According to most of the traditional indicators, the American economy is doing well, or at least as well as it’s been doing in a while. However, with such necessities as housing and healthcare becoming ever more prohibitively expensive for the average person, is it any wonder that, belying the propagandisticÂ happy talk, articles aimed at people with bad credit are some of our most clicked-on pieces of content?
It’s no secret that having bad credit brings serious complications to your life. This is doubly true if you’re trying to start your own business, when access to credit is of paramount importance. That’s why we’ve compiled a list of business credit cards that specifically cater to entrepreneurs with big dreams but poor credit scores.
Your credit score shouldn’t determine your ability to turn your business dreams into reality. The following credit cards claim to help you sidestep bad credit to live the American dream. Let’s see how well they deliver.
Capital OneÂ® SparkÂ® Classic for Business
Here’s a card for the credit-challenged that didn’t leave me wanting to take a Silkwood shower after reading about it: theÂ Capital OneÂ® SparkÂ® Classic for Business.
TheÂ SparkÂ® Classic for Business is marketed as a business card for people with “average” credit. It carries a high variable APR of 24.49% and a penalty APR ofÂ 30.9%. Those are the main drawbacks of the card. On the plus side, you’ll earn an unlimited 1% cash back on every purchase. Now, there are plenty of business credit cards that will see you earning cash back at a higher rate, but the vast majority of those cards are not available to those with more modest credit ratings. The card also carries no annual fee, no foreign transaction fee, and you can get additional employee cards at no extra cost.
As for benefits, you’ll get an auto rental collision damage waiver, travel and emergency assistance services, fraud coverage, and purchase security.
Another benefit of theÂ SparkÂ® Classic for Business is that Capital One will report your card activity to several business credit bureaus. This way, if you make your payments, you can improve your business credit.
Wells Fargo Secured Credit Card
The Wells Fargo Secured credit card, as the name suggests, is a card that requires a security deposit that establishes the amount of your credit line. There are no rewards or cash back to earn, but otherwise, the card is a pretty good deal.
A deposit of at least $300 is required, though you can deposit as much as $10,000. The card is available to U.S. citizens, permanent residents, and nonresident aliens. It’s also another card that reports your card activity to the credit bureaus, thus helping you build your business credit (assuming you make your payments in a timely manner!)
The card’s purchase APR is a variable 20.74% — a notably smaller APR than that of the cards I’ve listed thus far — and there’s no penalty APR. You’ll have to pay an annual fee of $25, which is not as nice as a $0 annual fee, of course, but lower than the annual fees of many cards. There’s a foreign transaction fee of 3% and a late payment fee of up to $38.
A note about interest:Â if you’re charged interest, the charge will be no less than one dollar. However, by paying off your entire balance by the due date each month, you can avoid paying interest on purchases.
If you make your payments on time, you may eventually become eligible for an upgrade to an unsecured Wells Fargo card, in which case your security deposit will be refunded to you. Another benefit:Â you’ll get protection for up to $600 on a cell phone against covered damage or theft.
Credit One BankÂ® Platinum VisaÂ® for Rebuilding Credit
TheÂ Credit One BankÂ® Platinum VisaÂ® for Rebuilding Credit isn’t a business credit card, but it certainly can be used by entrepreneurs with iffy credit as a credit card option. Should they, though? Let’s explore.
The Credit One BankÂ® Platinum VisaÂ® carries a variable APR ofÂ 17.49% to 25.49%, the lower end of which is pretty good for a poor-credit card. What’s unfortunate about the Credit One BankÂ® Platinum VisaÂ®, however, is the fact that your annual fee can be anywhere fromÂ $0 to $75 for the first year depending on your credit. For those whose credit score is bad (isn’t that the target audience here?), there will be an immediate $75 fee, reducing the $300 credit line (the minimum credit lineÂ Credit One BankÂ® will issue) to $225. And for each subsequent year, the annual fee can be as high as $99.
