How to Get Secured Credit Cards in Canada

Getting a secured credit card in Canada is a great way to start building or rebuilding yourcredit score. Whether you have a low credit score or no credit history, a secured credit card is a good option to consider. In this article, we will discuss what a secured credit card is, how to get one in Canada, and some tips on how to use it responsibly to improve your credit score.

What is a secured credit card?

A secured credit card is a type of credit card that requires you to make a security deposit to get approved. The security deposit acts as collateral for thecredit card issuer, which reduces their risk in case you default on your payments. The amount of the security deposit usually determines your credit limit, and it can range from a few hundred dollars to several thousand dollars.

How to get a secured credit card in Canada?

To get a secured credit card in Canada, you need to follow these steps:

1. Check your credit score: Before applying for a secured credit card, it's important to know your credit score. You can check your credit score for free on websites like Borrowell, Credit Karma, or Equifax.

2. Choose a credit card issuer: Many banks and credit card companies offersecured credit cardsin Canada, including Scotiabank, TD Bank, RBC, and CIBC. Compare their offers in terms of interest rates, fees, and rewards to find the best option for you.

3. Apply for the card: Once you've chosen a credit card issuer, you can apply for the card online or in-person at a bank branch. You will need to provide your personal information, employment status, and income. You will also need to make a security deposit, which will be refunded when you close your account or upgrade to an unsecured credit card.

4. Use the card responsibly: Once you receive your secured credit card, it's important to use it responsibly to build your credit score. Make sure to pay your balance in full and on time every month, and keep your credit utilization below 30% of your credit limit. Avoid cash advances and balance transfers, as they usually come with high fees and interest rates.

Tips for using a secured credit card responsibly:

1. Pay your balance in full and on time every month to avoid interest charges and late fees.

2. Keep your credit utilization below 30% of your credit limit to show that you can manage your credit responsibly.

3. Don't apply for multiple credit cards at once, as it can hurt your credit score.

4. Monitor your credit score regularly to track your progress and detect any errors or fraud.

5. Upgrade to an unsecured credit card when you qualify, as it will give you more flexibility and rewards.

Conclusion:

Getting a secured credit card in Canada is a smart move if you want to improve your credit score. By following the steps outlined above and using the card responsibly, you can establish a positive credit history and qualify for better credit cards and loans in the future. Remember to compare your options, read the terms and conditions carefully, and seek professional advice if you're not sure about anything. Happy credit building!