If you have bad credit, you can use a secured credit card to help build your credit scores. However, finding the best secured credit card in Canada can be hard with all the available options to choose from. To help you, we’ve curated a list of the best secured credit card in Canada. Compare important factors such as the interest rate, minimum security deposit and extra perks to find one that suits you.
The Best Secured Credit Cards In Canada
| Annual Fee | Purchase Rate | Min. Deposit | |
| Secured Neo Mastercard | $5/monthly | – 19.99% – 29.99% – QC: 19.99% – 24.99% | $50 |
| Home Trust Secured Visa* | – $0 (higher interest rate) – $59 (lower interest rate) | 14.90% – 19.99% | $500 |
| Vancity enviro™ Secured Visa* card | $0 – $395 | 11.25% or 19.50% | $500 |
| ATB Alberta Mastercard® – Secured | $49 | 19.99% | $500 |
Secured Neo Mastercard
The Secured Neo Mastercard 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.
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 (hard credit check required in QC). Features that credit-constrained individuals will appreciate.
Secured Neo Mastercard Main Features
Monthly fee: $5
Purchase rate: 19.99% – 29.99% (QC: 19.99% – 24.99%)
Cash advance rate: 22.99% – 31.99% (QC: 22.99% – 25.99%)
Minimum security deposit: $50
Maximum security deposit: $10,000
Extra features:
- Earn up to 4% cashback on gas and groceries.¹
- Earn up to 1% everywhere else.¹
- Earn extra cashback with select Neo partners.
- Help build a healthy credit history.²
- Guaranteed approval.
- Choose your credit limit based on how much you have saved for your security deposit.
Neo Perks
Neo credit card holders can also customize their cards by adding perks. They 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.
- Travel Perks: $7.99 a month (not available in QC)
- Mind & Body Perks: $9.99 a month
- Food & Drink perks: $1.99
- Mobile & Personal Protection Perks: $9.99 a month
Home Trust Secured Visa* Card
The Home Trust Secured 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 like you would with a conventional credit card. Set your 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. There is also a low-fee version of this credit card with 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%.
Annual Fee: $0 or $59
Purchase interest rate: 19.99% APR with no annual fee, 14.9% with an annual fee
Minimum security deposit: $500
Maximum security deposit: $10,000
Extra features:
- Insures eligible items for 90 days after purchase if damaged or stolen.
- Credit check required.
Vancity enviro™ Secured Visa* Card
The Vancity enviro Secured Visa card is a great option for residents of British Columbia who have struggled with financial issues in the past but are now ready to rebuild their credit. This secured credit card works slightly differently 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.
Annual Fee: $0 – $395
Purchase interest rate: 11.25% or 19.50%
Minimum security deposit: $500
Maximum security deposit: n/a
Extra features:
- Calculate your carbon footprint with their Carbon Counter™ tool.
- Supplementary cards cost $0 or $50 each.
ATB Alberta Mastercard® – Secured
If you live in Alberta and are looking for a secured credit card to help you rebuild a healthy credit history, the ATB Alberta Secured Mastercard is a great option to consider. This credit card is a no-fuss secured card. Users must provide at least a $500 security deposit to get started. With daily use and consistent on-time payments, this card can help anyone looking for a fresh start reestablish their credit history.
Annual fee: $49
Purchase rate: 19.99%
Cash advance rate: 22.99%
Minimum security deposit: $500
Maximum security deposit: n/a
Extra features:
- Can help rebuild health credit.
- Get up to 25% off at participating Avis and Budget car rental locations.
Looking for the best credit card options?
What Is A Secured Credit Card?
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, your creditor will report your activity to the credit bureaus, which may help build your credit. Over time, your credit may be high enough to upgrade yourself to an unsecured credit card.
How Does A Secured Credit Card Work?
Also referred to as a guaranteed credit card, a secured credit card requires a cash deposit to use. The cash deposit you provide generally becomes the credit card’s limit. You can then use your card to make purchases, just as you would 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 note, that in the event you default on your payment, the credit card issuer can use your security deposit to repay the owed balance. However, if you keep up with your bill payments and then cancel your card after some time, your security deposit will be returned to you.
The Best Secured Credit Card In Canada: Advantages And Disadvantages
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.
Advantages
- Build or Rebuild Credit. If you have no credit history or poor credit, a secured credit card is one of the easiest ways credit products to qualify for. With it, you can use it to help build or rebuild your credit. That is, as long as you make payments on time and in full.
- Introduction to Credit Use. If you’re new to credit entirely, a secured credit card is a great introduction to what it’s all about. It can help you prepare for larger credit commitments in the future.
- Little to No Requirements. To qualify for a secured credit card, you need to be the age of majority in your province or territory and have the funds available for the deposit – that’s all. Generally, no credit checks or income verification is required and approval is instant.
- Versatile Purchase Options. You might be thinking, why go through the hassle of getting a secured credit card if I already have the cash available for use? Cash is a limiting payment option these days. With a secured credit card, you can make purchases online, in-store, through payment processing services, and more.
Disadvantages
- High Interest and More Fees. Most secured credit card users are perceived to be a higher risk in the eyes of lenders. For this reason, interest rates can be high and more fees are applicable.
- Doesn’t Fix Bad Financial Habits. If you’re getting a secured credit card to rebuild credit, the card itself won’t fix your bad habits. You still need to work on your spending habits which can be tough.
- Can’t Access Deposited Funds. Once the cash deposit has been given to the credit card issuer, you won’t be able to access the funds until the end of the card’s term. Be sure that you don’t require the cash for anything else since it will be tied up for quite some time.
When Should You Use A Secured Credit Card?
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 secured credit card can be used to:
- Build credit history if none exists
- Rebuild credit if credit is currently poor
- Alternative to regular credit cards if having trouble obtaining one
- Use to make an anonymous or one-time purchase
- Recently moved to Canada
Secured vs. Prepaid
The major key difference between a prepaid credit card and a secured credit card is where the money comes from.
Purchases
- When you make purchases using a secured credit card, you are borrowing money from your credit card provider, which you repay at a later date.
- When you make a purchase using a prepaid credit card, you are using your own money. Prepaid cards are loaded with your own money that you can later use to make purchases.
Credit Score
- When you make a purchase using a secured credit card, the payments are reported to the credit bureaus, which can help build your credit.
- When you make a purchase using your prepaid credit card, it is not recorded to the credit bureaus because you are not borrowing money that must be repaid. It is simply a tool that allows you to manage your spending and make purchases.
How To Pick The Right Secured Credit Card
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.
- They report to credit bureaus to help you build credit
- You can afford the secured deposit minimum
- There is an option to increase your credit limit down the line
- There are unsecured credit card options you can upgrade to when the time is right
- Annual fees are low
- Annual interest rate is competitive
- Rewards or points can be earned on expenditures
How To Get The Most Value From 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:
- Only use the card for a handful of small purchases every month.
- Make your payments in full every month before the due date. This will help you build your credit score and avoid paying interest.
- Keep tabs on your credit score every so often. If it has increased quite a bit, ask your creditor about an upgrade to an unsecured credit card.
Secure A Better Financial Future
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.
Secured Credit Card FAQs
Can my secured credit card application be rejected?
Can a secured credit card affect my credit score?
How can a secured credit card help me?
Neo Credit and Neo Secured Credit cards are issued by Neo Financial™ pursuant to license by Mastercard International Incorporated.
¹Minimum balance in a Neo Everyday account required to earn the highest rate. Cashback earn subject to monthly maximum spend limits. Cashback may be limited and varies by perks, offer, and partner. There may be monthly limits for boosted cashback offers.
²When you make payments in full and on time each month.
