So, you have been declined for credit. Get in line. Over the last few years the banks are making it more difficult to be approved for any type of credit including secured credit cards. Secured credit cards act just like regular credit cards however to be approved they require some time of asset (generally a house or cash) backing the limit of the card. Unfortunately, major banks have recently given up offering out secured credit cards to those with bad credit due to a bankruptcy or other credit mistakes. That being said, they do still offer them to those who are just starting out, or to those who are new-to-Canada. However, people seeking to rebuild their credit will have to be approved by a non-banking institution.

Don’t waste your time with the banks

There are a few Non-bank lenders, who specialize in dealing with those with a bad credit history. However, even if the interest rate is the same as your unsecured credit cards (19% to 24%), they aren’t all created equal. Here are the pros and cons of each secured credit card available.

Capital One – Mastercard

Pros

  • They are forgiving. Even if you still owe them money in the past or had a bad payment history they will still consider approving you for a new credit card
  • They offer Leveraged security. This means your limit could be higher than the security you provide. For example, you provide a $150 security and then provide you with a credit card with a $300 limit
  • Their online application and approval process can be done within a few minutes
  • Even if you apply for the secured credit card they may approve you for an unsecured credit card
  • They are the fastest secured credit card to increase your limit without the need for additional security
  • Minimum limit is $150
  • Report to both Equifax and TransUnion

Cons

  • Annual Fee of $59
  • Are well known for being a credit rebuilding credit card
 

Home Trust Secured Visa Application

Pros

  • No Annual Fee option
  • Home Trust also offers mortgage financings. It never hurts to build an internal relationship with along with your credit score
  • Reports to both Equifax and TransUnion.

Cons

  • They don’t offer leveraged security, which means that if you want a limit of $500  than you have to put $500 for a security.
  • The minimum limit is $500
 

Refresh Secured Visa

Pros

  • Minimum Limit as low as $200
  • Interest rate 17% (most of the other ones are at 19 to 20%)
  • Lower annual fee than Capital One and People’s Trust

Cons

  • High sales pressure to sign up for a GIC savings loan. Talk to me before signing up for any kind of loan to build your credit.
  • Annual fee $50 first year and $3/month going forward
  • Have been reports of it not accepted at car rentals because it is seen as a pre-paid credit card
  • Still trying to confirm if it actually reports on both Equifax and TransUnion
 

People’s Trust Secured Credit Card– No longer offered

Once you have had unsecured credit card for 6 months to a year you can start applying for the regular credit once again. Just remember that all the 9 Rules of Credit still apply to secured credit cards as with any type of credit!

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