The nicest benefit of the card is undoubtedly the 1% cash back you’ll earn on all eligible purchases. However, consider the fact that only certain accounts will be given a grace period as far as interest goes. Without the grace period, interest will start accruing on your purchases immediately, regardless of whether you pay off your entire balance by the due date. There’s also a $19 charge to add another authorized user, which will come into play if you want to authorize an employee to use your card. Not to mention a 3% foreign transaction fee and a fee of up to $38 for late and returned payments. So while using the Credit One BankÂ® Platinum VisaÂ® for Rebuilding Credit will see you earning cash back (always a nice bonus for a bad-credit card), it’s not the most consumer-friendly card.
Green Dot primorÂ® VisaÂ® Gold Secured Credit Card
TheÂ Green Dot primorÂ® VisaÂ® Gold Secured Credit Card is a secured consumer credit card that can be used for business. The minimum deposit is just $200 while the maximum deposit is $5,000. The issuing company specifically states that there are no credit score requirements to apply for this card.
As it is a secured card, the APR is a low 9.99% (the cash advance APR is 18.99%), and the card carries a grace period of 25 days until interest on purchases will start to accrue, so if you pay off your card in full before the payment due date each month, you’ll avoid interest charges. Unfortunately, there’s an annual fee of $49, a foreign transaction fee of 3%, and there are no rewards or cash back to earn. The card does come with auto rental insurance and zero fraud liability, though.
OpenSkyÂ® Secured VisaÂ® Credit Card
Here’s another card that doesn’t even check your credit when you apply. TheÂ OpenSkyÂ® Secured VisaÂ® credit card is a personal credit card you can use to make business purchases. You don’t even need a checking account to get this card. It reports to all three credit bureaus, thus helping you build up your credit.
Though OpenSky deserves kudos for offering a credit card with no regard to the applicant’s credit score, the APR is a variable 18.64%, which is higher than that of some comparable secured cards. The minimum security deposit is $200, there’s a $35 annual fee, a 3% foreign transaction fee, and there’s a 25 day grace period at the start of each billing period in which you can avoid interest on purchases if you pay off your card in full. Not a bad deal for a card that has no credit score requirements whatsoever.
Applied BankÂ® VISAÂ® Business
One card that comes up a lot in discussions about business credit cards for those with poor credit is theÂ Applied BankÂ® VISAÂ® Business, which comes in both secured and unsecured versions. On the face of it, the card seems unsexy but reasonable — get the chance to build up your bad credit, and in exchange, you deal with a low maximum credit limit and zero rewards. However, the closer you examine theÂ Applied BankÂ® VISAÂ® Business, the worse it looks.
The unsecured version of this card comes with a steep APR of 23.99%, while the unsecured version, which requires an initial deposit of between $200 and $1,000 (your credit limit will be equal to the amount of your secured deposit, and the deposit is refundable upon closing the account), comes with an APR of 9.99%. However, if you get the unsecured card, you’ll have to pay an origination fee of $125 just to get the card, along with aÂ $9.95 monthly maintenance fee (that’sÂ $119.40 per year!). There’s also no grace period for the interest, meaning interest will start accruing as soon as you make your first purchase. Oh, and there’s also a late payer APR of 29.99%. The unsecuredÂ Applied BankÂ® VISAÂ® Business seems to be a cynical attempt to gouge vulnerable people with onerous terms and fees.
The secured card doesn’t come with an origination fee, but it does carry a $48 annual fee which comes due on your first billing statement and will reduce your initial credit availability. And while it drops the monthly maintenance fee and the 29.99% late payer APR, the secured card retains the lack of an interest grace period. For both cards, there’s a $30 per card charge to get additional cards for your employees, a minimum interest charge of $0.50 per transaction, a $38 late payment fee (they can do this because business credit cards are exempt from the requirements of the CARD Act, which limits such fees for personal credit cards), and a 3% foreign transaction fee.
There are better options out there if you want a bad-credit business card. In particular, the unsecuredÂ Applied BankÂ® VISAÂ® Business card ought to be illegal.
Statistically, it’s harder to start from a position of disadvantage in America than just about anywhere else. Thankfully, there are credit cards out there designed to cater to those whose circumstances have taken a toll on their credit rating. Of course, some of these cards are just attempts to take advantage of the vulnerable, but if you pay attention to the terms and fees, you can avoid the potential pitfalls and start climbing your way out of your credit hole.
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