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Find the best secured credit card

June 11, 2020 MoneySense staff
Find the best secured credit card


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What is a secured credit card?

A secured card is a specific type of credit card that requires applicants to make a cash deposit in order to be approved. The experience of using a secured card for everyday purchases is mostly the same as a “regular” credit card, and the deposit requirement makes secured cards extremely attainable and a good option for people who want to build their credit with a credit card but don’t qualify for traditional unsecured credit cards because of bad credit or a lack of credit history.

Ratehub’s best secured credit cards

Want to rebuild your credit with a secured credit card. Just input your income and preferences and the MoneySense Credit Card Finder will provide a comparison of some of the best secured credit cards in Canada from Ratehub’s partners.

 

To view more secured card options and MoneySense’s editor’s picks, read our blog on the best credit cards for bad credit in Canada.

How does a secured credit card work?

You pay a deposit upfront in order to be approved for a secured credit card. The deposit serves as collateral, so it’s easy to be approved for these cards even if you have a bad credit rating. The spending limit on your secured credit card will be one to two times the security deposit you put down. If you miss your minimum payments, then the issuer may take money from your deposit to cover what you owe, but you cannot use the deposit yourself to make payments on your card. If you decide to close your account or to upgrade to an unsecured card, then your deposit will be returned. 

Other than that, the card works just like a regular unsecured credit card. You can use it to buy things online, in stores, or to cover regular monthly bill payments, such as utilities or Internet service. If you carry a balance at the end of the month, you will be charged interest at the stated rate. 

Do secured credit cards build credit?

Yes. In fact, building a better credit rating is the primary value of a secured credit card. Because payment history is such an important factor in determining a credit score, this is an excellent option for people who are new to the country, have no credit or poor credit, or have recently filed for bankruptcy. It is important to remember to be as careful making your credit card payments as you would with any other loan or bill payment. Missed payments can hurt your credit rating more easily than making payments can help it. 



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