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If your search for a business credit card has brought you to the Bank of America secured card—and secured business credit cards in general—then you’ve figured out something very important about the business credit card process: Your personal credit score is crucial in determining whether or not you qualify for a business credit card.
As counterintuitive as this may seem, it makes sense if you think about it: Your personal credit score indicates what kind of spender you are. And since you, as the business owner, are the one spending on your business credit card, issuers will look to your personal credit score to decide if you qualify for their credit cards.
But as a business owner, you might prioritize your business’s finances over your own finances, and your personal credit score might suffer as a result. If you’re unable to qualify for a traditional, unsecured business credit card because your personal credit score is challenged, your best course of action is to improve your personal credit score by responsibly using a secured personal credit card—and one of your many choices is the BankAmericard Secured Credit Card.
We’ll go through the features of this Bank of America secured card, then examine how it stacks up against other choices for business owners looking to build credit.
The Bank of American secured card could be a great fit for you—but first, let’s go through the finer details of secured cards in general.
As you might imagine from its name, a secured credit card requires that you provide a security deposit up front. This deposit then acts as collateral, which secures the card. That mitigates the risk that card issuers, like Bank of America, 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 that security deposit—much like a business loan secured with collateral. This is inherently a much less risky deal for an issuer than extending an unsecured business credit card, in which a security deposit isn’t required.
Basically, secured credit cards like the Bank of America secured card or other similar 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.
Have a good hold on secured credit cards in general, and whether they’re the right move for you? Let’s look specifically at the Bank of America secured card.
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 card.
If you provide a security deposit of more than your income and credit history can qualify you for, Bank of America will 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 a traditional 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 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. If the point of using a secured credit card is to build your credit score, but you think you’ll carry a balance, then you might not be quite ready for a credit card at all yet—we’ll talk another option below.
Unfortunately, you’ll have to pay to be able to build credit with the Bank of America secured card. Here’s how the BankAmericard Secured Credit Card’s major fees break down:
Again, these numbers are subject to change, so be sure to check out the updated details for the BankAmericard Secured Credit Card’s fees. Also review your current spending habits, and 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 its competitors is its deposit return practices.
After a year with this card, Bank of America will review your account to see whether you’re eligible 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 deposit (in other words, as an unsecured credit card)—whereas most secured cards require you to go through the entire application process again to access unsecured credit.
With the Bank of America secured credit card covered, let’s explore some of the other choices available to business owners who need to build credit, or who just want to have access to a card to spend for their business:
Just like the Bank of America secured card, the Capital One Secured Mastercard is a secured personal credit card that provides credit to business owners whose personal credit score needs to be built—or rebuilt. Beyond that similarity, however, the Capital One Secured Mastercard differs wildly from the BankAmericard Secured Credit Card.
For starters, unlike the Bank of America secured card, the Capital One Secured Mastercard doesn’t have an annual fee. So, you won’t have to pay yearly 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. That’s opposed to the Bank of America secured credit card, which allows you to access 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 for Business.
This is the only unsecured business credit card on the market that’s available to business owners with poor credit who need to get their scores up. 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.
You can also rack up cash back rewards as you spend with the Spark Classic—for every dollar you spend on your business, you’ll get a 1% unlimited cash back return. And you won’t have to pay an annual fee to access these rewards.
Plus, 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 yet able to qualify for the Spark Classic, keep this unsecured business credit card in mind. It’s the perfect next step for business owners who are building personal credit with a secured credit card.
Maybe after reading through all of this, you’ve decided that you’re not quite ready take on card that reports to a credit bureau yet. And that’s smart! You don’t want to open up even a secured line of credit until you’re certain that you’re able to pay your bills in full and on time. That’s the best way to build healthy credit, both for yourself and your business.
A great way to figure out when to apply for that secured card is to get a prepaid business debit card first. With a prepaid business debit card, you’ll load funds from your business bank account directly onto your cards. That way, you’ll easily know if you’re inclined to max out your card, because you literally can’t—you can only spend within the bounds of your preloaded funds. However, these cards don’t report to credit bureaus, so they won’t help you build your credit score. Instead, they’ll help you build good financial habits, on your own terms.
Our prepaid business debt card pick is the Bento for Business. Not only can you use this card wherever Mastercard is accepted, but the Bento also integrates into your business accounting software. That way, you can really get a handle how and where you’re spending.
The verdict on the Bank of America secured card depends on your particular situation.
First off, if your personal credit score is around 550+, then you might not need to use a secured credit card at all—instead, you might able to qualify for the Capital One Spark Classic. 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 prioritize ease into unsecured credit, then the Bank of America secured card could be your best option.
But 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 on the market for building credit.
And if you’re not ready for either an unsecured or secured credit card, that’s okay, too! The Bento for Business will help you build healthy credit-spending habits, and you don’t need to worry about negative card activity damaging your credit score.
Whether you opt for the Bank of America or not, be sure to use your business credit card wisely: Pay off your bills in full and on time, spend well below your credit limit, and don’t forget about the more unusual ways to increase your credit score.