A case for Having a Canadian Secured Credit Card

A secured credit card is just that; a credit card secured by a deposit account held by the cardholder. The card holder may then deposit anywhere between 100-200 percent of the amount of credit as he may desire. But sometimes the credit card issuers may reduce that to only 10 percent. From the issuer standpoint, the secured credit card is better as there are fewer delinquencies when the cardholder suspects he may lose something by not paying.

From the cardholder's standpoint, a secured credit card can serve the purpose of building your FICO scores. For these types of cards, everyone is invited.

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For the sake of prudence, it has to be said that secured credit cards make the better choice. Since you cannot spend beyond the amount secured, it is unlikely that you will bury yourself in debt. That way you can start building a good credit history, but make sure that the credit card issuer reports your record to the credit bureaus.

The credit card holder in this case is expected to make regular payments to meet the amounts charged on the card. The deposit will only be used if the account is closed either at the customers request or after excessive delinquency. So there is no question of you forfeiting your deposit in the event of just one or two defaults. Also, the annual fees for many secured credit card in the Canadian market tend to be reasonable, unlike some available credit cards. The fees may be as low as $30 whereas for other cards, the fees could go up as high as $50.

Canadian Secured credit cards are also ideal for individuals who may want to access other lines of credit that are being offered by other companies. It is possible to have a credit card secured by the borrowers' home equity. This concept is known as Home Equity Line of Credit (HELOC).

Another plus for a secured credit card is that you are not an annual percentage rate for the deposited amount. Traditional credit cards come with the burden of interest rates, finance charges and you might end up paying several times the price of your purchases especially if you pay only the minimum balance.

The main downside of secured credit cards is that you will have to come up with the money in advance for any purchase you want to make, which is not always possible. But it also helps you take control of your own finances by spending the amount you can afford. You can also access facilities that were hitherto open to those with traditional credit cards only, like booking a hotel or making online purchases. In addition to building a credible credit history, it is possible to avoid the black holes of financial desperation using these cards. It is a win win win win situation.

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British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, Newfoundland, Nova Scotia, New Brunswick Canada