If you have poor or non-existent credit, chances are you may face a few credit card application rejections. Place your rejection woes aside. Secured credit cards are here to save the day.
A secured credit card helps cardholders build or repair their credit. Suppose you're ineligible for a regular credit card. In that case, a secured credit card can offer the conveniences of being a credit cardholder.
It functions like a regular credit card in some respects. However, to access a credit line provided by the credit card company, you’ll need to make a security deposit. This protects you and the credit card provider from missed bill payments.
When you sign up for a secured credit card, you’ll need to make a security deposit. Some credit card providers have a minimum of $50, while others require $200 at least.
The amount you pay will often set your credit limit. This means you can only make purchases up to the amount you deposit. For instance, if your security deposit is $500, you can only charge up to $500 on your secured credit card.
However, some credit card providers require a higher cash deposit for a lower credit limit. The amount of credit they offer often depends on your credit score.
You can use a secured credit card like a regular credit card. This includes in-person and online purchases. You can also use a secured credit card to settle your bills.
Besides the security deposit that sets this card apart, your credit activity is reported to Canadian credit bureaus. Therefore, every on-time payment can improve your credit.
Before applying for a secured credit card, consider the following advantages and disadvantages.
Finding the best-secured credit card for you requires shopping around. Here are some pointers to finding a suitable credit card:
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If you have poor credit or no credit history, then yes. Secured credit cards are also suitable for anyone who has declared bankruptcy or is in a consumer proposal. Since you won’t be eligible for a regular credit card, a secured credit card is your best bet.
Yes, as long as you pay your balance on time and in full. You’ll be amazed at what this card can do for your credit score.
Also, responsible use of your credit card will help you reach your financial goals. Remember only to use your card for small purchases every month to stay on track.
Not all secured credit cards have guaranteed approval. A credit card provider may deny your application. This is especially true if you have accounts in collection or multiple missed payments on your record.
If your application is denied, it’s best to ask why. You have a legal right to know. You can solve the problem before applying for another secured credit card. Note that cards offering guaranteed approval are known as guaranteed credit cards.
Ideally, yes. Although an income is not often required, your chances of approval will be higher if you have a source of income.