It is a good practice to separate your business and personal...
Small business credit cards are a very good way of establishing a business credit history and separating personal finances from business finances.
Most business credit cards rely on an owner’s credit history and ask for a personal guarantee. That is why both business Employer Identification Number (EIN) and Social Security Number are required on the application. If a business owner does not have a decent credit or his credit took a hit in the recent past, it can be hard for him to get a business credit card.
As with an individual card, there is a secured card solution for that. Have a look at our editor’s top picks for secured card for small business use. Below the listing, you can find interesting details regarding secured cards.
Secured cards look and work like a regular credit card except one major difference: it requires a security deposit that you put into the bank as collateral. The bank extends a credit line that usually matches a deposit amount. Good offers let you ask for a credit line increase after a period of good card use, thus making a so-called hybrid card when your credit line is larger than a credit limit. The best issuers can then offer you to graduate to a totally unsecured card in a matter of time.
Almost all secured business credit cards charge you an annual fee, and it is important to know if the bank allows you to close the card without closing the account. The trick is if you close a credit account, your credit score will take a hit because of the aggregated credit limit decrease.
There are some important details to watch when shopping for a secured card no matter for business or for personal use. Find a card with a grace period – it will help you to manage the card easier but not all cards offer that. It is very important to know if the card reports to 3 major credit bureaus – it is the only way the card can build your credit history. And as usual, the higher the limit and the lower the APR you can find, the better.