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.

Criteria Used to Evaluate the Top Secured Credit Cards

Our list of the top secured credit cards was gathered by using certain criteria to assess each card, which includes the following: 

• Minimum security deposit
• Annual fees
• Reports to the credit bureaus
• Rewards
• Perks
• Welcome bonus
• Eligibility

Summary of the Best Secured Credit Cards

Here is a quick overview of the top secured credit cards in Canada:

Capital One Guaranteed Secured MasterCard 

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. 

• Guaranteed approval
• Annual interest rate: 19.8% APR
• Annual fee: $59
• Increase credit limit up to $2,500
• Emergency card replacement if your card is lost or stolen
• Emergency cash advance
• 24/7 telephone access 
• Credit limit: $300

Home Trust Secured No-Fee Visa 

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. 

You also have the option to go with the paid 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%.

• Credit check required
• Annual interest rate: 19.99% APR
• Annual fee: $0
• Minimum credit limit: $500
• Maximum credit limit: $10,000
• Insures eligible items for 90 days after purchase if damaged or stolen

TD Cash Secured Credit Card

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.

• Annual interest rate: 22.99% APR
• Annual fee: $29
• Minimum credit limit: $500
• Earn 1% cash back on eligible purchases
• No limits with accounts in good standing
• Redeem rewards for cash back and gift cards

Refresh Financial Secured Visa 

Build your credit with money that you already have with the help of the Refresh Financial Secured Visa. Approval is guaranteed without a credit check, as long as you’re able to deposit a minimum amount that will serve as your credit limit. Refresh takes your specific financial situation into consideration based on your credit score, location, income, budget, and financial goals.  

• Minimum credit limit: $200 
• Maximum credit limit: $10,000
• Annual interest rate: 17.99%
• Annual fee: $12.95
• Maintenance fee: $3/month

No-Fee Scotiabank Value Visa

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.

• Annual fee: $0
• Annual interest rate: 16.99%
• Minimum credit limit: $500 
• 25% discount as participating Budget or Avis locations
• Optional protection in the event of job loss, strike, disability, illness, or death

Why Apply For a Secured Credit Card?

If you have low or no credit and are unable to get approved for a traditional unsecured credit card, then you may have to resort to a secured credit card. But a secured credit card is more than just having plastic to pay with.

A secured credit card gives you the chance to either build your credit score from the ground up if you’re just starting out, or it can help you repair a bad credit score after a history of poor financial behaviour. If you use it responsibly, not only can you build up a good credit score, but you’ll open up more opportunities to secure other financial products, including mortgages and personal loans. 

Pros and Cons of a Secured Credit Card

Let’s weigh the perks and drawbacks of secured credit cards to help you decide if this is a financial product worth applying for.

Pros

• Qualify with no or low credit score
• Typically report to credit bureaus
• Improve your credit score with timely payments
• Earn rewards with certain cards
• Use them like traditional credit cards
• Can’t fall too much in debt because you can’t overspend on your security deposit

Cons 

• Higher interest rates in some cases
• Low spending limits

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.

Final Thoughts

If a low credit score is stopping you from getting approved for a credit card or other financial products, a secured card can be both easy to secure and a great way to give your credit score a boost. Just be sure to choose the right card and use it wisely.