If you’re looking for a credit card with guaranteed approval, you’ve come to the right place. In this blog post, we will discuss the best secured credit cards in Canada and how they can benefit your financial future.
Secured credit cards are a great way to rebuild your credit history if you have had some bumps in the past. They are also a good option for people who are new to Canada and need to build up their credit scores.
So, what are secured credit cards and how do they work? Read on to find out more about the best secured credit cards in Canada!
What are secured credit cards?
Secured credit cards are a type of credit card that requires a security deposit. This deposit is used as collateral in case you don’t make your payments.
The amount or minimum security deposit will vary depending on the credit card issuer, but it can be as low as $50. Usually, the security deposit determines your credit limit. For example, if you deposit $2,000, your credit limit will be $2,000.
Secured credit cards are a good option for people with bad credit or no credit history. They can help you rebuild your credit by making on-time payments and keeping your balance low.
When you use a secured credit card, the issuer reports your activity to the major credit bureaus (Equifax and TransUnion). This helps build up your credit history, which is an important factor in determining your credit score.
How do secured credit cards work?
To get a secured credit card, you will need to apply and be approved by the card issuer. The good news is, these cards guarantee approval no matter your credit score because you’re putting down a security deposit.
Once you’re approved, you will need to make the refundable security deposit. This deposit is usually held in a savings account by the issuer.
Your credit limit is usually equal to the amount of your security deposit, but it can vary depending on the card and the issuer.
When you use your secured credit card, you will need to make regular payments just like you would with any other credit card. If you make your payments on time, your credit score will improve over time.
On the other hand, late payments will be reported to the credit bureaus and will damage your credit score. So, be sure to stay disciplined with your spending and use the card wisely!
Best Secured Cards in Canada
Now that you know a little bit more about secured credit cards, it is time to take a closer look at the best secured credit cards options in Canada:
| Secured Card | Annual Fee | Interest Rate | Credit Limit |
|---|---|---|---|
| Neo Secured Mastercard | $0 | 19.99-26.99% | $50 to $10,000 |
| Plastk Secured Credit Card | $48 | 17.99% | $300 to $10,000 |
| Home Trust Secured Visa | $0 or $49 | 19.99%/14.90% | $500 to $10,000 |
| Refresh Financial Secured Card | $12.95 | 17.99% | $200 to $10,000 |
| Capital One Guaranteed Secured Mastercard | $59 | 19.8% | $300 to $7,000 |
| Scotiabank Value Visa Card | $29 | 12.99% | $500+ |
1. Neo Financial Secured Mastercard
- Annual Fee: $0
- Interest Rate: 19.99% to 26.99% on purchases, and 22.99%-28.99% on cash advance
- Credit Limit: It varies according to your security deposit
Deciding to apply for a secured credit card is a big step toward securing your financial future. But not all secured cards are created equally.
With the Neo Financial Secured Mastercard, you have access to a cash back program that rewards you for making payments on time and for shopping at various stores across Canada.
All you need to do is put down a minimum security deposit of $50 to get your secured credit card from Neo Financial.
Get a guaranteed credit card approval with Neo Financial’s Secured Mastercard. Shop anywhere Mastercard is accepted and earn 5% unlimited real cash back at different stores in Canada.
Learn more: Neo Financial Credit Card Review
2. Plastk Secured Credit Card
- Annual Fee: $48
- Interest Rate: 17.99%
- Credit Limit: $300 to $10,000
The Plastk Secured Credit Card is loaded with rewards and benefits that make it one of the best secured cards in Canada.
This card entitles you to the following benefits:
- Reward points on certain purchases
- You receive a 5,000-point welcome offer
- For the first three months, the APR is 0% on purchases
- Free credit score check
The Plastk Secured Credit Card is one of the best options to build your credit though its annual fee is relatively higher than some of the other secured cards in this list.
To be approved for this secured credit card, you must be the legal age of majority in your jurisdiction and be able to pay the security deposit.
