secured credit card

Top 6 Secured Credit Cards for Canadians

April 22, 2020 By Samantha 71 Comments

This post has been updated on April 22^nd, 2020 to keep up with new developments in the secured credit card marketplace in Canada and update the card rankings.

It’s 2020 already and getting secured credit cards in Canada is getting harder, because fewer and fewer financial institutions here offer them. The financial products offered to Canadians with bad credit are far and few between, and this is a sad state of affairs. I get daily emails asking how to get a secured card, which one to get, which cards are easy to get, what credit score do you need to qualify for one, etc. My advice to you is to read the article below, read the many user comments talking about their experience in applying for a credit card secured by deposit, and make a decision based on your research.

Many years ago I got my first credit card from CIBC, and because I had no credit history I had to settle for a secured credit card. The card had $500 limit, which I had to deposit with the bank – not much of a credit card :). I used it for 2 years making small purchases and paying it off every month diligently, which helped me establish good credit history. While many of the big banks advertise financial products targeted at recent immigrants, and people who simply have no credit history yet, the fact is that getting even a secured credit card is much tougher nowadays in Canada. Even Peoples Trust out of British Columbia, which was a major player in the Canadian secured credit card space, decided to discontinue their card in July, 2017.

In the early 2000’s all major Canadian banks offered secured credit cards, but this is no longer the case. I haven’t seen a secured card advertised by a major Canadian financial institution for a while, and I know for a fact that Scotibank and CIBC have no such products. Even if the rest of the big banks still have such cards on offer, they are not easy to find or their use is discouraged.

If you are in the market for secured card, you might also consider getting a unsecured credit card with low limit, which should be easier to get. You can try store credit cards like Canadian Tire MasterCard for example. While not perfect this card is somewhat easier to obtain, and with less and less financial institutions offering secured credit cards, it may be the right choice for you.

Find a solution to credit issues – get a secured credit card

Individuals with a thin credit file usually apply for a secured card because they have a more limited choice, especially when it comes to specialty cards with attractive rates and terms. They are also offered to those who are new to credit as well as recent immigrants, newcomers, and students. Secured credit cards are available from unions, small and major banks, and other establishments and help consumers establish credit.

How Secured Cards Work

Issuers require a cash deposit or security funds as a guarantee of on-time payment. It is usually equal to or larger than the limit offered. The only difference between secured and unsecured cards is the fact that security funds are required because financial institutions deal with high-risk borrowers who are more likely to default. Other than that, holders can use the card to make payments online and in-store, to pay bills, and so on.

Benefits for Users

The main benefit for users is that payments are reported regularly to major bureaus such as TransUnion and Experian. Customers who keep their balance low and make on-time payments gradually establish or reestablish credit. The timing of reports and the issuer’s reporting practices determine how long it takes before your card appears on your credit file.

What Is the Right Credit Card for You?

The choice of a secured card depends on whether you are a regular bank customer or a union member and other factors. When comparison shopping, look at the credit limit, grace period, and purchase and penalty interest. In general, whether a product is right for you depends on the issuer’s reporting practices. Some establishments report only missed and late payments while others report all payments and help build credit with time.

Who Is Eligible to Apply

Individuals with any credit profile qualify, from tarnished and fair to stellar. Legal residents and Canadian citizens of legal age are eligible to apply. You must be of the age of majority for the province or territory where you reside. Some major banks like TD even offer secured cards to customers who don’t have Canadian credit history, including international students and foreign nationals (temporary residents). The range of products available depends on different factors, including your credit rating and financial situation. When applying for a secured card, consumers are often asked about estimated monthly payments, including lines of credit, loans, mortgages, and other accounts. Financial establishments also request information about your rent or mortgage payments as well as income amount, employer, and sources of income. Many card issuers require that applicants have a verifiable permanent address in Canada and a verifiable source of income (i.e. proof of income).

