One key to personal finance success lies in having an excellent credit history. Still, for individuals with limited or poor credit, it can be challenging to obtain traditional credit cards. Secured cards provide an ideal solution to this challenge as they require cash deposits as collateral to reduce lender risk and help individuals build or establish credit again.
In this article, we’ll look in-depth at six top-secured credit cards in Canada as of August 2023. These cards feature various features and benefits designed to improve users’ credit scores while giving access to essential financial tools.
Home Trust Secured Visa Card
Home Trust Secured Visa Cards offer an excellent solution for individuals aiming to establish or rebuild their credit histories. Their minimum security deposit ranges between $500 to $10,000, depending on an applicant’s creditworthiness. This acts as collateral and determines their card’s credit limit, making it accessible for people of varying levels of financial standing – those without established histories as well.
An added feature of the card that cardholders will find particularly beneficial is its purchase protection and extended warranty coverage; they give cardholders peace of mind when making purchases that could encounter defects or damages, especially costly items like electronics or appliances.
As with any financial product, the Home Trust Secured Visa Card does have some drawbacks – one being its annual fee, which is typical among secured credit cards.
Capital One Guaranteed Secured Mastercard
For consumers in search of an accessible secured credit card offering competitive rates and essential features, Capital One’s Guaranteed Secured Mastercard stands out as an appealing choice. Low annual fees make it perfect for budget-minded users looking to rebuild their credit.
Credit monitoring allows individuals to monitor their progress with credit, be alerted about changes to their reports, and identify areas for potential improvement. It can be an invaluable aid when working to boost one’s score. However, it should be remembered that Capital One Guaranteed Secured Mastercard may carry higher interest rates than other secured cards.
Scotia Secured Credit Card
The Scotia Secured Credit Card stands out in the secured credit card market as one of today’s premier offerings. As with other secured cards, it requires a security deposit but with relatively lower minimum amounts making it easily accessible for many applicants.
One of the critical advantages of Scotia Secured Credit Card is its dual credit bureau reporting feature. It reports to both Equifax and TransUnion credit bureaus in Canada – the two major Canadian credit bureau reporting players. This process maximizes positive credit behavior across both reports, significantly impacting the user’s score.
Scotiabank reviews each secured credit card account regularly and may offer eligible users the chance to switch to an unsecured card based on their performance and current balances.
TD Cash Secured Credit Card
For everyone who is looking to construct their credit score, earning rewards while simultaneously constructing their score is challenging. However, as this card offers cashback on every purchase as an incentive for responsible financial management, earning rewards is one of the keys to doing both effectively.
One of the unique aspects of the TD Cash Secured Credit Card is its ability to generate interest on users’ security deposits by holding it in an interest-bearing savings account. Therefore, it allows users to enjoy some return while providing collateral security against credit cards.
TD Bank regularly evaluates accounts to see how cardholders are doing financially and may offer higher credit limits as their behavior improves. This further leads to TD offering transitioning offer into an unsecured credit card.
RBC Visa Secured Credit Card
The RBC Visa Secured Credit Card offers individuals looking for flexibility when selecting their security deposit amount. Users can deposit an amount that aligns with their budget and financial goals, which makes the card accessible to a range of applicants.
Like other secured credit cards, the RBC Visa Secured Credit Card helps individuals establish or rebuild their credit histories through responsible use and on-time payments. Additionally, its features, such as purchase security and extended warranty coverage, make this card even more beneficial!
CIBC Smart Plus Secured VISA Card
The card stands out as being accessible to a broad spectrum of applicants, including students, those on lower incomes, and those with variable sources of income such as freelance work. They can all take advantage of its no-income requirement feature and apply.
As with other secured credit cards, the CIBC Smart Plus Secured VISA Card enables cardholders to make everyday purchases with cashback rewards that encourage responsible financial management while giving cardholders tangible returns for choosing it for transactions.
CIBC regularly reviews cardholder accounts, and users with responsible credit usage may qualify for an increase to their credit limit and transition to an unsecured CIBC card. It depends on how their performance measures up.
Tips for Responsible Use of Secured Credit Cards
Follow these essential tips to maximize the use of secured credit cards and improve your score:
- On-time payment of at least the minimum due on secured credit cards is critical in helping increase credit. Always try to meet this obligation within the due date.
- Keep your credit utilization ratio as low as possible. This ratio measures how much of the available credit you are using. Avoid maxing out secured cards even with higher limits to help lower this ratio.
- Regularly check Equifax and TransUnion reports to ensure the accuracy is intact. If you spot any discrepancies, quickly inform the credit bureaus to avoid inaccuracies and stop potential inaccuracies from developing further.
- Some secured credit cards provide the option of gradually raising your credit limit with responsible use over time, providing additional room to improve the credit utilization ratio. You should only request an increase if you can handle it responsibly.
- Be consistent in using and paying off your secured credit card on time each month to show creditors you can manage credit responsibly. Regular usage and timely repayment demonstrate this to the creditors.
Secured credit cards offer Canadians who want to build or rebuild their credit an invaluable way of doing so. Through responsible usage and financial discipline, secured cards provide an essential pathway toward improving one’s financial standing and opening new avenues of opportunities.