3. Home Trust Secured Visa
- Annual Fee: $0/$59
- Annual Interest Rate: 19.99%/14.90%
- Credit Limit: Your deposit amount, which may range from $500 to $10,000, determines your maximum limit
If you are looking for a low-cost secured credit card in Canada, then the Home Trust Secured Visa Card is a good choice.
The Home Trust Secured Visa is a secured card that allows Canadians to restore or build their credit history with a credit card without worrying about their application getting rejected.
There are two different variants of this card available:
The first option has no annual fees but comes with a 19.99% interest on purchases. While the other one has an annual fee of $59 and a lower interest on purchases of 14.90%.
This card is great for you if you have been turned down for credit in the past due to previous bankruptcies, late payments, or for no apparent reason at all.
With this secured card, you can qualify without worrying about your credit history. The Home Trust Secured Visa is available in all provinces and territories except Quebec.
4. Refresh Financial Secured Card
- Annual Fee: $12.95
- Annual Interest Rate: 17.99%
- Credit Limit: $200 – $10,000
Refresh Financial offers excellent credit building solutions in Canada at a relatively low cost.
To help you build your credit, Refresh Financial offers a secured card that features a low-interest rate and annual fee.
With an interest rate of 17.99% and a competitive $12.95 annual fee, it’s an attractive offer from a reliable company that has been helping Canadians improve their credit for many years.
To start, simply decide on the amount you’re comfortable to deposit and you’ll get a credit limit for the same amount.
Refresh Financial also offers a credit builder loan, another savvy product to help you build your credit fast.
Learn more: Refresh Financial Review
5. Capital One Guaranteed Secured Mastercard
- Annual Fee: $59
- Annual Interest Rate: 19.8% on purchases, and 21.9% on cash advances
- Credit Limit: $300 – $7,000
For people with a bad credit history, the Capital One Guaranteed Secured Mastercard can be an excellent option.
It focuses on building your credit rating and improving your score so that you can get access to more unsecured credit in the future.
The best feature of this card is its lower security deposit, which is excellent for people who have limited savings.
There is no complex process involved in securing your account. You just need a deposit of between $75 and $300 to get the card once your application is approved.
6. Scotiabank Value Visa Card
- Annual Fee: $29
- Annual Interest Rate: 12.99% on purchases and cash advances ($0 introductory cash advance interest rate for your first 6 months)
- Credit Limit: $500+
If you are looking for a low-interest secured credit card, then the Scotiabank Value Visa Card is an excellent option.
The Scotiabank Value Visa Card is one of the best secured credit cards in Canada that combines a low annual fee with competitive interest on purchases. It offers its cardholders secured credit cards with a 12.99% interest rate on purchases, and a minimum security deposit of $500.
Not only does the Scotiabank Value Visa Card give you low-interest rates, but you also get the assurance and benefits of its world-class insurance coverage.
Get the security you need and the purchasing power that you want with the Scotiabank Value Visa Card.
How to apply for a secured credit card
If you’re interested in applying for a secured credit card, follow these simple steps:
Step one: Compare the best secured credit cards in Canada
There are lots of different cards to choose from, so it’s important to compare the different offers and find the one that best suits your needs.
Step two: Gather your documents
In order to apply for a secured credit card, you will need to provide some personal information including your name, address and so on. You may also need to provide proof of income and a security deposit.
Step three: Submit your application
Once you’ve gathered all the necessary documents, you can submit your application online or in person at a bank branch.
If you’re approved, congratulations! You will need to make your security deposit and then you can start using your new card.
What are the benefits of secured credit cards?
There are a few benefits of using a secured credit card:
Rebuilding your credit history
A secured credit card is a great way to rebuild your credit history if you have had some bumps in the past. You may find it difficult to get approved for traditional credit cards if you have a low or bad credit score, but a secured card is much easier to get.
