Not everyone has a good credit score and is fortunate to get approved for a traditional credit card when applying. Likely, there is an option: secured credit cards.
Secured credit cards are great for people looking to build or rebuild credit and are available to people with all kinds of credit backgrounds. They can also be great for immigrants who are new to Canada.
Whether it’s your first credit card or a tool to fix your credit history, secured credit cards allow you to use a credit card and prove to lenders that you can be a responsible borrower. If you use your secured credit card responsibly, your lender will eventually offer you an unsecured credit card and return your security deposit. Be patient! It could take anywhere from 6 up to 18 months, depending on your prior credit history and how good the lender feels about you as a borrower.
➡️ What is a secured credit card?
Secured credit cards require a deposit that serves as collateral for purchases you make using the card. If you default on your payments, the card issuer keeps your deposit. Your purchases are reported to the credit bureaus – Equifax and TransUnion.
There are plenty of secured credit card varieties out there.
The application process is also the same as a traditional credit card. Card issuers review your credit history and might reject your application. Do not give up, your credit score is not perfect anyway, please re-apply again but with a different lender.
You can always get a prepaid card, but purchases made on a prepaid credit card are NOT reported to the credit bureaus.
Please keep in mind, don’t apply for a secured card without checking the terms and conditions. There may be other fees such as a maintenance fee and annual fee. You may pay a higher interest rate. Some say, whatever it costs to rebuild the credit.
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Best Regards,
Canadian Debt Advisors