Top 6 Secured Credit Card Picks

#1 – First Place
Refresh Secured Card

This is a brand new secured card from Refresh Financial targeted at customers with bad or no credit, and people looking to build or re-build their credit. This secured Visa doesn’t require a credit check, so it should be very easy to get. Here are the main Refresh Secured Card features.

Credit limit: $200 to $10,000
Purchase Interest rate: 17.99 percent
Annual fee: CAD $48.95

#2 – Second Place
Tangerine Money-Back Credit Card

This is NOT a secured credit card but the advantage it has is a higher chance for approval compared to the Big Five banks. Customers earn unlimited rewards and can either redeem them into their savings accounts or add them to their card balance. The Tangerine Money-Back Credit Card has:

No annual fee
Interest Rate: 19.95%
0.50% Money-Back Rewards on all your other everyday purchases.
2 percent back on select purchases (categories of your choice).

#3 – Third Place
No-Fee Scotiabank Value^® VISA Card

A yet another credit card by Scotiabank, this is a great solution to transfer existing balances, even though this is not a secured card. The introductory rate is just 3.99 percent and is in effect within 6 months of opening the account. The intro rate applies to credit card checks, balance transfers, and cash advances. The interest-free period is 21 days. Special discounts are offered, including car rental discounts. Optional credit card protection coverage is also available in the event of job loss, disability, or another unfortunate event.

Balance transfer fees: none
Interest rate: 16.99 percent
Annual fee: none

#4 – Fourth Place
Home Trust Secured Visa Card

Home Trust also offers a credit card that helps consumers to enhance their credit profile. Virtually everyone applying for a secured Visa gets approved, and there are two options available:

No annual fee with 19.99 percent interest rate
Annual fee of $59 with 14.9 percent interest rate

In addition to attractive terms and interest rate, this card goes with benefits such as the option to add an authorized user and a credit limit that can be as high as $10,000. The minimum limit is $500. This card can be used to book a vacation, make purchases online and over the phone, and access cash.

#5 – Fifth Place
Vancity enviro Secured Visa

Vancity features a secured card with a deposit of just $500 and plenty of added and optional perks, including delay and lost baggage insurance, price protection, travel accident insurance, and others. This card is available to applicants who don’t have a previous Canadian credit history and to recent immigrants. There are different options to look into, for example, enviro Classic which is a good choice for customers who pay the full balance. This card helps borrowers to rebuild credit and is intended for customers who have experienced financial problems in the past.

Annual fee: none
Interest rate: 19.5 percent

#6 – Sixth Place
RBC Visa Classic Low Rate

RBC features a low-cost card designed for customers who carry a balance. The card features optional and standard add-ons such as travel insurance and chip and PIN technology and can be used as a tool for debt consolidation to save on interest payments. Users are also offered additional cards with no annual fee. There is a card registration service for important documents and cards and auto payment service for ease and convenience.

Interest rate: 11.99 percent
Annual fee: $20

#7 – Seventh Place
Capital One^® Guaranteed Secured MasterCard^®

This card is ideal for individuals who need to establish credit history and goes with guaranteed approval. The credit limit varies and can be $300 or higher. The minimum security funds to deposit with the bank and access credit are in the amount of $75. Standard benefits that go with this card include referral to the closest ATM, zero liability, and others. Holders are free to make internet and in-store purchases, hotel reservations, car rental bookings, gas purchases, and more.

Purchase rate: 19.8 percent
Annual fee: $59
Grace period: min 25 days

#2 – Old Second Place
Peoples Trust Secured MasterCard^®

This card is no longer available.

This secured card is a flexible solution designed for customers with limited or no credit exposure, new immigrants to Canada, students, and anyone looking to build credit. It is also ideal for borrowers with poor ratings such as discharged bankrupts and those with serious credit problems. Similar to standard cards, this MasterCard helps holders to improve their rating with time. Customers with a verifiable source of income qualify.

