Wells Fargo Business Secured Credit Credit Card Review

Building a business isn’t easy; it requires endless choices about how to manage your business—and who to do business with. Building business credit might be easier, but it still takes time and capital and using this card to do it won’t cut business owners much slack.

A secured card requires that the account holder deposit a matched amount against the credit line as collateral. Unlike prepaid or debit cards, secured cards are credit cards and banks do report these accounts to the credit bureaus, meaning the cards provide an excellent way to build (or rebuild) credit. While personal secured cards are likely to report to the three main credit bureaus, some business cards, like the Wells Fargo Business Secured, report to the Small Business Financial Exchange.

The Business Secured card from Wells Fargo offers rewards where many secured cards won’t. Though competitive against secured cards, its 1.5% cash-back reward rate is less than the earnings rate of many unsecured cards. The card also offers the option to earn 1 point per dollar on every purchase, but this option is only a good fit for a small profile of cardholders. The choice of cash back versus rewards might be confusing for those who are new to rewards and in general, cash back is typically the more straightforward option.

For international business, the Business Secured card may be a solid option as it comes without foreign transaction fees. With no annual fee and a handful of convenient benefits like autopay, online account management, fraud monitoring, overdraft protection and $0 fraud liability, the card comes with the sort of features that should be expected with larger banks. It also comes with the fine print fees and details many have learned to expect from larger banks, too.

• 1.5% cash back or 1 point per dollar rewards options
• No annual fee
• No foreign transaction fees
• $500 to $25,000 credit line range
• Cards for up to 10 employees
• Custom card designs with Card Design Studio service

Earning Rewards

Why Wells Fargo makes the rewards structure with this card so complicated is beyond us, but nevertheless, the ability to earn rewards at all on a secured card is somewhat unique.

The card offers the ability to earn 1.5% cash back per dollar spent on qualifying purchases or earn 1 point per dollar and receive 1,000 bonus points when the company spend is $1,000 or more in any monthly billing period. The cash back option is the best fit for most cardholders. Cardholders who plan to spend between $1,000 and $2,200 each month may benefit from choosing the points option—continue reading to understand why.

Redeeming Rewards

Earning 1,000 points from spending $1,000 in a month is worth $10. This, in addition to the 1,000 bonus points earned for the $1,000 in spending required to achieve the 1,000 point bonus, equals $20 in value when redeemed for statement credit at 1 cent per point. Add 10% for the online points redemption bonus and earn an extra $2. This is more than the $15 earned on the same spending via a 1.5% cash-back reward.

But with just over double the minimum required spending for the bonus, 1.5% cash back yields a bigger reward. At $2,200 in spending each month, the 1.5% cash back will reward the same amount that the points system will. Anyone with guaranteed spending under $1,000 or over $2,200 each month should elect cash-back rewards. Anyone with spending fixed between these figures will earn slightly more in rewards with the points system.

The above math values points at one cent per dollar. This can vary—both because Wells Fargo can elect at any time to change the entire rewards system in any way (including canceling it entirely without notice) and also because points can be redeemed for airline flights or merchandise. Deep in the fine print, there’s a $24 redemption charge for airline tickets.

If we haven’t made our opinion clear yet, allow us to spell it out: The points rewards system with this card has some major hidden details that could make redeeming rewards challenging.

Rewards Potential

The rewards potential offered by this card depends not only on how much business spending will be put on the card, but also on which rewards-earning structure is chosen.

If the business has $2,000 in purchases per month, the card will net 3,000 points per month. This results in annual earnings of 36,000 points which can be redeemed for $360.

A business with larger spending will benefit from earning 1.5% cash back instead of points. Monthly spending of $3,000 would result in annual cash back of $540.

To maximize rewards potential with this card, you should determine your anticipated average monthly business spending so you can decide whether earning points or cash back will be more beneficial.

• No Foreign Transaction Fee: Make purchases in other countries without extra fees.
• Up to 10 Employee Cards: Empower your employees to make purchases.
• $0 Fraud Liability: Cardholders aren’t responsible for unauthorized transactions.
• Online Account Management: Manage account details and view spending online.
• Automatic Payments: Automate monthly payments online.
• Overdraft Protection: Use the card as overdraft protection for banking accounts.
• Card Design Studio Service: Custom card skins.

Interest Rates

• APR on purchases: see your cardholder agreement for current rates

Fees

• Annual fee: see your cardholder agreement for current rates
• Balance transfer fee: see your cardholder agreement for current rates
• Foreign transaction fee: None

Wells Fargo Business Secured Credit Card* vs. Capital One® Spark® Classic for Business*

While the Spark Classic is not a secured card, it is a great card for businesses just starting out and should be considered for businesses with at least fair credit. The card offers unlimited 1% cash-back rewards, no annual fee and no foreign transaction fees. The card’s extra benefits are mostly similar to the Business Secured.

While cash-back rewards are slightly better with the Wells Fargo Business Secured, the Spark Classic offers a similar enough alternative with a few extra perks like being able to choose the monthly due date or employee account limits and manager settings. One advantage the Capital One card has is that the credit limit ranges from $500 and $50,000—a limit that’s twice that of the Wells Fargo Business Secured.

Wells Fargo Business Secured Credit Card* vs. Discover it® Secured Credit Card

There’s not many options on the market when it comes to secured business credit cards. Which means that your best bet may simply be a secured personal card. One option to consider is the Discover it® Secured Credit Card. The $0-annual-fee card earns 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases and, starting on your 7th month after account opening, Discover will consider upgrading your account to an unsecured card and return your security deposit. With a stronger credit profile, you may be more likely to qualify for a business card down the line.

Wells Fargo Business Secured Credit Card* vs. The Brex 30 Card

Though it’s not a traditional credit card model in every way, the Brex 30 Card provides an interesting alternative to the Business Secured, specifically for tech companies. While the Brex 30 Card is a corporate card, it still may be an option for some businesses.

Brex uses a company’s financial data and other factors to determine credit limits instead of using the traditional credit system. Brex doesn’t charge fees or interest and makes money on transaction fees it charges merchants instead.

With Brex, rewards are significant from certain vendors and the partnership opportunities for small tech companies are fairly significant with serious discounts and offers on products like Amazon’s AWS, Slack, Dropbox, Zoom and Quickbooks. The reward points system uses several categories but still has unlimited 1 point per dollar spent on all purchases and points are flexible and can be turned into statement credit or miles.

Though its marketing might seem a bit unorthodox, the Brex Card is a great option for those tech businesses that may not have a strong credit history yet but do have strong financial health and want to scale up.

The Wells Fargo Business Secured, like any secured card, is designed for those looking to repair damaged credit or build credit from nothing. The 1.5% cash back reward option for this card is straightforward, unlike the card’s other reward option: a complicated points system that likely won’t be the most rewarding outside of certain spending habits.

The big bank conveniences like overdraft protection and automatic payments make the card a great option for those who will value and use them.