The Secured credit cards are cards issued by financial institutions, which is backed by a security deposit. Sometimes these cards are known as guaranteed credit cards. Very often the application process ends with instant approval or denial of the borrower as everything is done online. This article will focus on CIBC Secured Credit Card. Everything you need to know about CIBC no free credit card.
CIBC, the Canadian Imperial Bank of Commerce is one of the Big Five banks in Canada. Providing the full spectrum of financial services and products to people around the country.
That product offering includes a wide variety of credit cards in most card categories, like travel rewards, cash back, low interest, student, business, and more.
2020 has been a tough year for many and getting a secured credit card in Canada is getting harder as a result of the COVID-19 pandemic, because fewer and fewer financial institutions offer them.
The financial products offered to Canadians with bad credit are far and few between. This segment of the market is badly underserved. I get daily emails asking how to get a CIBC Secured Credit Card, which one to get, which cards are easy to get, what credit score you need to qualify for one, etc.
My advice to you is to read through the article, read the many user comments talking about their experience in applying for a credit card secured by a deposit, and make a decision based on your research.
My first credit card was with CIBC, because I had no credit history I had to settle for a secured credit card. The card had a $500 limit, which I had to deposit with the bank, not much of a credit card.
I used it for 2 years making small purchases and paying it off every month diligently, which helped me establish a good credit history. While many of the big banks advertise financial products targeted at recent immigrants and people who simply have no credit history yet.
The fact is that getting even a secured credit card is much tougher nowadays in Canada. Even Peoples Trust out of British Columbia, which was a major player in the Canadian secured credit card space, decided to discontinue their card
How Secured Credit Cards Work
Issuers require a cash deposit or security funds as a guarantee of a one-time payment. It is usually equal to or larger than the limit offered.
The only difference between secured and unsecured cards is the fact that security funds are required because financial institutions deal with high-risk borrowers who are more likely to default.
Your credit card is backed by your deposit, hence the term secured. Other than that, holders can use the card to make payments online and in-store, to pay bills, and of course to build their credit.
Why Should I Get a Secured Credit Card?
Secured credit cards are a great option for people who have no credit history or who need to repair their existing credit history. They can also be great for immigrants who are new to Canada.
Whether it is your first credit card or a way to fix your credit history, CIBC Secured Credit Card allows you to use a credit card and prove to lenders that you can be a responsible borrower.
What Happens to My Security Deposit?
While you cannot access the security deposit while you have the secured credit card, your deposit can be placed in a guaranteed investment certificate to collect interest.
Moreover, it will later be returned to you, when your credit improves and you qualify for an unsecured credit card
Who Is Eligible to Apply for CIBC Secured Credit Cards?
Individuals with any credit profile qualify, from tarnished and fair to stellar can apply for CIBC Secured Credit Card.
Legal residents and Canadian citizens of legal age are eligible to apply for a secured credit cards. You must be of the age of majority for the province or territory where you reside.
Some major banks like the Canadian Imperial Bank of Commerce and TD even offer secured cards to customers who don’t have a Canadian credit history, including international students and foreign nationals (temporary residents).
The range of products available depends on different factors, including your credit rating and financial situation. When applying for a secured credit card in Canada, consumers are often asked about estimated monthly payments, which include the lines of credit, loans, mortgages, and other accounts.
Financial institutions also request information about your rent or mortgage payments as well as income amount, employer, and sources of income.
Many card issuers require that applicants have a verifiable permanent address in Canada and a verifiable source of income (i.e. proof of income).
How Long do you Have to Use a Secured Credit Card?
If you use your secured credit card responsibly (i.e. pay off your entire balance on time each month), your lender will eventually offer you an unsecured credit card and return your security deposit to you.
It could take 12 to 18 months, depending on your prior credit history and how good the lender feels about you as a borrower.
Rebuilding Your Credit with A Secured Credit Cards
If you are looking to repair your credit rating, a secured credit card is one of the best tools at your disposal. You might think it is wiser to play it safe and use cash, but that actually hurts your credit score.
You actually need credit transactions in order to build up your score, so it is important to use your secured card with intentional care.
Make sure that you make all your payments on time. That is the number one thing you can do to repair your credit. Late payment of even a few days will undo a lot of your work toward credit repair.
After a period of time making punctual payments, however, you will see your credit score improving visibly.
Canadian Imperial Bank of Commerce: CIBC Secured Credit Cards
CIBC Secured Credit Card will give you a card for a specific term, usually two years. At the end of the two years, they will refund your deposit and by that time you will probably qualify for an unsecured card if you have used your secured card wisely.
CIBC Secured Credit Card Canada will charge an annual fee of $29 with an interest rate of 19.9%. This credit card has a minimum required deposit of $500
Things Secured Credit Cards don’t Include
Since secured credit cards in Canada are designed for those with poor credit scores, there are a few features these cards don’t include:
====> Very limited insurance coverage (if they have any at all)
====> Very few have no annual fees.
These credit cards are solely designed to help people improve their credit scores, which can be the best gift of all. A better credit score will help you get loans, better credit cards, and lower interest rates.
The secured credit cards are the best way to improve your credit score or to establish one if you are new to Canada and don’t have a financial history in this country.
With your secured credit card, you will enjoy all the benefits of credit card membership, like making purchases online and over the phone, or accessing cash from ATMs.