rebuild their credit with a secured card. If you must keep a balance, then it’s wise to pick a card with a low APR.
APR is the cost of borrowing money on your credit card. The APR for Wells Fargo is a variable 13.15 %. This is actually quite low compared to what some business credit cards, such as Capital One Spark cards, charge. Even our recommended card, Chase Ink Plus, charges more interest.
A variable APR means that it can change based on market conditions. Credit card interest rates have fallen over the last few decades, but there’s usually not a whole lot of variation from year to year.
Remember that your regular APR can change under other circumstances too. If you’re late with a payment, you could face a higher penalty APR. If you withdraw cash using your credit card (cash advance) or withdraw over your credit line (overdraft), you may be subject to a higher APR and other fees. Always review your cardholder agreement carefully, so you understand your APR.
Wells Fargo Secured Business Card doesn’t allow balance transfers. A balance transfer can help people with credit card debt lower their monthly payments by moving their debt to a low or no-interest credit card. Capital One Spark cards are the best options for balance transfers, but you need excellent credit to qualify.
Annual Fees and Foreign Transaction Fees
Unlike APR, which only affects you if you carry a balance, annual fees and foreign transaction fees affect all cardholders.
The Wells Fargo secured credit card charges an annual fee of $25. This is on top of the $50 fee that is charged for the rewards program. While this seems high, if you spend at least $7,500 per year (giving you $75 of cash back), this offsets the annual fee and rewards program fee.
Secured cards typically carry an annual fee of around $20 -40. Some consumer secured cards (see list here) don’t carry fees, but they won’t help you with establishing business credit.
This card carries foreign transaction fees of 3 %.
If you have employees, you may want to issue a credit card to them to use for business purposes.
Wells Fargo will issue you up to 10 employee cards (the card does not say “secured” on it). Your credit line will be allocated among your employees, and you must call Wells Fargo to specify the spending limit on each employee card.
For each employee card, you must pay a $25 annual fee. However, the $50 annual rewards fee covers all cards on the company account. All employee expenses generate rewards points/cash back for your company. For instance, if your employees together charge $1000 to the card in one month, your account gets $10 cash back or 10 points.
If you have poor or limited credit but money to put towards a deposit, you’re the ideal candidate for a secured credit card. Wells Fargo’s Business Secured Credit Card can help you establish or rebuild business credit, and it features a low APR, high credit line, and rewards program.
The card does have an annual fee of $25 per card and a rewards program fee of $50, but most businesses will offset this fee with their annual spending. Not to mention, if you enroll in rewards, you’ll be earning points and cash back. Eventually, you will be able to obtain an unsecured card once you establish or rebuild your credit with the secured card.