Building credit for the first time
If you’re new to Canada and need to build up your credit score, a secured credit card can be a good option. This is important because you need a good credit score to apply for things like car loans and mortgages.
Guaranteed approval
One of the best things about secured credit cards is that they guarantee approval no matter your credit score.
Flexible security deposit
With some cards, you can choose how much you want to deposit as your security deposit. This means you can control your credit limit and keep it at a manageable level.
Low annual fees
Many of the secured credit cards on the market have low annual fees, making them more affordable than traditional credit cards. Some of them even have no annual fees.
What are the drawbacks of secured credit cards?
There are a few things to keep in mind with secured credit cards:
Security deposit
The biggest drawback is that you need to put down a security deposit. This can be a challenge for some people. However, many of the top secured cards in Canada let you start with a few hundred.
No or limited rewards & benefits
Unlike regular credit cards, secured cards usually don’t offer any rewards or benefits. Where they have perks, they’re usually not that attractive.
The Neo Secured Card is, however, an exception with its minimum 1% cash-back on your purchases with the card.
So, if you’re looking for those perks, you may need to look elsewhere.
Low credit limits
Another downside is that your credit limit will likely be lower than with traditional unsecured credit cards since it’s based on your security deposit.
How Can a Secured Credit Card Improve My Bad Credit Score?
Being considered a risky borrower can make securing a credit card, loan and mortgage difficult.
However, a secured credit card is a great way to rebuild your credit or establish your credit history.
A secured credit card requires a deposit of an upfront refundable amount (the amount will equal or surpass the credit card limit).
If you pay your minimum payment on time every month, this will help you build your credit and prove to lenders that they should give you more traditional credit.
To get started, get any of the above secured cards, put down an upfront security deposit. Use your new card responsibly and you’ll likely see positive results.
Related: 7 Surefire Ways to Improve your Credit Score fast!
Tips for Using a Secured Credit Card
Whether you have a poor payment history or no credit at all, a secured credit card can be the ideal tool for getting on the right track.
Here are three tips to help you ensure you’re always on track and on the road to a better credit score:
Track Your Spending
You can get back on track with your finances with a secured credit card. One of the best ways to do this is by tracking your spending and staying well within your security deposit limit.
Remember that the interest on unpaid balance could leave you with bigger debts in the future and negatively affect your credit score. You should set-up pre-authorized payments when possible so you don’t miss your payment due dates.
Pay more than Minimum Payments
With an average interest rate of 19.99%, interests on credit cards build up fast especially if you’re only making the minimum payments monthly.
To reduce your interest cost and keep your debt level in check, use your credit cards wisely by not making purchases you can’t afford.
And when the payment due date comes around, clear the balance or pay as much as you can to reduce your balance..
Have a Low Credit Utilization Ratio
Your credit utilization ratio is the amount of credit you have used compared to the amount of credit you have available.
A good way to manage your secured credit card is to keep your utilization as low as possible since it impacts your credit score.
Some FAQs
A secured credit card is a good option for building your credit history. If you have a poor credit score, a secured credit card can help you rebuild your credit.
So as long as you are not spending above your means or exceeding the credit limit on your card, you can use your secured card as many times as you wish.
Building your credit score requires you to demonstrate your ability to manage borrowed funds appropriately.
Therefore, you should ensure that you use your secured credit card periodically or as much as possible. This will result in constant activity being recorded on your card.
When you apply for a secured credit card, you’ll need to put down a lump sum of cash as collateral. This way, the credit card company’s risk is minimized. If you fail to make a payment, the company has the right to deduct the amount due from your cash.
Conclusion
Despite some of their drawbacks, secured credit cards can be a great way to rebuild your credit or get started on the right foot if you’re new to Canada.
If you’re ready to get one, we hope the best secured credit cards in Canada profiled in this post will help you choose the right card for your needs.
Just be sure to compare the different offers and find the one that best suits your needs!
Do you have any experience with secured credit cards? Let us know in the comments below. Thanks for reading!
