Leveraging a Secured Line of Credit
- What does it Mean for You?

Sometimes a credit crisis happens and it negatively impacts our credit rating and our credit score. A bad credit history makes it difficult to obtain an auto loan or a home loan. A bad credit history also makes it difficult to be approved for future credit cards.

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But now it's now easier to obtain a new credit card, even with a poor or inadequate credit history. It's possible now, if it's a secured line of credit.

So just what are secured credit cards? Secured credit cards are similar to your general credit cards but the cardholder has to pay a deposit to purchase the credit card. That is the "secured" portion of the credit card. Depending on the credit card company and how bad the applicant's prior credit history is, the deposit amount will vary from anywhere between 100% and 300% of the approved credit line.

The actual credit line offered by the issuing bank is often less than the deposit amount. The excess funds from the deposit are retained by the issuing bank to cover any future unpaid debt owed to them by the cardholder. Some credit card companies will issue secured credit cards with high fees exorbitant fees, so be careful and read all the fine print.

Aside from the deposit, a secured credit card functions like any other normal credit card would. For example, if a payment is late or missed completely, the interest rate would rise just as in a normal credit card. However at the start of the program, most secured credit cards carry a higher interest rate versus regular unsecured credit card.

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Most Canadians that apply for a secured credit card are considered risky applicants who either have had a poor credit history, or do not have an adequate amount of credit history. And yet despite the additional cost of the deposit amount, obtaining a secured credit card is a very good way for someone to build or repair their damaged credit history. Again, always read the fine print to understand all the fees involved with a secured credit card.

And if a cardholder has maintained timely payments, they will often reap other rewards and benefits from their credit card bank. In some rare cases,
the cardholder may also be able to apply for an unsecured credit card. It takes an average time period of about a year before one can apply for an unsecured credit card with the same bank.

One of the best and most popular secured credit cards to apply for in Canada is a Capital One secured credit card. One reason is that through time, as the cardholder continues to build a good credit history, the cardholder may be given an option to eventually move from a secured credit card to a regular unsecured credit card. Another added plus is the ability to earn interest on the deposit. Furthermore, while all credit companies vary in their charges and fees, Capital One's secured credit card is fair and reasonable. Capital One's secured credit card is a great card to have since the cardholder may also earn cash back as well as retain other purchase rewards. New secured credit card rates can even start as low as 12.9% for people with bad credit to as low as 0% for people with no credit history.



In summary, the reasonable fees, the normal interest rates for those with bad or no credit, the interest earned on deposits, plus the ability to possibly convert a secured credit card into an unsecured credit card makes Capital One a great choice for Canadians seeking to repair or build great credit history. Don't delay and start rebuilding yours today! Contact Capital One for your secured credit card.

More Secured Credit Card info.