Are there any unsecured business credit cards?

Note: All Orchard Bank credit cards are now issued by Capital One.

Yes, there are many unsecured business credit cards. In fact, if you have a well-established business with good existing credit, then you should have no difficulty finding an unsecured business credit card to use for your business needs.

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Establishing credit for your business is a good thing. Separating your business life from your personal life financially simply makes good financial sense. You don’t want a personal or business problem affecting each other. While most people look at this from a business prospective, if you don’t separate your business dealings and, for example, you have an auto accident and you are sued, then your business could be at risk as well!

What is the difference between secured and unsecured business credit?

In the world of lenders, a secured line of credit is when you use business assets to secure a loan of a line of credit. With credit cards, however, it is different. Just like a personal secured credit card, a secured business credit card offers a credit line based on the amount of money you deposit into the card.

To make it easy, think about it as you would a gift card. When you get a gift card for a friend, you decide how much money you want to put on that gift card. When you give it to your friend, they have that amount of money, and no more, to spend. This is what a secure card offers.

However, where a secured credit card is different is that you are required to make payments to that card every month, despite the fact that it is your money funding the card. The benefit to doing this is that credit card companies then report your regular payments to the major credit reporting agencies, which can help your business, establish credit.

There are typically a lot of fees associated with secured credit cards. However, some companies such as Chase, American Express, and Orchard Bank are offering cards with fewer or even no fees, outside of the standard interest rates and transaction fees you will find on a typical credit card.

Conversely, an unsecured credit card is offered to you based on your credit worthiness. You don’t have to supply any money, other than an annual fee if applicable; you simply get a line of credit based upon your business credit score.

Whether you choose a secured or unsecured line of credit, your credit card company will still have to follow the laws set forth in the Fair Credit Act.

When is it a good idea to get a secured business credit card?

Actually, there are a couple of situations where a secured business credit card might be right for you. The first situation is if you don’t have any business credit at all and want to work to establish the credit. This, of course, only works as a great credit option if you have a lot of upfront cash to use for the secured credit card.

The other reason you might choose a secured business credit card is if you have a business credit card that doesn’t allow you to limit how much your employees can spend on your secondary credit cards. A secured credit card not only works to improve your credit score but you can create cards with minimum credit lines for employee use if necessary.

Can unsecured business credit cards pose a danger to my business?

Just like with your personal credit, you can ruin your credit if you don’t treat your business credit right. Unsecured credit can pose a problem for business owners who spend more than the business has in its budget to pay off.

Sometimes business credit cards can have incredibly high lines of credit. You have to be responsible with your credit to ensure that you don’t go overboard in your purchases.

When you use a secured credit card, the credit limit doesn’t increase unless you have the ability to increase the balance on your card. What’s more, some credit card companies only allow you to increase the amount on such a card a certain times, like every 6 months.

According to Trade.Gov, it is your responsibility as a business owner to use your credit wisely. As a business owner, you will find that this simply makes good business sense. You will have to approach any credit card purchase with the attitude of how it fits in your budget.

If you take care to be responsible and you pay your bills on time, then you should have no difficulty maintaining unsecured business credit card debt.

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