Credit limit: $500 or higher
Purchase Interest rate: 12.99 percent
Monthly fee: CAD $5.80
Interest rate on cash advances: 24.50 percent

Fees, Limits, and Rates

The interest rate varies by issuer and is usually around 20 percent. It is in effect once the account has been activated. The rate on balance transfers and cash advances can be the same or different. In general, the rate is slightly higher compared to unsecured cards because financial institutions take more risk. Many applicants have a history of missed or late payments, maxed out cards, defaults, foreclosure, and even bankruptcy. This is why fees and service charges are usually higher as well. At the same time, there are many banks that feature credit cards with no annual fee, including Scotiabank and TD Canada Trust.

The grace period also varies from 19 to 25 days and applies to regular bank transfers and new purchases. Secured cards have a zero-day grace period on special bank transfers and cash advances. The available limit and security funds required depend on your financial circumstances and can be as high as $10,000 and as low as $500. Some banks even offer cards with lower credit limits. If you plan to make large purchases (one-time and big-ticket items), it is better to choose a card with a larger limit provided that you make timely payments and pay at least the minimum before the deadline (grace period). The minimum payment can be $10 or 3 percent or fees plus interest but this depends on the card of choice. Make sure you check the minimum monthly payment, especially if you only pay the minimum.

Refresh Financial Secured Card

December 8, 2017 By Samantha 6 Comments

Refresh Financial offers a new secured card in light of the fact that credit conditions are tightening in Canada, especially for customers with fair and poor scores and average and low income. Many Canadians use credit cards in emergencies, to pay for car rentals and hotel bookings, to make in-store and online purchases, and so on. Some of them have poor credit and access to fewer options than those with stellar scores. The Refresh Secured Card is one option for customers with less than perfect scores and stable income.

Market Conditions

The largest player in the market, People’s Trust discontinued their secured card while other providers tightened up conditions, making it more difficult to qualify with bad credit. People’s Trust is no longer accepting applications but existing holders can still use their cards. This is unfortunate given the low interest rate of 12.99 percent and low minimum deposit of just $500. The Affirm MasterCard Credit Card is another product suitable for borrowers with a poor or fair score. Similar to People’s Trust, the company stopped issuing new cards. The only option that borrowers with poor credit have is the secured Visa offered by Home Trust. The card goes with no annual fee and a minimum deposit of $500. Customers need a bank account to apply but borrowers with poor credit have better chances to qualify compared to unsecured varieties. In reality, however, Home Trust does not approve many applications. The fact that Refresh Financial offers a secured card is good news for applicants with poor credit. As we all know, there are many ways to get bad credit, including divorce, items in collections, identity theft, bankruptcy, consumer proposal, and loss of job. Other reasons include car repossession, late or missed payments, mortgage foreclosure, and high card balances. People end up with a poor credit score when they cosign, fail to pay bills on time, have a seasonal or part time job, and have low income and too many commitments.

Who Is This Card for?

A secured Visa from Refresh Financial is ideal for borrowers with a blemished credit score. Whether applying for the Refresh secured card or another product offered by the company, approval requires banking verification (a bank account), a Canadian ID, and minimum monthly income.

Security Deposit, Perks, and Other Features

The card goes with a security deposit of $200 – $10,000, which is less or equal to the credit limit. Customers are offered free access to a program called Financial Intelligence Training. This is a financial education program to help customers gain basic skills and learn how to set financial goals. Borrowers learn how to save money, avoid credit traps, and build personal wealth. They are offered free short videos which are divided into 7 series. The short videos feature money tips and advice to get a better idea how credit works. In addition, customers are offered access to convenient tools such as credit builder calculators to find out how their credit score impacts the interest rate on their card, vehicle or personal loan, or mortgage loan.

Added Benefits

There are further benefits for customers, one being that borrowers have access to more than 1 million ATM locations across the globe. They are also free to make online purchases and shop at more than 24 million in-store locations in Canada and abroad. What is more, the card goes with all benefits of Visa and helps customers build or rebuild their credit. Visa benefits include roadside dispatch, zero liability, rental collision damage waiver, and reporting for stolen and lost cards. Cardholder inquiry service is an added benefit for Visa holders. The rental collision damage waiver, for example, is a beneficial feature in case of damage due to theft or collision. The coverage is offered to all standard Visa holders. The secured Visa from Refresh Financial also comes with standard benefits such as emergency cash disbursement and card replacement and other convenient features.

