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Business credit cards are a great tool for accessing capital, but it can be difficult to qualify for them if you have poor credit. In that case, secured business credit cards are another option to consider.

In this guide, we'll explain how secured and unsecured credit cards work, so you know which type of card to choose for your business.  

‍What is a secured credit card?

‍A secured credit card is a type of credit card that requires a security deposit to open the account. The security deposit then serves as the card’s credit limit, and is typically refundable when the account is closed.

When you spend money using a secured credit card, that money is added to your balance and deducted from your available line of credit. You then have the option to pay the balance off completely or carry the balance month to month, making small payments. If you take the month-to-month route, you’ll pay interest charges as a result.

Secured credit cards give you a way to show lenders that you and your business are worthy of unsecured options. When used responsibly, they can help build a good credit score and lead to better credit card options in the future.

What is an unsecured credit card?

Most credit cards are unsecured cards. Unlike secured cards, they don’t require a security deposit to open, and the credit limit is determined based on your creditworthiness. Generally, an unsecured card should be your first choice, unless you have bad credit. These cards usually offer better interest rates and better rewards than secured cards.

Unsecured credit cards offer a revolving line of credit with payments required each billing cycle. With both secured and unsecured credit cards, it’s important to pay at least the minimum payment by the due date. Late payments negatively affect your credit score and can lead to your interest rate increasing.

Differences between secured credit cards vs. unsecured credit cards

The main difference between secured and unsecured credit cards is that secured cards require a security deposit as collateral, while unsecured cards offer a credit limit based on the creditworthiness of the borrower. Here’s all of the major differences to keep in mind:

Feature Secured Credit Card Unsecured Credit Card
Deposit requirement Yes, requires a security deposit that serves as the credit limit. No, doesn't require any security deposit.
Credit limit Set based on the amount of the security deposit. Determined by the creditworthiness of the applicant.
Credit score No credit score requirement. Typically requires good to excellent credit.
Fees Usually has no annual fee. Sometimes has an annual fee.
Interest rate (APR) Usually ranges from 18% to 26%. Usually ranges from 13% to 20%.
Credit building Good for building or rebuilding credit if the issuer reports to the credit bureaus. Also effective for building credit, provided payments are made on time and the issuer reports to credit bureaus.
Rewards and perks Typically fewer rewards and perks compared to unsecured cards. Often offers rewards like cash back rewards, travel benefits, and other perks.

Do secured or unsecured credit cards build credit faster?

Whether you use a secured or unsecured credit card, the process of building credit is the same. No matter what kind of credit card you have, lenders generally provide details of your payment history and card balance to the three major business credit reporting agencies.

Applying for a secured vs. unsecured credit card

The application process is the same for secured and unsecured credit cards. Once you choose a card, you can apply on that credit card company’s website. Typically, a business credit card application will ask you for the following information:

  • Business details: Your business name, address, industry type, legal structure, tax ID (EIN or SSN for sole proprietors), annual revenue, years in operation, and number of employees.
  • Personal details: Your name, contact details, Social Security number (SSN), ownership percentage, and role in the business.
  • Financial information: Estimated monthly spending and the intended use of the card.
  • Credit and security: Authorization for a credit check and agreement to a personal guarantee, if required.

In terms of eligibility, unsecured cards will require a higher FICO score, while it’s generally possible to qualify for unsecured cards with a low credit score.

Discover Ramp's corporate card for modern finance

How to choose between secured and unsecured credit cards for businesses

The choice is simple: Unsecured credit cards are the better option if you qualify for them. Here's why:

Benefits of unsecured credit cards

  • Rewards: Unsecured credit cards offer better rewards, like travel rewards, points, or cash back rewards.
  • Access to capital: Capital restrictions are one of the biggest pains business owners face. Unsecured credit cards give you more access to capital.
  • Expense management software: Certain business cards come with expense management software to help you manage your finances.

Transitioning from a secured to an unsecured credit card

If you use a secured credit card responsibly, in time, your credit card issuer may offer to upgrade you to an unsecured card.

This outcome relies on consistent, timely payments and a low credit utilization ratio. Upon converting the card to unsecured, your issuer will remove the requirement for a security deposit.

Here's what to expect if you transition from a secured to an unsecured card:

  1. Return of deposit: The cash deposit you initially made is returned to you. This refund can either be a direct payment or a credit to your account.
  2. Credit limit increase: Unsecured credit cards often come with higher credit limits. This increase reflects the issuer's trust in your ability to manage credit effectively.
  3. Improved credit profile: Transitioning to an unsecured card is a positive move for your credit report. It shows future lenders that you have successfully managed credit under more stringent conditions.
  4. Access to better terms: Unsecured credit cards may offer more favorable terms, including lower interest rates, better reward programs, and fewer fees.
  5. Continued credit building: Using your card responsibly remains crucial. Aim to make on-time payments and keep your balance low to further improve your credit score.

Build credit with a secured card

If your business doesn’t qualify for an unsecured credit card, you can use a secured card to build your business credit and open the door to an unsecured credit card down the line. Make sure you follow these best practices to build a strong credit history:

  • Payments: It’s imperative to make your payments on time, every time. It’s also a good idea to pay as much of your balance off as you can each month and avoid making minimum payments.
  • Spending: Also be sure to keep your spending in check. Never spend more than 30% of your credit limit, as doing so will raise your credit utilization rate, potentially harming your credit score.
  • Ask for limit increases: Most lenders won’t automatically increase your limit, but a higher limit could improve your credit score. After you’ve used your card properly for at least six months, call the lender and see if you qualify for a credit limit increase.

Try Ramp's unsecured corporate card

Ramp is an unsecured corporate card that your business may qualify for even if you have a limited credit history. If you're an e-commerce business, we also offer sales-based underwriting.

Ramp is a charge card, meaning you can access the money you need and pay off your full balance every month, avoiding interest and finance fees.

Our platform also comes with spend management features to help you stay in control of your finances, and you’ll earn 1.5% cashback each time you use it.

Try Ramp for free
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No personal credit checks or founder guarantee.
Thank you! Your submission has been received!
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Finance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

FAQs

A secured credit card requires a security deposit equal to the amount of the credit limit set for the card. An unsecured credit card does not require a security deposit. 


Unsecured credit cards have a stricter approval process than secured credit cards. They can also be dangerous for the user because spending limits are higher. Bad credit borrowers will be charged a higher interest rate than good credit borrowers. 


Ramp’s cards are unsecured, but they are business charge cards, not credit cards. As part of the underwriting process, Ramp pulls commercial credit bureau information for the business itself, not the owners. Business owners are not required to post a security deposit or submit to a personal credit check to be approved for a Ramp charge card. In addition to commercial credit data, Ramp considers bank balances and financials as a basis for approving businesses

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