07 Aug The best secured credit cards in Canada for 2024
A secured credit card is a unique financial tool that requires a cash deposit as collateral, so the issuer is protected in case the cardholder fails to make payments. If you miss a payment, the bank can use the deposit to pay off the amount owing. Because this reduces the financial risk to the credit card provider, it’s much easier to get approved for a secured card than it is a traditional non-secured card. Here’s a look at some of the best secured credit cards in Canada.
Best overall secured credit card
At a glance: The Home Trust Secured Visa is an incredibly user-friendly card with attractive flexibility. Applicants have the choice of going with an interest rate of 19.99% with no annual fee or opting for a low interest rate of 14.90% and paying a $59 annual fee. Because Home Trust reports your payments to Canada’s credit bureaus, you can establish a credit file and build up your score. All you really need to apply is a minimum of $500 in a Canadian bank account. Unfortunately, the card is not available if you are currently in bankruptcy or live in Quebec. With this card you can deposit anywhere from $500 up to $10,000, and your chosen amount becomes your limit.
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Home Trust Secured Visa
Annual fee: $0
Rewards: None (designed for people looking to rebuild credit)
Welcome offer: None
Card details
| Interest rates | 19.99% on purchases and 19.99% on cash advances |
| Income required | None specified |
| Credit score | 300 or higher |
Best secured card for rewards
At a glance: Neo is one of the few secured cards that offers some appealing extras like rewards, a welcome offer and a low minimum deposit. This card lets you deposit as little as $50, and you can earn an average of 5% cash back for purchases you make at select partners. Neo even promises guaranteed approval as long as you’re a Canadian resident and are the age of majority in your province or territory.
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Secured Neo Mastercard
Annual fee: $60
Rewards: A minimum of 0.5% cash back and an average of 5% cash back on purchases at partners
Welcome offer: earn $25 cash back.
Card details
| Interest rates | 19.99% on purchases (19.99% to 25.49% for Quebec residents) and 22.99% on cash advances |
| Income required | Personal or household income of $50,000 |
| Credit score | None specified |
Best secured card for insurance
At a glance: With its secured MasterCard, Capital One guarantees you’ll be approved as long as you’re of the age of majority in your province, you don’t already have a Capital One account, and you can provide security funds of $75 or $300. This card comes with a few extra perks like extended warranty, car rental insurance and some travel benefits. Especially worth noting is that the card comes with price protection: If you buy a new item that goes on sale for a lower price within 60 days, Capital One will pay you the price difference up to $100 per item and $500 per year. This is an incredibly rare perk even among premium cards in Canada.
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Capital One Guaranteed Secured Mastercard
Annual fee: $59
Rewards: None (designed for people looking to rebuild credit)
Welcome offer: None
Card details
| Interest rates | 19.80% on purchases, 21.90% on cash advances, 19.80% on balance transfers |
| Income required | None |
| Credit score | None (designed for people with bad credit) |
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.
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.
If you make your minimum payment on time every month, it’s possible to develop good credit in as little as a year. Once that happens, you may be able to qualify for an unsecured credit card and get your deposit back. It is good practice to use your secured credit card regularly but to use it sparingly. You want to be sure you can pay off your entire balance each month to avoid paying interest.
Secured vs unsecured credit cards
Secured credit cards
- Require deposit
- Easy to get approved for (even if you have bad credit)
- Often have annual fees, or setup fees
- Don’t come with any perks or rewards
- Can have higher interest rates, but rates can vary
- Can help build credit
Unsecured credit cards
- No deposit required
- Require a moderately good credit rating
- No set up fees; many options do not have annual fees, while others do
- Can come with benefits such as travel points, cash back, travel insurance and so on
- Lower interest rate cards are available
- Can help build credit
Frequently asked questions
More of the best credit cards:
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