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Best Business Credit Cards for Bad Credit in 2020

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Securing a line of credit for your business can be difficult when your credit score is below average or you’ve made credit mistakes in the past. But all isn’t lost and, in fact, some business credit cards for bad credit come with lax standards that make it significantly easier to get approved. This may mean they’re secured credit cards, which require a cash deposit as collateral to get started. However, small business credit cards for bad credit can help you get your foot in the door.

If you’re looking for the easiest business credit card to get, consider the cards we’ve highlighted below and how they might work for your small business.

Here are Bankrate’s top picks for business credit cards for bad credit in 2020:

  • Best overall: Capital One® Spark® Classic for Business
  • Best secured credit card for business: Wells Fargo Business Secured Credit Card
  • Best secured credit card with rewards: BBVA Compass Business Secured Visa Credit Card

Best overall

Capital One Spark Classic for Business

  • Earn an unlimited 1% back on all purchases
  • No annual fee
  • Available for average credit
  • Free employee cards

Why it’s the best overall business credit card for bad credit

We like the Capital One Spark Classic for Business the most among business credit cards for bad credit based on the simple fact this is an unsecured credit card. This means you won’t have to put down a cash deposit as collateral, and you can secure a real line of credit you can actually borrow against right away.

You can also get approved for this business credit card with “average” credit, which makes it a doable option if your credit isn’t stellar. Finally, we love the fact that there’s no annual fee and that you get free employee cards for your business. You also get the chance to earn 1 percent back on all the business purchases made with your card, and you can start building your credit right away.

Best secured credit card for business

Wells Fargo Business Secured Credit Card

  • Earn 1.5% cash back on your spending or 1 rewards point per $1 spent
  • Earn 1,000 bonus points when your company spend is $1,000 or more in any monthly billing period
  • $25 annual fee per card
  • Credit line from $500 to $25,000
  • Available to consumers with no credit or limited credit

Why it’s the best secured business credit card for bad credit

The Wells Fargo Business Secured Credit Card is the top secured credit card for business due to its relatively low carrying costs and the fact you can earn some rewards. This card charges a $25 annual fee for each card you carry, including up to nine additional employee cards, but you can access a line of credit between $500 and $25,000 depending on your income and other factors. This is a secured business credit card, however, meaning you’ll have to put down a cash deposit as collateral to get started.

Not only will your credit payments with this card be reported to your personal credit reports, but Wells Fargo reports your payment and usage behavior to the Small Business Financial Exchange as well. This means you’ll get the chance to build personal and business credit as you learn better credit habits and make on-time payments with your card. Also, as your credit score improves, Wells Fargo promises to periodically review your account to see if you’re eligible for an upgrade to one of their unsecured business credit cards.

Best secured credit card with rewards

BBVA Compass Business Secured Visa Credit Card

  • Earn 3x points at office supply stores and 2x points at gas stations and restaurants
  • Earn 1x points on all other purchases
  • $40 annual fee (waived for the first year)
  • Free employee cards
  • Secure your line of credit with a savings account

Why it’s the best secured business credit card for bad credit with rewards

The BBVA Compass Business Secured Visa Credit Card made our list due to the fact there’s no annual fee the first year and it has a generous rewards program. Earning 3x points at office supply stores and 2x points at gas stations and restaurants could easily help you rack up points quickly, and you’ll also get 1x points on all other purchases you make with this card.

You’ll have to put down a minimum deposit of $500 to get started with this card, but your deposit goes into a savings account set aside on your behalf. From there, your available credit will work out to 90 percent of your savings account balance, or $450 if you put down $500 as collateral.

This card also comes with free employee cards and perks like auto rental insurance for business, purchase protection against damage or theft, extended warranties, travel accident insurance and travel and emergency assistance.

How to choose the best business credit card for bad credit

Check your credit score

When it comes to startup business credit cards for bad credit, it’s possible you’ll have to start your journey with a secured credit card. However, some business owners assume their credit is poor when it’s really just average or “okay.” With that in mind, you should check your personal credit score to see where you stand. According to myFICO.com, a “fair” credit score ranges from 580 to 669, so you could potentially qualify for an unsecured credit card with a FICO score in that range, especially if it’s on the higher end.

Compare fees and interest rates

Make sure to check for fees, including added fees for additional employee cards. Other fees to watch out for include annual fees, application fees, late fees and over-the-limit fees. Interest rates tend to be high for all credit cards for bad credit, so you should check to see about ongoing APRs as well.

Look for rewards

You should also look for and compare rewards programs, including the type of rewards you can earn and any bonus spending categories that may be available. Ideally, you’ll find a business credit card for bad credit that offers a generous flat rate of rewards or bonus categories you happen to spend a lot in for your business.

Frequently asked questions about business credit cards for bad credit

Do business credit cards for bad credit help you build your credit score?

Business credit cards for bad credit can help you build your credit score since they report your credit movements to the three credit bureaus. However, some business credit cards don’t report your payments to your personal credit reports, meaning responsible credit use with a business credit card may not directly boost your personal credit score.

How do I apply for a business credit card for bad credit?

Applying for a business credit card online is easy. All you have to do is find the best card for your needs, hit “apply now,” and provide information like your name, Social Security number, business type, business and personal income, your address and other details related to your business.

Do I really need a dedicated business credit card?

Having a dedicated business credit card can be helpful if you need to keep personal and business purchases separate. A business credit card can also help you build your business credit score, which is separate from your personal credit score.

What is a secured credit card?

A secured credit card is any card that requires a cash deposit as collateral to get started. These cards are typically geared to individuals and small business owners who have poor credit (or no credit) that prevents them from qualifying for an unsecured credit card.

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom



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Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

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The government’s incentive to step in and bail out depositors when banks fail is clear from past experience.

By Anusha Chari & Amiyatosh Purnanandam

The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.

The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.

A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.

A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.

Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.

India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.

The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!

A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.

India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.

In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.

Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.

Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan

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5 Signs You’re Not Ready to Own a Home, According to a CFP

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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet. 

Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up. 

I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse

It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy. 

1. You have credit card debt

Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress. 

Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home. 

To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards. 

There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.  

2. You have bad credit

Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to

mortgage lenders
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home. 

Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home. 

Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future. 

3. You don’t have an emergency fund (or an inadequate one)

If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.

Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there. 

4. You don’t have separate savings for your home

I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt. 

When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value. 

Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership. 

5. You have a low savings rate

It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save. 

If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget. 

Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor. 

Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.

Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.

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