Rates and Fees

Interest rate: 17.99 percent
Purchase rate: 17.99 percent
Annual fee: $48.95

The Refresh secured card is advertised as the lowest cost card on the market, and no credit is required. All payments are reported to the major bureaus to help borrowers rebuild credit. Customers have the chance to rebuild credit over time provided that they make on-time payments. Like other secured cards, maxing out and missing payments has an adverse effect on the customer’s score.

Other Products Offered by Refresh Financial

The company offers a credit building program as well, which is an alternative to secured cards. There are several benefits for participants, and one is that they do not need up-front money. On-time payments are reported to the major credit bureaus which helps borrowers improve their scores. On the downside, there is an initial commitment fee. In fact, customers can choose from different solutions to rebuild credit. One alternative for borrowers with poor credit is the Fresh Start program offered by Refresh Financial. Customers get approved regardless of their score and provided that they are committed to rebuilding credit. The amount available varies depending on the borrower’s requirements. Payments are reported to the bureaus like payments on an installment loan. Timely payments prove potential lenders that applicants are trustworthy and responsible. A portion of the money paid goes toward fees and interest charges, and borrowers are free to use the remaining amount in any way they like after they finish the program.

Keep in mind that the company does not offer credit repair services but only the Refresh Secured card and short term secured savings loans. Repayment terms vary from 36 to 60 months and loan amounts are in the range of $1,200 to $5,500. There is a loan set up fee that can be as low as $200 and as high as $400.

Top 5 Student Credit Cards for Young Canadians

January 8, 2016 By Samantha Leave a Comment

Young Canadians usually have a more limited exposure to credit, which makes it more difficult to get approved for unsecured loans and specialty credit cards. The good news is that issuers offer student cards that are specially designed for young people enrolled in college.

Options Available to Young People

Young Canadians have several options to look into, including department store, secured, prepaid, and student credit cards. Secured cards require that customers first make a deposit and then use the money to pay bills and make payments. This is one option if you want to build credit. A department store card is another option that gives you access to exclusive promos and deals but the rate is often higher compared to standard cards. A prepaid card is a third option that works much like a standard debit card and payments are not reported. A student credit card is also an alternative, and there are perks such as cash back incentives, no annual fee, and discounts on school-related items and purchases.

What Are the Benefits of Student Credit Cards

Student credit cards offer a number of benefits, among which additional protection in the form of zero fraud liability, miles, cashback points and other incentives, and lower credit limits. Many issuers also offer convenient tools to save users valuable time, help them stay current on their payments, and avoid penalty interest and negative impact on their credit score. Such tools are, for example, automatic bill payment, spend analyzer, and others.

How to Apply

It is easy to apply for a student card if you meet the requirements. Many issuers offer online applications and ask customers to provide employment, personal, and financial details such as your social insurance number, mother’s maiden name, whether you are a landed immigrant or Canadian citizen, and whether you are a domestic or foreign student. You may be asked to provide information such as your expected graduation date, program start date, whether you apply on your own or together with a co-signer, etc.

Fees to Watch for

Like other credit cards, student cards come with fees such as penalty interest, annual fee, cash advance fees, foreign currency conversion fees, and others. If you find good deals with no annual fee, this is a great way to save on charges. There are other fees to check for with your issuer, including late payment and over-the-limit fees, replacement, lost, or emergency issue card charges, and additional cardholder fees. The latter is usually $0 on no annual fee, low fee, and low rate credit cards. Fees and charges vary from one bank to another and can be different for business and individual cards. Some issuers charge fees for urgent card delivery as well as balance transfer fees, overdraft fees, surcharges, and so on. Make sure you check with your provider to ensure there are no hidden charges and penalties.

