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On your search for a business credit card, you’ll quickly learn something slightly counterintuitive—your personal credit score is one of the most important factors that will decide if you qualify for business credit card offers.
It makes sense, if you think about it. Your personal credit score indicates what kind of spender you are. Since you—as the business owner—are the one doing the spending on your business credit card, issuers will look to your personal credit score to decide if you qualify for their credit card.
Even though this makes sense in theory, it can be frustrating in practice.
As a business owner, you might prioritize your business’s finances over your own personal finances, and your personal credit score might suffer because of this sacrifice.
If you’re unable to qualify for an unsecured business credit card because of your personal credit score, your next move is to improve your personal credit.
How exactly do you build personal credit, though?
One of the most sure-fire ways to do this is through a secured personal credit card, and one of your many choices is the BankAmericard Secured Credit Card.
We’ll review this secured credit card option and see how it stacks up against other choices for business owners who are looking to build credit.
If you have a credit score higher than 550, opt for the Capital One Secured Mastercard over the Bank of America Secured Credit Card. If you have a lower score, the Bank of America Secured Credit Card is still a good option, you’ll just have to pay an annual fee for it.
To understand what the BankAmericard Secured Credit Card can offer business owners, we need to cover the fundamentals first. Let’s break it down starting with the basics—what is a secured credit card exactly, and why should you consider one?
For starters, let’s nail down what makes a secured card different from your average, everyday credit card.
The security deposit that you have to provide for a secured credit card acts as collateral that mitigates the risk that credit card issuers take on by extending a credit card to those with lower personal credit scores. In the worst case scenario that you can’t repay what you owe on the card, the issuer can simply seize the deposit you’ve put down against the secured credit card. This is inherently a much less risky deal for an issuer than extending an unsecured business credit card.
Put simply, secured credit cards are meant for building credit. They offer people with lower credit scores an opportunity to access a credit line despite their credit history.
When you use a secured credit card responsibly over time, you’ll eventually improve your credit score and, as a result, open up the opportunity to qualify for an unsecured credit card.
Now that we’ve covered what a secured credit card is exactly, it’s time to take a look at the Bank of America secured credit card specifically.
What kind of terms does this particular secured personal credit card offer business owners who want to build credit for future funding potential?
Let’s check it out:
Depending on your credit history, your income, and how much you’re able to put down as a security deposit, you’ll be able to access a credit limit of anywhere from $300 to $4,900 with the Bank of America Secured Credit Card.
If you provide a security deposit of more than your income and credit history can qualify you for, Bank of America with return the difference to you as a check.
One thing to understand about secured credit cards is that you’ll accumulate interest on your overdue spending even though you have a security deposit on the line of credit. Just like any unsecured credit card, secured credit cards will come with an APR that they’ll charge on any balance you carry from month to month.
The Bank of America Secured Credit Card is no exception. You’ll have to check the terms for the BankAmericard Secured Credit Card to see its current ongoing APR for overdue spending, as the rate can change and will vary based on the market prime rate.
As with any credit card, carrying a balance with this secured card will cost you in money and in credit score points.
You also have to pay to be able to build credit with this secured credit card. More specifically, this secured credit card comes with an annual fee of $39. Additionally, you’ll have to pay a balance transfer fee of either $10 or 3%, whichever amounts to the greater sum of money.
Not to mention, you’ll have to shell over $10, 3%, or 5% for cash advance with this card, depending on the manner through which you acquire the cash. Plus, you’ll have to pay up to $38 for a late payment and up to $27 for a returned payment.
Finally, you’ll have to pay a foreign transaction fee of 3% of every transaction you make abroad.
Again, these numbers are susceptible to change, so you can check out the details for the BankAmericard Secured Credit Card’s fees here—it’s crucial to go over your current spending habits to see if this card’s fees will cause you to rack up a lot of charges.
One of the main perks that distinguishes the Bank of America Secured Card from the crowd is its deposit return practices. After a year with this secured card, you can have your account reviewed for a return of your security deposit. This decision will be based on your overall credit history, and if you qualify, you can use your card without the security deposit.
Most secured cards require you to go through the whole application process again to access unsecured credit after spending responsibly, but the Bank of America Secured Card makes unsecured credit that much easier to access.
With the Bank of America Secured Credit Card covered, it’s time to take a look at some of the other choices available to business owners who need to build credit.
Here are the two best alternatives to the BankAmericard Secured Credit Card on the market.
Let’s see how they compare:
The Capital One Secured Mastercard is another option for business owners looking to build credit with a secured card. Just like the Bank of America Secured Credit Card, the Capital One Secured Mastercard is a secured personal credit card that provides credit to business owners whose personal credit score leaves something to be desired.
Beyond the fundamentals of being a secured credit card, however, the Capital One Secured Mastercard differs wildly from the BankAmericard Secured Credit Card.
For starters, unlike the Bank of America Secured Credit Card, the Capital One Secured Mastercard doesn’t come with an annual fee. So, you won’t have to pay a yearly lump sum for this opportunity to build credit.
Additionally, based on your credit history, the Capital One Secured Mastercard could let you make a security deposit that can be as small as 25% of your credit line. Meanwhile, the Bank of America Secured Credit Card requires a security deposit of 100% of your credit line, no matter your creditworthiness.
All that said, to qualify for an unsecured card after improving your credit with the Capital One Secured Mastercard, you’ll have to apply for a new credit card, whereas the Bank of America Secured Credit Card facilitates the process for you by allowing you unsecured credit on the same card.
If you’re in the market for a secured credit card, decide whether this ease into unsecured credit is worth sacrificing the perks that the Capital One Secured Mastercard offers.
Another option for business owners for less-than-stellar credit? The Capital One Spark Classic.
This is the only unsecured business credit card on the market that’s available to business owners with less-than-stellar credit. If you’re working with a personal credit score that’s 550 or above, then you might be able to get your hands on the Spark Classic and its unsecured credit limit.
Not to mention, you can rack up cash back as you spend with the Spark Classic—for every dollar you spend on your business, you’ll see a 1% unlimited cash back return. Plus, you won’t have to pay an annual fee to access these rewards.
The best part?
Capital One will report your activity on the Spark Classic to personal credit bureaus, so you’ll be able to improve your credit swiftly if you spend responsibly.
Even if you’re not quite able to qualify for the Spark Classic, this unsecured business credit card is the perfect next step for business owners who are building personal credit with a secured credit card.
The verdict on the Bank of America Secured Credit Card depends on your own particular situation. If your personal credit score rounds in somewhere above 550, then you might be able to qualify for the unsecured Spark Classic—in which case, you should definitely opt for it. With unsecured credit, cash back rewards, and no annual fee, the Spark Classic is far and away the best credit card for business owners whose credit isn’t quite excellent.
However, if you’re not yet able to qualify for the Spark Classic, you’ll need to take a look at your secured credit card choices. If you’re willing to prioritize ease into unsecured credit, then the Bank of America Secured Credit Card could be your best option.
That said, if you’re not worried about easing into unsecured credit, then the Capital One Secured Mastercard is likely a better choice for you—with no annual fee and a flexible security deposit, this is one of the best tools for building credit available on the market.