A credit-building credit card, also known as a secured credit card, is a type of credit card that is designed for individuals who are looking to build or rebuild their credit score. With a credit-building credit card, you are required to make a deposit upfront that serves as collateral for your credit limit. Your credit limit is typically equal to the amount of your deposit.

The main purpose of a credit-building credit card is to help you establish a positive credit history or improve your credit score by demonstrating responsible credit behavior. You can use the card to make purchases and payments, just like any other credit card, and your payment history and credit utilization will be reported to the credit bureaus.

If you make your payments on time and keep your credit utilization low, you can build a positive credit history and improve your credit score over time. Once you have established a good credit history, you may be able to qualify for other credit cards or loans with better terms and rewards.

List of the Best Credit-building Credit Cards Canada

Some of the popular credit-building credit cards in Canada include:

1. Capital One Guaranteed Mastercard: This card is designed for people with bad or no credit history. It has a low credit limit, but it reports to both Equifax and TransUnion, helping you build or improve your credit score.
2. Home Trust Secured Visa Card: This card is a secured credit card, which means you need to make a deposit to get approved. The deposit serves as collateral and is used to secure your credit limit. The card reports to Equifax and TransUnion, helping you build your credit history.
3. Refresh Financial Secured Visa: This card is another secured credit card that can help you build or rebuild your credit score. It reports to both Equifax and TransUnion and offers a credit limit up to $10,000, depending on the size of your deposit.
4. Canadian Tire Triangle Mastercard: This card is a rewards credit card that is available to people with limited or no credit history. It has a low credit limit, but it offers rewards on your purchases and reports to Equifax, helping you build your credit history.
5. BMO SPC CashBack Mastercard: This card is available to students or young adults who are starting to build their credit history. It offers cash back rewards and has a low credit limit, but it reports to both Equifax and TransUnion, helping you build your credit score.
6. Scotiabank Value Visa: This card is designed for people who want to establish or rebuild their credit history. It has a low annual fee and a low interest rate, making it easier to manage your balance.
7. Affirm Financial Mastercard: This card is another option for people with limited or no credit history. It has a low credit limit and a high interest rate, but it reports to both Equifax and TransUnion, helping you build your credit score.
8. CIBC Dividend Visa Card for Students: This card is designed for students who want to start building their credit history. It offers cash back rewards on purchases and reports to Equifax, helping you build your credit score.
9. Capital One Low Rate Guaranteed Mastercard: This card is another option for people with bad or no credit history. It has a low interest rate and a low credit limit, but it reports to both Equifax and TransUnion, helping you build your credit score.
10. Walmart Rewards Mastercard: This card is available to people with limited or no credit history. It offers rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
11. Desjardins Classic Visa Card: This card is designed for people who want to establish or rebuild their credit history. It has a low interest rate and no annual fee, making it easier to manage your balance.
12. RBC Cash Back Mastercard: This card is available to people with limited or no credit history. It offers cash back rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
13. TD Emerald Flex Rate Visa Card: This card is another option for people who want to establish or rebuild their credit history. It has a variable interest rate and no annual fee, making it easier to manage your balance.
14. Tangerine Money-Back Credit Card: This card is designed for people with limited or no credit history. It offers cash back rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
15. BMO Preferred Rate Mastercard: This card is another option for people who want to establish or rebuild their credit history. It has a low interest rate and no annual fee, making it easier to manage your balance.
16. PC Financial Mastercard: This card is designed for people with limited or no credit history. It offers PC Optimum points on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
17. Meridian Visa Cash Back Card: This card is another option for people who want to establish or rebuild their credit history. It offers cash back rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
18. HSBC +Rewards Mastercard: This card is available to people with limited or no credit history. It offers rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.
19. Home Trust Preferred Visa Card: This card is designed for people who want to establish or rebuild their credit history. It has a low interest rate and no annual fee, making it easier to manage your balance.
20. Canadian Western Bank Rewards Mastercard: This card is another option for people who want to establish or rebuild their credit history. It offers rewards on purchases and reports to both Equifax and TransUnion, helping you build your credit score.

Here is a table summarizing the 20 credit-building credit cards available in Canada:

Note: “Unsecured” means that the card does not require a security deposit, while “Secured” means that a deposit is required to open the account. Rewards vary by card and may include cash back, points, or other benefits.

Pros of Credit-building Credit Cards

There are several pros of using credit-building credit cards:

1. Help Establish Credit History: Credit-building credit cards are specifically designed for people who have limited or no credit history, making them a great option for those who are looking to establish a credit history.
2. Can Help Improve Credit Score: By using a credit-building credit card responsibly, such as making payments on time and keeping your balance low, you can improve your credit score over time.
3. Can Offer Rewards: Many credit-building credit cards offer rewards, such as cash back or points, which can help you save money or earn benefits.
4. Can Be Easier to Qualify For: Since credit-building credit cards typically have lower credit limits and higher interest rates than traditional credit cards, they may be easier to qualify for if you have limited or poor credit history.
5. Can Be a Good Tool for Learning Responsible Credit Use: Using a credit card responsibly can teach you good financial habits, such as budgeting, tracking expenses, and making payments on time.