Top 5 Student Credit Cards

Many credit unions, banks, and online services offer student cards, including CIBC, Laurentian Bank, Desjardins, and others. If you are a regular customer and have a savings or checking account or an outstanding balance, it pays to check with your bank first.

#1. No-Fee Scotiabank Value^® Visa Card

Scotiabank features a handy student card with card protection and introductory rate of only 3.99 percent. The introductory rate is for both cash advances and balance transfers, and makes it a good choice if you need to consolidate high-interest credit card balances. The card also offers car rental discounts, itemized transactions, and free supplementary cards. All in one this is a great student credit card choice.
• Annual fee: none
• Interest rate: 16.99 percent
• Credit limit: $500 (min)

#2. Tangerine Money-Back Credit Card

The Tangerine Money-Back Credit Card is a great choice for students, as it doesn’t have annual fee, and is actually one of the top cashback credit cards in Canada. The card offers 2% money back in many categories, and 1% on everything else. However for a limited time you can get 4% cashback in the 2% categories for the first 3 months. The card has no limit on the amount of cashback rewards you can earn.
• Annual fee: none
• Interest rate: 19.95 percent

#3. Desjardins VISA^® FOR STUDENTS ONLY Credit Card

Also a great choice to start building credit, VISA for Students Only comes with handy features such as free-of-charge access to credit reports, travel insurance covering the first 3 days of each trip, mobile device insurance, and more. Cardholders benefit from additional perks such as flexible financing, no annual fee on additional cards, payment reminders, and the option to manage their account from their tablet, mobile device, or computer. There are additional features such as generous Hertz discounts, mobile payments, and no transaction fees.
• Interest rate: 12.9 percent
• Annual fee: $30

• Interest rate: 19.9 percent
• No annual fee

#4. Laurentian Bank Student VISA^® Black Card

Laurentian Bank also features a student VISA card with perks such as exclusive discounts, free additional cards, and more. In addition to virtual mail statements, customers also benefit from convenient payments at bank branches, online, by phone, and by mail. This product is a great choice to build credit if you are studying aboard and are a full-time student. You can use it to make payments in emergency situations or pay daily and small expenses. If you usually maintain a balance, you may want to look into other options.
• Interest rate on purchases: 19.99 percent
• Monthly fee: none

#5. CIBC Aventura^® Visa* Student Card

CIBC Aventura is another student card that offers the option to collect rewards points and features benefits such as accident coverage, travel medical insurance, mobile and online banking, authorized spending limits, and a lot more. Customers are free to use the online banking system to request additional cards, increase their limit, and make payments. The first purchase earns 5,000 rewards points. Cardholders also earn 2x bonus points on travel purchases at the CIBC Rewards Centre and 1 bonus point on regular purchases.
• Interest rate on purchases: 19. 99 percent
• Annual fee: $39
• Up to 3 free additional cards

#6. MBNA Rewards MasterCard^® credit card for Students

This student credit card is yet another option if you are new to credit and offers immediate cash access, online account access, and unlimited rewards. Each dollar spent brings 1 rewards point. You can redeem points for charitable donations, money back, gift cards, travel purchases, and brand-name merchandise. To apply online, college students are asked to provide information such as date of birth, SIN (optional), monthly payment and housing status, employment status (unemployed, self-employed, retired, homemaker, employed, etc), and other financial and personal information.
• Interest rate: 19.99 percent
• Grace period: 21 days
• No annual fee

Conclusion

As you can see, big banks and other major issuers offer plenty of choice to help you build a solid credit history and stay current on utility and other payments. A student credit card is a handy tool if you make payments by the end of the grace period. Just make sure you check for transaction fees such as cash equivalents, over-the-counter cash, and ATM fees, account fees, and other charges. Ask about the default rate in case you are late on your payments because penalty charges can be considerably higher. If you have a credit card with high interest charges, there are student cards with a balance transfer option to benefit from a lower interest rate. Ask about the promotional rate as well and the amount you can request if you choose to make a balance transfer.