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Secured Credit Cards


Secured credit cards, Secured credit card reviews and credit card application details.

A secured credit card…don’t you love the sound of that? It looks like something you can safely charge anything to. But what exactly is a secured credit card? Basically, these cards require a deposit in cash as collateral, which is transformed into a credit line. If you put $1000 in the account, you can make purchases of up to $1000 on that card. In some cases, the bank adds to your line of credit as a reward for good payments. Most banks issue secured credit cards to customers with no or bad credit history. Credit unions also issue such cards to their members, and many waive annual fees and offer lower interest rates.

The charges vary from product to product, so it is worth shopping around. You may find a card with which an application fee is not charged. There is no escaping the annual fee though; every secured card charges one. The bad news is that they can vary tremendously. Be very wary of secured cards in this regard – you may find your entire limit depleted by charges before you have even used the card. Most cards require a deposit of $300 to $500. Your limit may be set at a percentage above the amount you put in. The initial popularity of secured credit cards has waned markedly. The trend is toward shopping with unsecured cards. Secured cards are a good option only for people trying to build or rebuild their credit rating. Promises of “guaranteed secured credit cards” are something to watch out for. These companies charge fees ranging from tens to hundreds of dollars and either send you nothing or just an application for a card.

Before you decide to go for a secured credit card, you should find out if the issuer reports to credit bureaus. If it doesn’t, you are losing a major advantage. If, on the other hand, you start receiving offers for unsecured cards after several months of regular payments, that is a sign that reports are indeed being issued.

Another benefit is that you can earn interest on your deposit. It is usually as much as it would be on a garden-variety savings account. Deposit options include a certificate of deposit and money market apart from a savings account. In some cases, you must sustain your deposit over a certain period after closing the account. This is a bank policy for covering additional charges. Finally, the best way to use a secured card for developing a credit rating is by paying it off in full on a monthly basis and charging only a couple of items to it at a time. You should not carry a balance. Watch your spending carefully – never spend more than you can afford to!

Some products on the Canadian credit card market you can look at are Capital One Guaranteed Secured MasterCard, BMO Prepaid Travel MasterCard, and Home Trust Secured Visa Card. It is best to check the offers of the big banking institutions first.




NameTypeInterest RateAnnual Fee
Capital One Guaranteed MasterCard for NewcomersMasterCard19.8%$59
Capital One Guaranteed Secured MasterCardMasterCard19.8%$59
Home Trust Secured VISA CardVisa19.5%$0