Bad credit? No credit? No problem! - Get a Secured Credit Card

We’ve all heard the commercials from sleazy money lenders and used car lots. If you don’t have a good credit history, you might think that these are your only options. If you’re a citizen of Canada, though, a secured credit card is a much better option.

Secured credit cards are issued by reputable companies like Visa and MasterCard, and you can use them just like you would use any other credit or debit card. As long as you’re over the age of 18, you can apply for a card, no matter your credit score.

Secured credit cards are great if you have credit mistakes in your past or just looking to build up your credit score. They are a great way to learn how to manage your money, and are extremely convenient. You pay your monthly balance, just as you would with a credit card, and you can manage your account online. Personal checks and money orders are accepted.

There are two types of secured credit cards, the Home Trust Secured Visa Card and the People’s Trust Secured MasterCard. The difference between the cards is fees, set-up charges, and interest rates. Both will help your credit history in the same way, so choose which one best suits your needs and then apply.

The way these cards boost your credit score is that you build a history of on-time payments and responsible spending. You provide a $500 deposit to the credit card company as a sort of “earnest money,” proof that you can handle the responsibility of a card, and then let your credit building begin.

Upon application, the credit card company will work with you to help you set a spending limit. Credit limits vary from $300-$25.000, and if you don’t feel comfortable allowing yourself the option of having $25.000 at your disposal, you can request a lower amount.

If you’re a student, new immigrant to Canada, or someone with a few spending missteps in your past, you can use the secured credit cards to begin the path to debt independence. Once you have built up a history with either credit company, you can then submit further deposits to increase your credit limit, or even begin applying for regular credit cards.

Secured credit cards do not rope you into a vicious cycle of over-spending and then maxing out your credit card. You pay your balance every month, just as with any other card, and payments-in-full are accepted. If for some reason you would like to close your account, you simply need to pay your balance in full – you’ll even get your deposit back!

Credit mistakes are easy to make. When you’re young it can be easy to overlook the consequences of some unwise purchases. On the other hand, if you don’t yet have a credit history, you can find yourself in a catch-22 – you need history to have a credit card, but you can’t get the history without a card. Secured credit cards, from some of Canada’s best lenders, will help you out of this debt trap.