Newcomers to Canada can have a very difficult time getting a credit card because they don’t have a credit history.
Building up a positive credit history is a good idea because it will make it easier to get a line of credit, a loan, or a mortgage later on.One way to do that is with a secured credit card as long as you understand how it works.
Here are a few tings to remember about a secured card:
- You will be required to leave a security deposit with the credit card company.
- Your credit card limit is typically the same or more than the value of your deposit.
- If you don’t make the credit card payments, the credit issuer can take the money you owe from your deposit.
- Use the card responsibly – that means not exceeding your limit and paying the bills on time. That will help you build up a positive history and eventually you will be able to get a regular credit card with a higher limit.
I was able to raise my credit score after I got a couple of secured credit cards who reported to the credit bureaus. Great article and thanks for the write-up!
Secured credit cards are a funny thing. I use to have one and although i loved finally building my credit i felt the card was pretty worthless because my credit limit was so small for years (~$200).
We went into bankruptcy a few years back and the consequences were all our cards were cut and we were left with secured cards. We still have them. It’s not the best of things but its good to have the option. Without them i dont think anyone would have any money.
When my family immigrated to Canada it took us the longest time to realize the usefulness of such branded cards. We had been taught for so long that debt was bad so it came as a surprise when we found out this type of thing was actually a good thing, if not necessary.
Not sure if its the same in Canada but here in the US we can have our children on our credit cards as authorized users and by being on our account this is a great way for them to build their credit history.
@nelly, i think you need to re-read the article. The true purpose is to allow one to build credit history. A good and healthy Credit History opens one to all kinds of opportunities including, but not limited to, car loans, and lower interest rates.
I’m only 18 but i came here to find more information about getting my first credit card. So “secured” is my only option? I guess that is what will have to do.
The devils are in the details. I don’t recommend anyone ever to get involved with secured credit cards.
There are alternatives to build credit history. Secured credit cards are only the tip of the history iceberg.
People should realize that their are secured cards that ALSO provide benefits to using them. The article points out rewards points so its not all bad to be a secured card holder.
Huh? If i have to leave a large deposit then what’s the point of getting a credit card at all? Seems pointless. But then i am not old enough to have credit 🙂