FAQs About Rebuilding Credit With Secured Credit Cards

Automotive Finance, Bad Credit, Credit Education

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Restoring credit with credit card

Secured credit cards are a convenient, flexible way to help you rebuild your credit – especially if you have bad credit, and can’t qualify for other “unsecured” credit cards.

Secured credit cards are fairly simple. A bank or card issuer requires you to deposit a specific amount – say, $500 – and then you are issued a credit card with a limit equal to your deposit.

This ensures you can’t overspend and won’t’ get into debt. If you fail to pay your monthly payment, the bank will simply close your account and take your deposit.

Because these cards are secured, they’re a great way for Canadians with bad credit to rebuild their credit scores. Let’s take a look at some common questions about secured credit cards now.

1. How Much Money Do I Have To Deposit?

Generally, the minimum for a secured credit card is $300-$500 – though the policy varies depending on the issuer of the card. You can deposit more than the minimum required by the bank or credit card company, if you desire a higher credit limit.

However, your deposit won’t earn interest – and it will be held until you close your account. So as a rule, it’s best to deposit the minimum amount you can, and pay your bill off in full each month.

2. Do I Have To Pay Additional Fees?

This depends on the issuer of the card. While some companies require application fees, most banks do not – avoid cards that require application fees.


However, a yearly fee is quite common for secured credit cards. The amount can vary dramatically, but is usually less than $100/yearly.

3. Can I Use A Secured Credit Card To Qualify For An Unsecured Credit Card?

The answer is “yes” – but this depends both on your chosen card issuer, and your proven ability to repay debt.

If you take out a secured credit card, pay it down monthly, and do so for over a year, your card issuer may decide that you’re qualified for an unsecured credit card.

However, be careful about taking out an unsecured credit card. If you have bad credit, chances are that credit card debt was a factor in your debt – and unless you’ve changed your financial habits, taking out an unsecured credit card could lead to even more financial issues.

4. Are APRs And Interest Rates Higher For Secured Credit Cards?

Generally, yes. While folks with good credit can usually get an unsecured credit card with an APR as low as 13.99%, unsecured credit cards have higher interest rates. If you have bad credit, you can expect to pay a 23% or higher APR.


Of course, you don’t have to pay any interest if you don’t have an outstanding balance each month – so it’s recommended to simply pay off your monthly balance each month, thereby avoiding high interest rates.

5. Are Secured Credit Cards Reported To The Two Canadian Credit Bureaus?

If you’re looking to rebuild your credit in Canada, it’s important that your card issuer actually reports to Equifax and TransUnion. While almost all card issuers do so, make sure to ask the question before signing up for a secured credit card – there are always exceptions, so it pays to double-check.

Secured Credit Cards – A Great Way To Build Your Credit!

While there is no “magic bullet” for credit repair, proper use of a secured credit card allows you to rebuild your credit score safely, and without risking burdensome credit card debt. So if you have bad credit in Canada, consider applying for a secured credit card now!

And if you have bad credit in Canada and need a used car, come to Ride Time today! Our location in Winnipeg is full of affordable, top-notch used vehicles, and we have a network of 15+ lenders who can help you get a car loan – even if you have bad credit.

As long as you can supply proof of 3+ months of steady employment, pay stubs proving take-home pay of $1,500/mo before deductions, and a valid Canadian driver’s licence, we will do our absolute best to find you a reasonable deal on a fantastic used car.

So come to Ride Time now. Get the vehicle you need – at a price you can afford!

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