Secured credit card
There’s a reason that you’ll find at least one credit card in just about everyone’s wallet: they give you an incredible amount of financial flexibility and, if used responsibly, cost little to nothing to use. However, not everyone has the credit history to easily get a typical card extended to them. A secured credit card is a simple option to get some credit coverage during a period in which you have a low or non-existent credit score.
How Secured Credit Cards Work
Secured credit cards work by taking an initial deposit made by you, the cardholder, and extending a line of credit based on that first lump sum. The lender holds that money for as long as you hold the card, using it as collateral to ensure that any debts you incur will be paid even if you fall far behind on your payments. Don’t worry about losing that money: if and when you ever cancel the card, the deposit money is returned to you in full. By using it as a deposit, you’ve only given the lender temporary control over it for security reasons.
Since the limit on a secured card must scale with the deposit in order for the concept to work, it’s usually quite low – sometimes only a few hundred dollars. This type of card also won’t allow you to purchase much more with it than you could have afforded by paying cash, since you had to have an equivalent amount of cash in order to get it. However, it’s extremely easy to qualify for this type of credit, which makes it a solid option for those who have been turned away from other types of credit.
Planning for Tomorrow
Not only do these credit cards give you some financial freedom, but they can also help you improve your credit score. By using them responsibly, you’ll be establishing proof that you can be counted on to repay debts, which will in turn increase other lenders’ confidence in you. These cards are one of the easiest and most effective ways to build a credit history in order to get access to larger loan amounts and premium interest rates in the future. Eventually, you may be able to prove sufficient creditworthiness to be entrusted with a mortgage or business loan that will allow you to make a significant investment in your future.
These cards are treated identically to any other credit card in credit score calculations, so despite the extra caution on the part of the lender, you’ll reap the same benefits as you would from any other line of credit. This strategy works for both those who have suffered from bad credit in the past and those who have no credit history at all (which can be just as bad!). Whether you’re recovering from a financial setback, new to Canada or just too young to have had the time to build a credit score, a secured credit card is the tools you need to get started.
Get a Secured Credit Card in Canada
Here at Bonsai Finance, secured credit cards are just one more financial product we help bring to you. Our online portal gives you access to a wide selection of secured credit cards from trustworthy lenders with affordable deposit amounts. You can compare any applicable fees and required deposit amounts to find the best deal out there. All you have to do is fill out your application, send over your deposit, and start using your new card. Buy the things you want or need right away and keep on top of your payments, and over time, you’ll create the credit score you need to get ahead in your financial life. Remember, it’s never too early or too late to start