The apply for a secured credit card is a relevant resource for those seeking to establish credibility with credit agencies in the country. In fact, the way you behave with this type of card, making responsible use and punctual payments, is the basis that creditors use to assess your financial responsibility.
Therefore, this is the initial step that, with time and correct discipline, paves the way for unsecured credit products, lower interest rates, and greater flexibility. Thus, the decision to apply for a secured credit card is not just about having a piece of plastic for purchases, but about building a solid financial future.
In this article, we will detail the complete process to apply for a secured credit card. From understanding how it works to an objective comparison of the main secured credit card options. Keep reading and learn now how to use this card.
How does a secured credit card work?
The secured credit card designed for those facing barriers to obtaining credit.
It is an essential tool for newcomers to the country, people who have just emerged from bankruptcy, or anyone who wishes to rebuild a credit history.
Its operation is different, as you need to make a security deposit, which the financial institution keeps in its possession while the card is active.
In most cases, the credit limit the holder receives will be equal to or even greater than the deposited amount, offering immediate purchasing power.
Additionally, in addition to the deposit, the institution may apply an enrollment fee or an annual fee. And the deposited amount must be kept in a secured account.
What is the purpose of the security deposit?
For those looking to Apply for a secured credit card, the security deposit is the pillar of the credit relationship.
It not consumed by daily use but remains with the issuer as protection against losses.
The credit limit linked to the deposit can reach CA$10,000 with some issuers, although the minimum accepted can be as low as CA$50.00.
Once the holder demonstrates responsible use and payment discipline, the bank begins to report this good behavior to the country’s main credit agencies.
This positive record is what, with time and correct discipline, allows the individual the chance to transition to credit cards without the deposit requirement.
Step-by-Step to Apply for a secured credit card in Canada
Let’s now look at the complete step-by-step to get your secured credit card
- Research and Compare available options: It is essential to analyze different cards, examining the fees, applied interest, and benefits offered. Using reputable websites, consulting large banks. Also, resorting to official sources are effective methods to identify which card offers the best combination of costs and advantages for your profile;
- Check eligibility requirements: as a rule, you must be of legal age according to provincial laws and be a resident of Canada. Some banks may require proof of income or that the applicant already has an active bank account with them;
- Separate the necessary documents for the application: the bank will request a valid identification document, such as a passport or driver’s license. In addition, proof of address required, which can be a phone or electricity bill. You must also present financial proofs, such as pay stubs or bank statements, to validate payment capacity;
- Fill out the Application: The application process offers flexibility, being able to be completed online, by phone, or, in some cases, in person at an agency. Accuracy in filling in all fields is vital. Errors can delay or invalidate the application;
- With the deposit made, you must await final approval and subsequent processing.
There will be a period until the card issued and sent. Once the physical card is received, the Card Activation step must be followed according to the instructions provided by the issuer.
See how simple it is? Getting the card is no secret. But which card to choose? That’s what we talk about next. Keep reading.
Analysis of secured credit card options
1. Neo Secured Mastercard (Neo Financial)
The Neo Secured Mastercard from Neo Financial stands out for its modern and flexible approach.
It offers digital application and guaranteed approval without a credit check outside Quebec. Making it ideal for those with a weak history.
The minimum deposit is CA$50, allowing the limit to reach up to CA$10,000.
In terms of rewards, the card offers cashback, with 1% at gas stations and supermarkets and up to 15% at partners, in addition to the ability to add personalized “perks”.
2. Secured Tims Mastercard
The Secured Tims Mastercard is attractive for its zero annual fee, representing significant savings.
The card requires a minimum deposit of CA$50, with a maximum potential limit of CA$10,000, and approval is facilitated, without a credit check outside Quebec.
Its differential is the points program. You can earn up to 12 points per dollar spent at Tim Hortons, 2 times at supermarkets, gas, and transport, and 1 point for every CA$4 on other purchases.
In fact, even being a secured credit card, it is on the list of the main cashback credit card promotions.
3. Home Trust Secured Visa
The Home Trust Secured Visa is known for its acceptance and the flexibility of choosing between two models.
The minimum deposit required is CA$500, with a maximum limit of CA$10,000.
Furthermore, the holder can choose between a version without an annual fee. Which applies interest of 19.99% on purchases, or a version with an annual fee of CA$59. But with a significantly lower interest rate of 14.90%.
4. Refresh Secured Visa
The Refresh Secured Visa, from Refresh Financial, is quickly approved, requiring collateral and without a credit check.
The card allows deposits from CA$200 to CA$10,000, allowing the holder to adjust the limit according to the deposited amount.
A highlight is its competitive interest rate of 17.99%. One of the lowest among secured options. However, it has an annual fee of CA$12.95, complemented by a monthly fee of CA$3. Resulting in a maintenance cost to be considered.
5. TD Cash Secured Credit Card
The TD Cash Secured Credit Card is an ideal option for those who are already clients of TD Canada Trust and value banking integration.
The security deposit, which ranges from CA$300 to CA$5,000, must be linked to a official TD savings account.
You can also accumulate cashback of 3% and 2% in selected categories and 1% on other purchases.
Attention! The card has an annual fee of CA$29. However, it requires a credit analysis and the interest rates for purchases are higher, set at 27.24%.
Conclusion
Secured credit cards are undoubtedly valuable and accessible tools for starting or rebuilding credit in Canada. The application process boils down to researching options, meeting requirements, and essentially providing the security deposit, culminating in responsible use of the card.
The final point is the importance of choice: when comparing options. Carefully consider the annual fee, the deposit amount, and interest rates.
Here’s a tip! Prioritize reliable issuers and choose a card whose usage rules you can strictly follow; this will ensure that, in a few months or years, you can upgrade to a non-secured product.
So, if your goal is to strengthen your financial history and gain more freedom, don’t hesitate. Start your research now and take the decisive step to apply for a secured credit card today.
If you recently arrived in Canada, are recovering from a financial history, and want to start your credit journey, knowing how to apply for a secured credit card is the most important step.