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But there’s a category of credit cards designed with you in mind – secured credit cards. They’re very similar to regular credit cards, but with a couple of differences.
Best part? You’re virtually guaranteed to be accepted.
Here’s what you need to know about secured credit cards, and what secured credit cards are available in Canada.
Summary of the best secured credit cards
|Credit Card||Annual Fee||Special Features||Apply Now|
|Home Trust Secured Visa||$0||* 2% foreign transaction fee
* Purchase protection insurance
|Home Trust Secured Visa (Low Rate)||$59||* 2% foreign transaction fee
* Purchase protection insurance
* Low purchase interest rate of 14.9%
What is a secured credit card?
So what exactly is a secured credit card? These are credit cards designed for one set of people in mind, those with poor credit – which means a credit score of less than 560.
Sometimes also called guaranteed credit cards, they work just like regular credit cards, except for one key difference.
You have to supply a security deposit before you get issued a card. This security deposit then becomes your credit limit.
And this security deposit is why these credit cards have almost guaranteed approval. The issuer has your security deposit, and if you don’t pay your credit card bill, they’ve got collateral so that they’re protected and won’t lose any money if you don’t pay your bill.
Once your credit score improves from using a secured credit card and paying your bills on time, when you go to close your account you’ll receive your security deposit back. It’s important to note, however, that you generally won’t receive any interest on the amount they were holding.
Other than this security deposit, secured credit cards work the same way as regular credit cards. You’ve got a credit limit, you can use your card to make purchases, and you’ll get a monthly bill. And just like regular credit cards, these cards also have an interest rate. If you don’t pay your bill in full, you’ll be charged interest on top of your payments.
Want to know more about what credit score you need to be approved for regular credit cards? This article has everything you need to know about credit scores and more.
Things secured credit cards don’t include
Since these credit cards are designed for those with poor credit scores, there are a few features these cards don’t include:
- very limited insurance coverage (if they have any at all), and
- very few have no annual fees.
These credit cards are solely designed to help people improve their credit scores – which can be the best gift of all. A better credit score will help you get loans, better credit cards, and lower interest rates.
Approval is not guaranteed
Despite everything listed here, approval is not guaranteed. Depending on the issuer, you may still be subjected to a credit check, and depending on what is on your file, you still may not get approved for one of these credit cards.
But you have a much better chance with a secured card than any other credit card on the market.
Overview of secured credit cards
So what secured credit cards are out there? The truth is, there’s a limited supply of them in Canada.
Here’s a listing of what’s available.
Home Trust Secured Visa
The best secured credit card in Canada right now is the
Why this card? What separates it from the rest?
It has no annual fee, saving you some additional money every year. It actually includes 1 type of insurance – purchase protection coverage. And, it has a slightly lower foreign exchange fee of 2%, compared to the standard 2.5% fee.
These 3 things are what separates it from the rest.
The minimum security deposit required is $500, with a maximum limit of $10,000.
Home Trust also offers one other option – the
For an annual fee of $59, or $5 per month, you’ll gain access to a lower purchase interest rate of 14.9%, compared to 19.99%.
Otherwise, it has all the same features.
Refresh Secured Credit Card
Refresh Financial also offers a secured credit card – the
Refresh states that you won’t be subjected to a credit check, and your deposit can be as little as $200 to get your card issued, with a maximum limit of $10,000. Refresh also offers free financial training.
So while that’s good, there are fees involved.
First, the annual fee is $12.95 per year. Plus, there’s also a monthly maintenance fee of $3. If you have this card for a year, you’re paying $48.95 in fees for this card.
Otherwise, there are no other benefits with this card.
Capital One secured credit cards
Capital One offers a secured credit card – the Guaranteed Security Mastercard.
The card has an annual fee of $59. The initial security deposit required is low – between $75 and $300. You can increase your limit up to a maximum of $2,500.
The big banks and secured credit cards
The big banks are suspiciously absent from our list. None of them actually offer secured credit cards for all Canadians, but many of them have programs for newcomers to Canada, which includes credit cards.
You’ll have to go into a branch to apply for these credit cards, it can’t be done online.
Here is what each of the 5 big banks have to offer in this regard.
BMO secured credit cards
CIBC secured credit cards
RBC secured credit cards
Scotiabank secured credit cards
TD secured credit cards
Like the others above, TD doesn’t have a secured credit card. There is a program for those who are new to Canada, with a variety of secured credit cards specifically designed with newcomers in mind. Here is what is available.
Help repair your credit
Secured credit cards have one thing in mind – with near automatic approval, they give you the ability to help improve your credit score.
Have you used a secured credit card in the past?
Let us know in the comments below, and share your experience with them.
Here are some frequently asked questions about secured credit cards.
What is a secured credit card?
A secured credit card is largely the same as any other credit card, except you have to provide a security deposit before you get a card issued. Your security deposit becomes your credit limit.
What is the best secured credit card?
The Home Trust Secured Visa is the best secured credit card. It has no annual fees, a lower foreign exchange rate of 2%, and purchase protection insurance.
Do the big banks offer secured credit cards?
The big banks do not offer secured credit cards that are available for everyone. However, they do have financial programs for newcomers, and have credit cards as part of these programs.