Like other financial products, traditional unsecured credit cards require that you meet certain criteria, including having a healthy credit score. After all, the creditor is letting you spend money that’s not really yours, and a good credit score will give them some peace of mind knowing that you’re good for the money and will make your payments as they come due.
But what if you have bad credit? Or what if you have no credit at all? What can you do to build your credit while still being able to use a credit card?
That’s where secured credit cards come into the picture. Unlike unsecured credit cards that allow you to spend up to a certain credit limit of money that’s not yours, secured credit cards require you to make a security deposit before you start spending. So in essence, you’re spending your own money.
It sounds a bit like a debit card, but a secured credit card can do a lot more for you; namely, help you to build credit. With every timely payment that you make, you can slowly and steadily build credit, since most secured credit cards report your activity to the credit bureaus. Over time, responsible payment activity you can give your credit score the boost it needs to finally be eligible to upgrade yourself to an unsecured credit card.
If you have bad credit or no credit, you may want to consider getting yourself a secured credit card, and we’ve rounded up the best ones for Canadians.
| Annual Fee | Interest Rates | Min. Deposit | |
| Neo Card (Secured) | $0 | 19.99% – 26.99% | $50 |
| Plastk Secured Visa Credit Card | $48 (+$6 monthly fee) | 17.99% | $300 |
| Home Trust Secured Visa Card | 0$ or $59 | – 19.99% (no annual fee) – 14.9% (with annual fee) | $500 |
| Vancity enviro Secured Visa Card | $0 – $395 | 11.25%– 19.50% | $500 |
| TD Secured Credit Card | $29 | 19.9% | $500 |
| Capital One Guaranteed Secured Mastercard | $59 | 19.8% | $75 |
| No-Fee Scotiabank Value Visa | $0 | 16.99% | $500 |
You’ve made it this far along which must mean you’re interested in getting a Canadian secured credit card. Not all secured credit cards were made equal, below are the top five secured credit cards in Canada along with what you can expect when applying for and using the card.
The Neo Card (Secured) is a unique secured credit card, in that it allows users to earn cashback on all their purchases while at the same time working toward improving their credit. This card is ideal for anyone looking to rebuild their credit, but who is also looking for additional perks and benefits. Neo Financial is a 100% digital financial institution, which means you can apply for a secured card (or any of their other financial products), make payments, manage your accounts, etc. all online and from the comfort of your home.
Neo Card (Secured) users earn enormous bonuses – like up to 15%1 cashback on first-time purchases from Neo partners – as well as an average of 5%1 cashback at Neo partners. Users can easily adjust their credit limit, and there is no annual fee. Furthermore, approval is guaranteed (must be the age of majority in your province or territory of residence, a Canadian resident, and provide security funds) and there is no credit check required, two features that credit-constrained individuals will appreciate.
Neo is offering new customers a $25 welcome bonus, sign up by clicking the button below and receive your $25.
Sign-up & receive $25Neo CardTM holders can customize their cards by adding perks. Neo perks are stackable and reward you for spending by boosting cashback offers for different categories. Neo perks are flexible and come with no commitment. You can easily add a perk to your card via the Neo app and cancel it at any time.
Valued at over $170 a year, Everyday Essentials perks can be added to your Neo Card for a low fee of $8.99 a month. With it, users can earn 1.5x more cash back when they shop at participating grocery stores and gas stations.
Neo Travel perks cost $4.99 a month and have a value of over $360 a year. Users who travel regularly will benefit from the added perks.
Premium Access perks is a great option for all Neo Card holders, as the price tag is so affordable at $0.99 a month with a value of over $100 a year.
The Plastk Secured Visa Credit Card is the only secured credit card that offers a premium rewards program. As a cardholder, every purchase you make will earn you points that you can redeem at a later date. Every dollar you spend on your Plastk card will earn you at least 1 point. Points can be redeemed for, merchandise, gift cards, travel, exclusive event, and charities.
In addition, to a great rewards program, the Plastk secured credit card can help those looking to improve their credit. All payments are reported to the largest credit bureau in Canada — Equifax, which can help you improve your credit. Because of this, the Plastk secured card is a great option for consumers who are having trouble gaining access to a traditional credit card and students or new Canadians looking to build credit.
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The Home Trust Secured No-Fee Visa allows consumers to build credit without being charged any annual fees. Approval isn’t guaranteed, though approval rates are pretty high at about 95%. Shop and pay online with your secured card much like you would with a conventional credit card. Set your own deposit limit (minimum of $500) and only pay interest if you carry a balance.
