Secured credit cards seemed pretty basic, you don't really need to compare for interest rates or rewards/miles offers when you shop for a secured credit cards. So I asked myself, what factors should you consider when you're shopping around for a secured credit card? moneycentral.msn.com offers the following advice when looking for a secured credit card:

1. Offers no application fee and a reasonable annual fee.

According to moneycentral, some secured cards ask for huge upfront and annual charges onto their accounts so you don't need to pay these to build your credit.

2. The secured credit card company reports to the major credit bureaus.

Call and ask the secured credit card issuer is they regularly report your progress to the three major credit bureaus (Equifax, Experian and Transunion) before you apply to document your progress and improve your credit score.

3. Opportunity to convert to an unsecured card after paying on time for 12-18 months.

Good behavior should get you the chance to upgrade to a regular credit card within a year or two of being prompt in your payment.

VIA moneycentral.msn.com

That's the whole idea behind a secured credit card... ideally you want to be able to apply for one, and not be forced to have a cosignor etc. It's nice to get credit with your own signature, and based on your own assets and liabilities

Here's more option for you if you can't get a regular credit card.

1. Get a secured credit card: To get this type of card, you need to make a "security deposit" with the credit card company. This may be cash, furniture or something else that the company will accept.

2. Apply for a joint card: Find a friend or family member with good credit who will share the card with you. You would both be responsible for the bills and this would help you build a credit history.

3. Get a co-signer: It would be your credit card but the co-signer would be responsible if you were unable to pay your bills.

4. Take out a loan: Apply for a loan from a bank or any other lending institution and pay it off quickly.

5. Get a retail credit card: Apply for a credit card from a non-financial institution, such as a gasoline company or a department store. With these cards you can buy things at certain stores but you cannot borrow money. Usually these types of cards have a higher interest rate than cards from banks.

6. Join a credit union at work or in your community.

Hey folks! Here's what I found, I hope you find it useful as I did if you're looking for credit options besides credit cards.

The article says that secured credit cards are your best option if you cannot get a regular credit card because:

1. You have no credit history.
2. You have no Canadian credit history (new to Canada).
3. You had credit problems in the past and want to improve your credit rating.
4. You recently filed for bankruptcy

The application process for a secured credit card is virtually approved, Maybe this is mainly because before you can get a secured credit card, you have to put in a deposit for the issuer or a collateral, so your crefit limit is equals to the amount of your deposit and if you are unable to pay your balance, the credit issuer will take it from your deposit.

Click Here for the full story.

Thanx for the quick reply. I understand that secured credit card is a good way to build your credit score after bankruptcy. And it will surely help me become a more responsible spender. But what do I need to get a secured credit card? And can I still keep my current credit cards? Is there an APR and other fees applied for secured credit cards?

Hey bebiesean,
A secured credit card is where you make a deposit with the credit card company before you get the card... so.. if you want a credit line of $500 you would put in a security deposit of $500 .. It's not conventional thinking as most people think of credit cards as unsecured.

If you put down a security deposit, then the company has the money should you not make your payments. It's a good way to start your credit rating.

Good question about secured credit cards!

Can I pay my credit card in advance and use it like debit card to help me spend wisely? I'm told this is how secured credit card works but I like my credit cards with the rewards and other perks. Would it be better if I just use a secured credit card?

Short of being in bankrutpcy, you'll be accepted for the capital one secured credit card... the whole idea is that you give security to back the card.

this is obviously different from an unsecured credit card.

The home trust visa is 100% security backed. Capital One requires on $75-$300 as security..

The benefit is that you can start to rebuild your credit rating even if you have bad credit.

Hi there, I would just like to know how secured credit cards work? and if it would be wise to go through my bank to do one?

I know that I have pretty terrible credit. although it's being paid slowly.
I have paid all of my delinquent accounts and am now looking at reestablishing my credit. Any suggestions? Aside from Capital one?

You would be accepted for a secured credit card.. You just need to give Capital One a security deposit.
They'll even accept people who are just discharged from bankruptcy.

re: What is a secured credit card - Canadian