One thing you might be surprised to learn about Canada, is that we are a country which loves to use credit. We use credit for a large variety of items, from simple grocery store shopping, to buying a computer, to taking out a mortgage on a home. Whatever the purchase may be, people are happily using credit to pay for them. 

For most purchases, except the largest ones, such as a car or home, people usually use their credit card. And why wouldn’t they? A quick search online will show the endless number of credit cards and their various benefits, from getting cash back, to reward points, to travel rewards, to insurance, and even protection against theft. The credit card companies certainly make their product extremely enticing. 

One hidden benefit that usually isn’t listed, however, is the fact that regularly using (and paying, of course) a credit card will help a person boost their credit rating. In a country where credit is king, earning a good credit rating is a no brainer.

Barrier to Entry

There is a small challenge however, and it’s that getting a credit card in the first place usually requires you to have some credit rating! This creates a bit of a problem for young people, or people new to Canada who haven’t had a chance to establish their credit yet. 

The Solution

One strategy for people in this particular situation is to use something called a secured credit card. In normal every day use, it’s essentially the same as a credit card. The only difference is that when you apply for it, you’re required to have some amount of money in an account against which the credit card is “secured”. 

What does it mean when your credit card is secured? It simply means that in the case where the credit card holder is unable to pay off their credit card, the credit card issuer would then take the secured collateral. This is different from a traditional credit card, where it is considered a form of unsecured credit.