Secured Credit Card Canada

You don't need good credit to get a secured credit card in Canada. That's all well and good, but what's the catch? The reason why they're referred to as secured credit cards is that you're required to put down a deposit before using it. Your credit limit depends upon the amount of your deposit. Therefore, if you want a $2,500.00 credit line, then you must put down $2,500.00.

In order to qualify for secured credit, a minimum deposit is usually required. Depending on which card you get, the minimum deposit could be around $500.00. Why is a security deposit required? The deposit is used as insurance in case you happen to default on your payments. After all, the banks don't want to lose money. If you're applying for a secured credit card, you probably have a low credit rating, so you're considered a high risk. Let's say you owe $450.00 and can no longer make even the minimum payments. The money from your deposit goes towards covering those costs. However, if you make your monthly payments consistently, your deposit could get refunded in a matter of three years. As long as use your credit prudently, you have earned the trust of your creditors.

Secured credit cards usually have higher interest rates than unsecured credit cards, but if you do some comparison shopping you could find low-rate cards. Additional costs include annual fees, interest on unpaid balances, overlimit fees, cash advance fees, exchange fees, and lack of interest you earn on your security deposit. But if you're responsible and pay your balances in full every month, those fees shouldn't apply to you.

I bet you're thinking, what's the difference between a secured credit card and a debit card? After all, just like with debit cards, they're no good unless you put money into them. Debit cards are useful when making purchases at standard retailers like department stores. Nevertheless, if you're making a purchase in a foreign country or submitting a deposit to a hotel or rental car company, you need to use credit. Also, credit cards are useful in times of emergency.

Over 450,000 Canadian locations accept secured credit cards, so they're definitely worth applying to if you're looking to repair your credit. In Canada, secured credit cards are available at banks, trusts, credit unions, and selected credit card companies (i.e.: Capital One). Except for Capital One (which you could apply for online), you must go to the branch to register for a secured credit card.

Canadian credit cards have many good uses, but they're also primary causes of debt in the country. More and more Canadians fall into credit card debt each year. With secured credit cards, you can't fall into debt since the money is insured by your security deposit. However, the whole reason you own a secured credit card or are looking to apply for one is probably because of debts from your unsecured credit cards.

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