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2021's Best Secured Credit Cards for Canadians

Find the best secured credit card to help you rebuild your credit and improve your overall credit score.

What is a secured credit card?

If you have bad credit or little to no credit history at all and you’re ineligible for most credit cards, you can still improve your credit score with a secured credit card. Secured cards require you to put down a security deposit that is equal to or less than the limit of a card, depending on your credit history. The deposit acts as a security for lenders, protecting them against missed bill payments. As a credit card user with a low credit score, credit card provider’s view you as a risky borrower. By using a secured credit card, you have the advantage of using the deposit in case you can’t pay your credit card bill. In general, secured cards are usually not associated with the best rewards programs or the lowest interest, so you should always think of secured cards as a stepping-stone to other credit products. Once you’ve improved your credit, you can close your account, get your deposit back, and apply for a credit card with more benefits.

Best of Finance Winner for 2021:

Best Secured Credit Card for Building Credit

It can be challenging to get approved for credit, particularly if you have little or no credit history. But to build a credit history, you often need access to credit. So, what is a person to do?

A secured credit card is an excellent first step. This handy little product can benefit those who are new to credit or need to improve their credit, and it works much like a standard credit card. Cardholders can usually pay bills, purchase items in-store and online, and access a credit limit. However, the credit limit is determined by a deposit set by the cardholder and is secured on the card.

The cardholder is responsible for paying their statement each month and will also owe interest if they carry a balance. With each payment made on time, the positive information is reported to the credit bureaus in Canada and should slowly build or increase the cardholder's credit score.

Over time, the cardholder may qualify for unsecured products and should be able to get their initial deposit back.

We compared secured credit cards in Canada using our Best of Finance methodology and ranked the cards that provided the highest value. Though, in this case, we felt that annual rewards and savings were not the most important benefits. Cardholders would get the best value from a no-fee card that focused strictly on building credit.

  First year value Annual fee Top features
$0 $0 Rebuild credit + Purchase protection insurance
$68 $48 + $6 monthly fee ($72 per year) Monthly credit score update + 25-day interest-free grace period on purchases
$180 $0 Earn cash back + Low foreign exchange fees + Personalized financial coaching

Winner: No Fee Home Trust Secured Visa* Card

The No Fee Home Trust Secured Visa Card* allows cardholders to build or rebuild their credit for no annual fee. Cardholders can set their credit limit based on a deposit ranging from as low as $500 to as high as $10,000. Shop online, pay bills and use the card anywhere Visa is accepted — just like an unsecured card.

If you keep up with the payments, your credit rating should improve, whether you are just starting to build your credit or your credit score needs some repair.

Home Trust also offers the Home Trust Secured Visa* Card with a lower interest rate for a $59 annual fee. However, appealing as this may seem, cardholders looking to rebuild credit should aim to pay off their credit card balance in full each month. The No Fee Home Trust Secured Visa* Card is one of the safest and best options.

First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$0
Annual savings
$0
Annual fee
$0
Total first year value
$0
No Fee Home Trust Secured Visa Card

card image
Welcome bonus
$0
Annual savings
$0
Annual fee
$0

Winner – Best Secured Credit Card for Rebuilding Credit
Great stater card for students, newcomers to Canada, or those looking to repair their credit score
Details at a glance Collapse details
First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$0
Annual savings
$0
annualFee
$0
Total first year value
$0
Welcome bonus
$0
Annual savings
$0
Winner – Best Secured Credit Card for Rebuilding Credit
Great stater card for students, newcomers to Canada, or those looking to repair their credit score
Details at a glance Collapse details

Runners-up: Best Secured Credit Card for Building Credit

Plastk Secured Visa Credit Card

The Plastk Secured Visa Credit Card regularly reports to credit bureaus like Equifax and TransUnion as cardholders make payments to build or rebuild credit. Members can track their progress with monthly updates and increase their card limit to suit their needs as the security deposit determines it.

According to our Best of Finance methodology, the average Canadian will see $68 in points within the first year, which is low compared to many rewards credit cards. However, few secured credit cards offer rewards or other perks included on this card.

The average Canadian can also save around $40 in interest charges over the first 12 months if they choose to use the balance transfer feature.

Annual fee:

$48

Monthly maintenance fee: 

$6 ($72 per year)

Credit limit (deposit):

$300 to $10,000.

Limited time offer/bonus:

  • Access a 0% annual interest rate on purchases for the first three months. Also, receive 5,000 bonus reward points upon approval, redeemable after three months.

Offer expiry date: N/A subject to change without notice

Rewards:

  • Earn one point for every $1 spent on all purchases made on the card. Redeem rewards for travel, cash back or brand name merchandise.