Cons of Credit-building Credit Cards

While credit-building credit cards have their benefits, there are also some cons to consider:

1. Higher Interest Rates: Credit-building credit cards generally have higher interest rates than traditional credit cards, which can make it more expensive to carry a balance.
2. Lower Credit Limits: Credit-building credit cards typically have lower credit limits than traditional credit cards, which can make it harder to make larger purchases.
3. Fees: Some credit-building credit cards may come with annual fees or other fees, which can add to the cost of using the card.
4. Limited Rewards: While some credit-building credit cards offer rewards, they may be less generous than rewards offered by traditional credit cards.
5. Not Widely Accepted: Some credit-building credit cards may not be widely accepted, particularly if they are issued by smaller banks or credit unions.
6. Risk of Further Damaging Credit: If you don’t use a credit-building credit card responsibly, such as by missing payments or carrying a high balance, you could further damage your credit score.

Credit-building Credit Cards Facts

Here are some important facts to know about credit-building credit cards:

1. Designed for People with Limited or Poor Credit History: Credit-building credit cards are designed for people who have limited or poor credit history, making them a good option for those who are looking to establish or improve their credit score.
2. Lower Credit Limits: Credit-building credit cards generally have lower credit limits than traditional credit cards, which can make it harder to make larger purchases.
3. Higher Interest Rates: Credit-building credit cards generally have higher interest rates than traditional credit cards, which can make it more expensive to carry a balance.
4. Security Deposits May Be Required: Some credit-building credit cards may require a security deposit, which serves as collateral for the credit limit.
5. Can Help Build Credit History: By using a credit-building credit card responsibly, such as making payments on time and keeping your balance low, you can build or improve your credit history.
6. Credit Reporting: Most credit-building credit cards report to credit bureaus such as Equifax and TransUnion, which can help you establish or improve your credit score.
7. Rewards Programs: Some credit-building credit cards offer rewards programs, such as cash back or points, which can provide additional benefits to cardholders.
8. Fees: Some credit-building credit cards may come with annual fees or other fees, which can add to the cost of using the card.
9. Not Widely Accepted: Some credit-building credit cards may not be widely accepted, particularly if they are issued by smaller banks or credit unions.
10. Responsible Use is Key: It’s important to use a credit-building credit card responsibly, by making payments on time and keeping your balance low, to avoid further damaging your credit score.

Credit-building Credit Cards FAQs

Here are some frequently asked questions about credit-building credit cards:

1. What is a credit-building credit card? A credit-building credit card is a type of credit card that is designed for people with limited or poor credit history. These cards generally have lower credit limits and higher interest rates than traditional credit cards, but they are designed to help people establish or improve their credit history.
2. How does a credit-building credit card work? A credit-building credit card works like a traditional credit card, but with some differences. The card may have a lower credit limit, and the interest rates may be higher. To qualify, you may need to provide a security deposit. By using the card responsibly, such as making payments on time and keeping your balance low, you can establish or improve your credit history.
3. How can a credit-building credit card help me improve my credit score? By using a credit-building credit card responsibly, such as making payments on time and keeping your balance low, you can establish or improve your credit history. This can help increase your credit score over time, making it easier to qualify for loans and credit in the future.
4. Can I get a credit-building credit card if I have bad credit? Yes, credit-building credit cards are specifically designed for people with limited or poor credit history, including those with bad credit.
5. Will a credit-building credit card hurt my credit score? Using a credit-building credit card responsibly can help improve your credit score. However, if you don’t use the card responsibly, such as by missing payments or carrying a high balance, you could further damage your credit score.
6. Can I get rewards with a credit-building credit card? Some credit-building credit cards offer rewards programs, such as cash back or points, which can provide additional benefits to cardholders.
7. Do I need to pay an annual fee for a credit-building credit card? Some credit-building credit cards may come with annual fees or other fees, which can add to the cost of using the card. However, many credit-building credit cards do not have an annual fee.
8. Can I use a credit-building credit card outside of Canada? Credit-building credit cards may not be widely accepted outside of Canada, particularly if they are issued by smaller banks or credit unions. It’s important to check with the card issuer to see if the card can be used internationally.
9. Can I switch from a credit-building credit card to a traditional credit card? If you use a credit-building credit card responsibly and establish a good credit history, you may be able to qualify for a traditional credit card in the future.
10. What is the difference between a secured and unsecured credit-building credit card? A secured credit-building credit card requires a security deposit, which serves as collateral for the credit limit. An unsecured credit-building credit card does not require a security deposit but may have higher interest rates and lower credit limits.
11. How long does it take to build credit with a credit-building credit card? It can take several months or even years to build a strong credit history with a credit-building credit card. This depends on factors such as how responsibly you use the card and how frequently the card issuer reports to the credit bureaus.
12. How much should I use my credit-building credit card? To establish or improve your credit history, it’s important to use your credit-building credit card regularly but responsibly. This means making purchases that you can afford to pay off, and keeping your balance low relative to your credit limit.
13. Can I get approved for a credit-building credit card with no credit history? Yes, many credit-building credit cards are specifically designed for people with limited or no credit history, including those who are just starting out.
14. What should I look for when choosing a credit-building credit card? When choosing a credit-building credit card, it’s important to consider the interest rate, fees, rewards, credit limit, and credit reporting practices of each card. You should also make sure the card is issued by a reputable financial institution.
15. Can I use a credit-building credit card to pay off debt? While you can use a credit-building credit card to make payments on existing debt, it’s important to make sure you can afford to make the payments and avoid carrying a high balance, as this can further damage your credit score.