Best Secured Credit Cards to Build Your Credit Score
Learn more about how secured credit cards work and find cards that can help you build your credit history. Want to compare even more credit cards? Sign up with Borrowell to get your free credit score and see your approval chances for all types of credit cards in Canada.
What's a Secured Credit Card and How Does it Work?
A secured credit card is similar to a regular credit card, but it's backed by a cash or security deposit that you make before receiving the card. The cash deposit you make will determine the credit limit on your card. For example, if you give your lender a cash deposit of $1,000, they'll grant you a credit limit on your card of up to $1,000.
You'll be able to spend up to that amount, but you'll need to make regular repayments to your lender, just like a regular credit card. If you don’t make your payments, the lender can claim your security deposit against any outstanding charges.
How to Build Credit with a Secured Credit Card
Make Your Payments On-Time
Use your secured credit card for regular purchases. Each month, pay back the balance you've spent on your card to your lender.
Build Payment History
Your payments are reported to the credit bureaus added to your credit report. Payment history makes up 35% of your credit score.
Improve Your Credit Score
Building positive payment history can help you increase your credit score, whether you're starting from scratch or rebuilding your credit.
Top Secured Credit Cards in Canada
Refresh Financial Secured Card
$200 – $10,000
Minimum Deposit Required
Great option for people with less-than-perfect credit
No credit check is required to get approved
Payments are reported to both credit bureaus (Equifax and TransUnion), which helps you build credit history
Lowest annual fee amongst low-interest competitors
Quick online application with 4 simple steps
Capital One Guaranteed Secured Mastercard®
$300 – $2,500
Minimum Security Funds Required
Annual Interest Rates
Can qualify for this card if you:
Are at least the age of the majority in your province or territory of residence
Have not applied for a Capital One account more than once in the last 30 days, or had a Capital One account that was not in good standing in the last year
Don’t have an existing Capital One account or a pending application for one
Provide the required security fund
Guaranteed access to credit (terms and conditions apply)
May help you establish or re-establish your credit history
Annual interest rate of 19.8% on purchases and balance transfers
Annual interest rate for cash advances is 21.9%
Home Trust Secured Visa Card
$500 – $10,000
Minimum Deposit Required
Not available to residents of Quebec
Cardholders can choose between no annual fee and 19.99% interest or an annual fee of $59 and 14.90% interest
Control your spending limit with the amount of your deposit
Accepted wherever Visa cards are allowed
Plastk Secured Credit Card
$300 – $10,000
Minimum Deposit Required
Monthly credit score update provided by Equifax
Referral program to earn points and cash back
After two (2) missed payments, the interest rate will increase to 29.99%
Secured Credit Card FAQs
A secured credit card works like a regular credit card, except you make a deposit to the lender beforehand in order to get you card. Your deposit determines the credit limit you have available on your card. For example, a deposit of $1,000 will secure you up to $1,000 as a credit limit.
You can make regular purchases with your secured credit card. Each month, pay off your outstanding balance to your lender. If you don’t make your payments, the lender will claim your security deposit against any outstanding charges.
When used properly, a secured card can help you build credit history and your overall credit score. Every regular repayment you make to your lender will be reported to Canada's credit bureaus (Equifax and TransUnion), and this information will be recorded on your credit report. This can help you build positive payment history and increase your credit score over time. This is a great choice for individuals who have no credit history, who are new to Canada, or who need to rebuild their existing credit.
A secured credit card is a great option if you're looking to build your credit, especially if your current credit rating is preventing you from qualifying for unsecured credit cards. If you’re working to re-establish your credit after an insolvency, if you’re new to Canada, or if you’re a young Canadian new to using credit, a secured credit card can help you build your credit history and qualify for more financial products in the future.
There are a few key differences between secured and unsecured cards. A secured card requires you to put down a deposit before accessing your line of credit, while an unsecured doesn't require a deposit. With a secured credit card, your deposit determines your credit limit, and your lender can use your deposit as collateral in case you default on your credit card bill. Because you need to make a deposit, secured cards are often easier to qualify for than unsecured credit cards. They are a great option to consider if you have a low credit score and are looking to build credit history.
Although they seem similar on the surface, there are major differences between secured credit cards and pre-paid credit cards.
Secured credit cards:
Let you set your credit limit with your deposit, which helps you control your monthly spending
Can help you build credit history from scratch or rebuild your credit score
Are accepted by most merchants in the world, both in-store and online
In comparison, pre-paid credit cards:
Continually need to be loaded with funds once your balance reaches zero
Doesn't help you build credit history or improve your credit score
Isn't accepted by all merchants
The minimum deposit you need to make to get a secured credit card all depends on the lender. Many lenders require a minimum deposit of $500. Some lenders, like Refresh Financial, offer a minimum deposit requirement of $200. Capital One's Guaranteed Secured Mastercard has a minimum deposit requirement of $75, which is one of the lowest in Canada.
Like learning a new skill or getting in shape, building credit takes time. If you're building your credit from scratch, you'll need at least 6 months of payment history before the credit bureaus are able to calculate your credit score. If you're recovering from negative financial events, like missed bill payments or a consumer proposal, it could take between 12 to 18 months before you start noticing any substantial results. The key is to be patient. Raising your credit score and improving your financial health is like exercising: it takes time, discipline, and consistency.
If you decide to close your account, you will receive your security deposit back as long as you don’t have an outstanding balance. If you've been using your secured card responsibly, your lender might offer to graduate you from a secured card to an unsecured credit card. In this instance, your lender would return your deposit before issuing you your new unsecured card.
Monitor Your Credit and Find the Best Cards
You can use Borrowell to check your credit score for free, monitor your credit weekly, and find financial products that fit your profile. Find the best credit card for you and see your credit improve over time as you use your card responsbily. As your build your credit from scratch or rebuild your credit, use Borrowell to find new credit cards and loans that you can qualify for.