If you are prepared to pay your balance in full every month, this is an ideal card for you. There is no annual fee if you agree to a higher interest rate. Although, the interest rate will not impact you so long as you make payments on time and in full. If you don’t intend to make full, timely payments every month, you’re a revolving credit card user, then the annual fee with lower interest is the best option with this card. The paid version of this credit card has an annual fee of $59 (or $5 paid monthly). The fee is offset by a lower APR of 14.99% versus the no-fee card’s APR of 19.99%.
The Vancity secured credit card is a great option for residents of British Columbia who have struggled with financial issues in the past but are now back on track and ready to rebuild their credit. This secured credit card works slightly different than other secured cards. To start you will need to open a Vancity TFSA or high-interest savings account and invest at least $500. Your investment will act as your security and you’ll be issued a credit card with a limit equal to your investment. Another benefit is that you’ll be able to earn interest on the security amount because it’s been invested.
The TD Cash Secured Credit Card is great for building or repairing your credit while also giving you the benefit of earning cash back on all your expenditures. You can use it like any other card to make purchases both in-person and online and earn rewards. If you use the card wisely, not only will you be improving your credit score, but you‘ll also have the ability to upgrade to an unsecured card.
The TD secured credit card requires a deposit upfront which then becomes the credit limit. There is an annual fee and high interest, but there are other unique benefits to using this card. So long as you manage the card successfully by making payments on time and in full for seven continuous months, you will become eligible for an unsecured credit card with TD. This card will definitely help you along the path to improved credit and personal finances.
The Capital One Guaranteed Secured MasterCard is a great option for Canadians who are just starting to build their credit or are in the process of repairing it. Approval is guaranteed, and the card is supported by Mastercard, so you can use it anywhere that MasterCard is accepted (which is just about everywhere). You’ll also be protected against credit card fraud thanks to the card’s built-in liability protection. The Capital One Guaranteed credit card also has one of the lowest minimum deposits on the market making it easier to commit to. However, the low minimum deposit is offset by the annual fee and high-interest rate. The annual fee is unavoidable, unfortunately, but as long as you always pay off your full balance every month, you can dodge any interest charges.
Learn MoreNeed help choosing the right credit card for your needs? Check out this article.
Start building your credit without having to pay any annual fees with the No-Fee Scotiabank Value Visa. Right now, you can snag an introductory interest rate of only 3.99% on balance transfers for the first 6 months after getting the card (then pay 16.99% after that). The card also offers as much as 25% discounts when you pay for a car rental using your card at eligible Budget or Avis car rental locations.
A secured credit card requires a cash deposit to use. Secured credit cards are also referred to as guaranteed credit cards.
Typically, the cash deposit becomes the credit card’s limit. Although it depends on the credit card provider, some will require a higher cash deposit for a lower credit limit. Secured credit cards are designed for higher-risk borrowers which is why a deposit is required. In the event that the credit card user defaults, the credit card issuer will keep the deposit to repay the owed balance.
Other than the fact that security is required, a secured credit card is the exact same as a regular credit card. You will be able to make purchases in-store, online, through payment processing services, and use it to pay bills.
Do you know the difference between a secured credit card and a prepaid credit card? Find out here.
All financial products have corresponding pros and cons. Before getting a secured credit card, it’s important to understand all of the advantages and disadvantages so you know what you’re getting yourself into. Below is a list of all the advantages and disadvantages of secured credit cards.
Check out these 8 secured credit card myths, click here.
If you’ve never heard of a secured credit card, you might be wondering what instances where using one would be favourable. Secured credit cards actually have many uses and purposes compared to what you might initially think. A list of common secured credit card uses follows below.
The major key difference between a prepaid credit card and a secured credit card is where the money comes from.
There are a number of secured credit cards out there, so how do you choose which one is best for you? Here are a few things to consider when picking a secured credit card.
Secured credit cards are powerful tools to help both establish and improve credit, but only when used responsibly. To make the most out of your secured credit card, consider the following:
Regardless of your financial situation, secured credit cards can help you build or rebuild credit and are a great introduction to credit in general. Of course, there are annual fees and interest rates to consider along with establishing and improving financial habits. Secured credit cards are simply an excellent tool to secure a better financial future.
Card issued by ATB Financial pursuant to license by Mastercard International Inc.
1Average based on current offers at select partners. Cashback varies per plan, offer and partner.
Rating of 5/5 based on 8 votes.
Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.
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