By Sandra MacGregor on 6 August 2024
Estimated reading time: 10 minutes
A secured bank card is a singular financial instrument that requires a money deposit as collateral, so the issuer is protected in case the cardholder fails to make their payments. If you miss a payment, the bank can use the deposit to repay the quantity owed. Because this reduces the financial risk for the bank card provider, it is far easier to get a secured card than a standard unsecured card. Here are a few of one of the best secured bank cards in Canada.
Best overall secured bank card
At a look: The Home Trust Secured Visa is an incredibly user-friendly card with attractive flexibility. Applicants can make a choice from a 19.99% rate of interest with no annual fee or a low 14.90% rate of interest with a $59 annual fee. Because Home Trust reports your payments to the Canadian credit bureaus, you possibly can construct a credit file and improve your credit rating. All you actually need to use is a minimum balance of $500 in a Canadian checking account. Unfortunately, the cardboard shouldn’t be available should you are currently bankrupt or live in Quebec. This card lets you deposit between $500 and $10,000, and the quantity you select becomes your limit.
Presented
Home Trust Secured Visa
Annual fee: $0
Reward: None (intended for individuals who need to restore their credit)
Welcome offer: None
Card details
| Interest charges | 19.99% on purchases and 19.99% on money advances |
| Required income | not specified |
| Credit Score | 300 or higher |
Best secured card for rewards
At a look: Neo is certainly one of the few secured cards that gives some attractive extras like rewards, a welcome offer, and a low minimum deposit. With this card, you possibly can deposit as little as $50 and earn a mean of 5% money back on purchases with select partners. Neo even guarantees guaranteed approval so long as you reside in Canada and are of legal age in your province or territory.
Presented
Secured Neo Mastercard
Annual fee: 60$
Reward: Minimum 0.5% cashback and a mean of 5% cashback on purchases from partners
Welcome offer: earn $25 cashback.
Card details
| Interest charges | 19.99% on purchases (19.99% to 25.49% for residents of Quebec) and 22.99% on money advances |
| Required income | Personal or household income of $50,000 |
| Credit Score | not specified |
Best secured card for insurance
At a look: Capital One guarantees approval with its secured MasterCard so long as you are of legal age in your province, don’t have already got a Capital One account, and might provide security deposits of $75 or $300. This card comes with a couple of additional perks like an prolonged warranty, rental automotive insurance, and a few travel advantages. Most notably, the cardboard comes with price protection: If you purchase a brand new item that goes on sale at a cheaper price inside 60 days, Capital One can pay you the worth difference as much as $100 per item, and $500 per yr. This is an incredibly rare perk even amongst premium cards in Canada.
Presented
Guaranteed Secured Mastercard from Capital One
Annual fee: 59$
Reward: None (intended for individuals who need to restore their credit)
Welcome offer: None
Card details
| Interest charges | 19.80% on purchases, 21.90% on money advances, 19.80% on balance transfers |
| Required income | None |
| Credit Score | None (designed for individuals with poor credit) |
What is a secured bank card?
A secured card is a special kind of bank card that requires the applicant to make a money deposit as a way to be approved. Using a secured card for on a regular basis purchases is basically the identical as using a “regular” bank card, and the deposit requirement makes secured cards extremely reasonably priced and a very good option for individuals who need to construct their credit with a bank card but don’t qualify for traditional unsecured bank cards because of poor credit or lack of credit history.
How does a secured bank card work?
To get a secured bank card, you will need to put down a security deposit up front. The deposit acts as collateral, so you possibly can easily get these cards even when you’ve gotten horrible credit. The spending limit in your secured bank card is one to 2 times the deposit you place down. If you possibly can’t make your minimum payments, the issuer can deduct money out of your deposit to cover your debt. However, you possibly can’t use the deposit itself to make payments in your card. If you select to shut your account or switch to an unsecured card, your deposit will likely be refunded.
Otherwise, the cardboard functions like a daily unsecured bank card. You can use it to make online or in-store purchases, or to pay regular monthly bills, similar to utility or web bills. If there may be a balance at the top of the month, you will likely be charged interest on the stated rate.
Do secured bank cards construct credit?
Yes. In fact, constructing a greater credit rating is the predominant good thing about a secured bank card. Because payment history is such a vital think about determining creditworthiness, this is a superb option for people who find themselves recent to the country, haven’t any or poor credit, or have recently filed for bankruptcy. Remember to be as careful together with your bank card payments as you’ll with some other loan or bill payment. Missed payments can hurt your credit rating more easily than payments may help it.
If you make your minimum payment on time every month, you possibly can construct a very good credit rating in as little as a yr. Once that happens, you might find a way to qualify for an unsecured bank card and get your down payment back. It’s good practice to make use of your secured bank card repeatedly but sparingly. You need to make sure you possibly can repay your entire balance every month to avoid interest payments.
Secured vs. unsecured bank cards
Secured bank cards
- Deposit required
- Easy approval (even with low creditworthiness)
- Annual fees or setup fees are sometimes charged
- Do not include any perks or rewards
- May have higher rates of interest, but rates of interest may vary
- Can help construct credit
Unsecured bank cards
- No deposit required
- Requires moderately good creditworthiness
- No setup fees; many options haven’t any annual fees, while others
- May include advantages similar to travel points, cashback, travel insurance, etc.
- Cards with lower rates of interest can be found
- Can help construct credit
continuously asked Questions
Other best bank cards:
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