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How Does A Secured Credit Card Work?

Rachel Surman Nov 16, 2017

At Borrowell, we love answering questions that YOU asked about personal finance and building credit! Have a credit-related question you’d like answered? Simply tweet at us on Twitter or send us a message on Facebook

Let’s jump into our first question from a Borrowell customer: “Do you have any advice on how to improve my credit with a secured credit card?” Yes, we do! Let’s start with the basics.

What is a secured credit card?

A secured credit card is a type of credit card, different than a debit or prepaid card, that’s meant for people looking to build credit.

A secured credit card is secured, as the name suggests, with the card issuer by a cash deposit from the card owner. How much money you’re required to put on the card to secure it is based on your unique credit profile and the card issuer’s requirements. 

How can I use a secured card to improve my credit score?

The great thing about secured credit cards is the issuer of a card usually reports to a credit bureau to provide details about your credit activity. This includes information such as your payment history and credit utilization – how much of your available credit you’re using each month (try to keep it under 30%). 

Making your credit card payments on time and using your card responsibly can help you build your credit. Then, eventually, you would be able to move to an unsecured credit card. Unsecured credit cards are generally something to aspire to (again, when used responsibly) because you can earn rewards or cash-back, depending on what your specific needs. 

Which secured credit card is best for me?

The best secured credit card for you relies largely on your credit score. When you check your score for free with Borrowell, you’ll instantly see the best credit card options available to you. A great option for someone looking to build credit is the Capital One® Guaranteed Secured Mastercard®.

Depending on your credit history, $75-$300 will be required as collateral, although your credit limit may be more. If you decide to close your account, the security funds will be returned once the balance is paid in full.

Your credit limit would range between $300 and $2,500 but this depends on your credit history. With this card, Capital One will also report your credit activities to the credit bureaus monthly, which is great if you’re looking to build credit quickly.

The Bottom Line

A secured credit card allows you to take control and build your credit with responsible use. Don’t know your credit score? Find out here and check out My Recommendations to see all the financial products available to you and your likelihood of approval.

The Capital One product details described in this article may have changed since the time of publication. Please see capitalone.ca for current product details.

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Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.


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