Secured vs unsecured cards

Rho Team
January 25, 2022
read time
1 minute
Reviewed by
February 21, 2024

How to obtain the corporate card  you need to scale—without putting your company’s assets on the line

As you explore various corporate cards to keep your operations running smoothly and your business growing, you’ll undoubtedly come across secured and unsecured corporate card models—with the former often offered to young or scaling companies that are still building out their credit history.

So, which is right for your business?

A secured card may sound like a great choice—”secure” is just another word for “safe,” right?—but it can actually have major implications for a growing company. (Hint: the security is for the benefit of the card provider, not your organization.)

In this article, we clarify what secured and unsecured corporate cards really entail and explain why unsecured options like the Rho Card can be a much better option for a high-growth business.  

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Breaking down secured vs. unsecured cards

If you want to open a corporate card but avoid needless liabilities, it helps to understand the main differences between secured and unsecured cards.

Secured Cards

A secured card is designed to mitigate risk for the card provider and can be a good option for small businesses looking to build or rebuild credit. When you take out a line of credit on a secured card, your company posts collateral that can be seized by the issuer to recoup losses if you don’t make payments on time. Collateral may include any business asset—but typically comes in the form of cash held in your deposit account. This is especially true when your card provider is also the bank that holds your cash as it is easy for them to seize and recoup their losses if you don’t pay your balance.

Generally, with a secured corporate card, your credit limit will be dependent on the amount of cash being posted as collateral. Unlike a prepaid card—where transactions are automatically deducted from your balance as you spend—with a secured card, you pay off your statement balance at the end of every month (or whenever it is due), without a corresponding reduction in your cash collateral.

Unsecured Cards

An unsecured card allows you to enjoy the benefit of a “true” credit extension—that is, you are not required to post cash (or other business assets) as collateral in favor of your card provider. If your company ends up defaulting on an unsecured card, your card provider cannot directly seize your cash, or any other business assets to recoup its loss.

Due to this lack of collateral, providers of unsecured cards may extend a lower limit, or none at all, to young or growing businesses. To qualify, your business will generally need to undergo an in-depth underwriting process and demonstrate clear signs of creditworthiness—like a solid financial history, evidence of consistent revenue, or strong assets—to prove you can pay on time and in full. Some providers might then offer lower credit limits, impose various fees, or even require business owners to sign a personal guarantee in order to mitigate risk.

Once acquired, however, an unsecured corporate card offers immediate advantages for your business, especially one with a high credit limit like the Rho Card. Since you’re not setting aside cash as collateral, you may freely use this cash to invest in inventory, marketing campaigns, and other key growth initiatives.

Why the Rho Card is win-win

At Rho, we set out to create the perfect corporate card for growing companies.

That’s why the Rho Card is unsecured (and it doesn’t require a personal guarantee, either). Instead, Rho uses an innovative, holistic underwriting process that identifies your company’s core strengths and extends a high, scalable limit and flexible credit terms that adapt to your business.

In our view, this is the only corporate card model that truly supports your company’s spend and gives your business the credit it deserves—with no strings attached.

To learn about the high credit limits and flexible payment terms your company could enjoy with the Rho Card, sign up for a free account, and schedule a consultation with one of our specialists.

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Rho is a fintech company, not a bank. Checking and card services provided by Webster Bank, N.A., member FDIC; savings account services provided by American Deposit Management, LLC and its partner banks.