KOHO Standard Prepaid Visa Card

The KOHO Standard Prepaid Visa Card is not a secured credit card; however, it features an affordable tool to help cardholders build their credit. Credit Building by KOHO costs users a budget-friendly $7 a month for six months to use. When the six-month subscription ends, cardholders can repeat the process as many times as they need.

Since the card is prepaid, cardholders can load funds onto the card and will never have to worry about spending over their means. They will also earn 0.5% back on all purchases and can access personalized financial coaching through the app.

According to our Best of Finance methodology, the average Canadian would earn around $180 in rewards in the first year.

Annual fee:

$0

Limited time offer/bonus:

  • Get an additional 1% cash back on all purchases for 90 days when you sign up with a referral code and when you refer a friend. You can earn up to 10% cash back for 90 days.

Offer expiry date: N/A subject to change without notice

Rewards:

  • Earn 0.5% unlimited cash back on all purchases.

Rates, product information, and reward estimates are subject to change at any time and do not constitute financial advice. This post was not sponsored. The views and opinions expressed in this review are purely those of RATESDOTCA. Information in this article is accurate as of the date of this posting, May 18, 2021. Read our full disclaimer.

4 tips for using a secured credit card

If used the right way, a secured credit card can help you rebuild your credit and become eligible for a higher limit and better rewards credit card in the future.

Here’s how to make your secured credit card work for you:

  • Make minimum payments: It’s important to pay the minimum payment on your secured credit card statement on time, as secured credit cards have high interest rates. You will only be able to improve your credit score by responsibly paying off your credit card balance.
  • Track your spending: You should regularly track your credit card statement to be aware of all the purchases you’re making and also the due date for the minimum payment. You can set up mobile/email alerts, so you can track all your credit card activity and understand your spending.
  • Pay in full: lf you have the means to pay off the total balance owing on your credit card statement, you should always do so. This can help improve your credit as it signals to lenders that you can manage to handle borrowed credit and pay it off timely.
  • Use the secured credit card: Just because you have bad credit, doesn’t mean that you have to limit your credit card usage. In fact, if you don’t use credit it’s going to be more difficult to improve your credit score. Try to responsibly use your credit card to cover transactions you can afford and pay off your balance before your due date. Don’t overspend, and be mindful of your purchases and credit score. A healthy payment history on your secured credit card will help you repair your credit. You should check your credit score frequently and track your progress.

Applying for a secured credit card? Here’s everything you need to know about secured credit cards.

What are the requirements for a secured credit card?

If you have no credit history in Canada or a low credit score, you are eligible to apply for a secured credit card. Unsecured credit cards may require a higher credit score (600 or more), so secured credit cards are a better option if you’re looking to rebuild or establish your credit history. In order to obtain a secured credit card, you are required to put down a security deposit. The security deposit can range from $200 to $1000 depending on your current credit score and credit requirements. This security amount determines your secured credit card’s limit and acts as insurance against your spending.

Do you need income for a secured credit card?

Typically, yes. Credit card lenders may not always require you to have an income for a secured card, but if you’re able to show some form of income, you have a higher chance of being approved. Your ability to pay off your credit card bill is tied directly to your income, making income a determining factor for your approval.

What is the difference between a secured credit card and a prepaid credit card?

It is easy to get secured credit cards and prepaid credit cards confused. The main feature that differentiates them is their function. When you use a prepaid card, you “prepay” the amount you are intending to spend. It is a reloadable credit card and it doesn’t help you rebuild your credit like a secured credit card does. If you want to avoid using traditional credit or debit cards, you can consider applying for a prepaid credit card. Prepaid cards are relatively easier to obtain and require no credit checks, but they won’t help you with your financial future.

If you want to improve your credit score, a secured credit card is a better option. A secured credit card functions more like a traditional credit card, but comes with the requirement of depositing a security amount.

How will a secured credit card help me rebuild my credit?

When you responsibly use a secured credit card, your credit card activity is reported to major credit bureaus like TransUnion and Equifax. As you pay off your secured credit card bill regularly, you begin to generate a positive impact on your credit, creating a good credit history. As long as you don’t miss payments, you can continue seeing a slow and steady increase in your credit score.

With your security deposit in place, you don't have to worry about debt collectors contacting you for missed payments on the card, but any late payments will hurt your credit score. Use your secured credit card in responsibly to rebuild your credit history.

Can I get my deposit back from a secured credit card?

When you apply for a secured credit card, you lay down a deposit which you are guaranteed to get back so long as your secured credit card bill is payed of when you close the account. Once you’ve decided that your secured credit card has helped you rebuild your credit score, you can close or upgrade your credit card and this will allow the lender to refund your security deposit.

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