A secured line of credit card is a type of credit card that is secured by collateral. The collateral used to secure the line of credit is typically a cash deposit that is placed in a savings account or certificate of deposit (CD) with the credit card issuer.

With a secured line of credit card, the credit limit is typically equal to the amount of collateral that is deposited. For example, if you deposit $1,000 as collateral, your credit limit will be $1,000.

The purpose of a secured line of credit card is to help individuals build or improve their credit history. Since the credit card is secured by collateral, the risk to the credit card issuer is lower, which means that individuals with poor or limited credit histories may be approved for this type of credit card.

It’s important to note that while a secured line of credit card can be a useful tool for building credit, it’s important to use it responsibly. This means making payments on time and keeping balances low. Defaulting on a secured line of credit card can result in the loss of the collateral used to secure the line of credit.

List of the Best Secured Line of Credit Cards Canada

Here are some of the best secured line of credit cards available in Canada:

1. Home Trust Secured Visa: This credit card has no annual fee, offers credit limits from $500 to $10,000 and helps to establish or rebuild credit.
2. Scotiabank Value Visa: This credit card has a low interest rate and an annual fee of $29. The credit limit is up to $100,000 and it also comes with a range of benefits.
3. Capital One Guaranteed Mastercard: This credit card has no annual fee, offers credit limits from $300 to $7,000 and helps to establish or rebuild credit.
4. RBC Secured Visa: This credit card has an annual fee of $29 and offers credit limits from $300 to $50,000. It also comes with a range of benefits, including purchase protection and extended warranty.
5. TD Emerald Flex Rate Visa: This credit card has a variable interest rate and an annual fee of $25. The credit limit is up to $50,000 and it also comes with a range of benefits, including travel medical insurance and auto rental collision/loss damage insurance.
6. Desjardins Visa Secured: This credit card has an annual fee of $50 and offers credit limits from $500 to $50,000. It also comes with a range of benefits, including travel insurance and roadside assistance.
7. Canadian Western Bank Collabria Cash Back Secured Visa: This credit card has an annual fee of $39 and offers cash back rewards on purchases. The credit limit is up to $50,000 and it also comes with a range of benefits.
8. CIBC Secured Visa: This credit card has an annual fee of $25 and offers credit limits from $500 to $100,000. It also comes with a range of benefits, including purchase protection and extended warranty.
9. BMO Preferred Rate Mastercard: This credit card has a low interest rate and an annual fee of $20. The credit limit is up to $100,000 and it also comes with a range of benefits, including travel insurance and purchase protection.
10. Affirm Financial Mastercard: This credit card has an annual fee of $59 and offers credit limits from $300 to $3,000. It also helps to establish or rebuild credit.
11. Refresh Financial Secured Visa: This credit card has an annual fee of $12.95 and offers credit limits from $200 to $10,000. It also helps to establish or rebuild credit.
12. No-Fee Scotiabank Value Visa: This credit card has no annual fee and offers credit limits up to $50,000. It comes with a range of benefits, including travel insurance and purchase protection.
13. Meridian Collabria Cash Back Visa: This credit card has no annual fee and offers cash back rewards on purchases. The credit limit is up to $25,000 and it also comes with a range of benefits, including travel insurance and purchase protection.
14. Peoples Trust Secured Mastercard: This credit card has an annual fee of $69.60 and offers credit limits from $500 to $25,000. It also helps to establish or rebuild credit.
15. Walmart Rewards Mastercard: This credit card has no annual fee and offers rewards on purchases at Walmart and other retailers. The credit limit is up to $20,000 and it also comes with a range of benefits, including purchase protection and extended warranty.

16. Vancity enviro Secured Visa: This credit card has an annual fee of $10 and offers credit limits from $500 to $20,000. It also comes with a range of benefits, including purchase protection and extended warranty.
17. National Bank MC1 Mastercard: This credit card has no annual fee and offers credit limits from $500 to $10,000. It also comes with a range of benefits, including purchase protection and extended warranty.
18. DUCA Visa Secured: This credit card has no annual fee and offers credit limits from $500 to $25,000. It also helps to establish or rebuild credit.
19. Canadian Tire Bank Guaranteed Mastercard: This credit card has an annual fee of $59 and offers credit limits from $300 to $10,000. It also comes with a range of benefits, including roadside assistance and purchase protection.
20. Collabria Low Rate Secured Visa: This credit card has an annual fee of $35 and offers a low interest rate. The credit limit is up to $100,000 and it also comes with a range of benefits, including travel insurance and purchase protection.

As with any financial product, it’s important to compare the features, benefits, and fees of each secured line of credit card to determine which one is best for your financial situation and credit goals.

Note: The credit limit ranges mentioned in the table are indicative and subject to change based on individual credit profiles and other factors.

Pros of Secured Line of Credit Cards

There are several potential benefits to using a secured line of credit card:

1. Establish or rebuild credit: Secured line of credit cards can be a useful tool for establishing or rebuilding credit history. Since the credit limit is secured by collateral, individuals with limited or poor credit history may be approved for this type of credit card.
2. Lower interest rates: Some secured line of credit cards may offer lower interest rates compared to other types of credit cards, which can save you money on interest charges.
3. Rewards and benefits: Many secured line of credit cards offer rewards or benefits, such as cash back, points, or travel insurance, which can help you save money or earn rewards on purchases.
4. Flexibility: Secured line of credit cards can provide flexibility in managing your finances. You can use the credit card for everyday purchases and pay off the balance over time, or use it as a backup source of funds in case of emergency.
5. Higher credit limits: Since the credit limit is secured by collateral, some secured line of credit cards may offer higher credit limits compared to other types of credit cards.

Cons of Secured Line of Credit Cards

While there are several benefits to using a secured line of credit card, there are also some potential drawbacks to be aware of. Here are some cons of secured line of credit cards:

1. Requires collateral: To obtain a secured line of credit card, you must provide collateral, usually in the form of a cash deposit or savings account. This means tying up your funds until the credit card is closed or the collateral is returned.
2. High fees: Some secured line of credit cards may come with higher fees, such as annual fees or application fees, compared to other types of credit cards.
3. Limited credit limit: The credit limit on a secured line of credit card is typically equal to the amount of collateral provided. This may result in a lower credit limit compared to unsecured credit cards, which could limit your ability to make larger purchases.
4. Potential loss of collateral: If you default on your payments, the credit card issuer may take possession of your collateral to cover the outstanding balance. This could result in a loss of funds if the collateral was a cash deposit or savings account.
5. Limited acceptance: Some merchants or vendors may not accept secured credit cards, which could limit your ability to make purchases or payments.

Secured Line of Credit Cards Facts

Here are some key facts about secured line of credit cards:

1. They require collateral: Secured line of credit cards are secured by collateral, typically in the form of a cash deposit or savings account. The credit limit is typically equal to the amount of collateral provided.
2. They can help establish or rebuild credit: Secured line of credit cards can be a useful tool for individuals with limited or poor credit history to establish or rebuild credit.
3. They may come with fees: Some secured line of credit cards may come with annual fees, application fees, or other fees that can add to the cost of using the credit card.
4. They may offer rewards and benefits: Some secured line of credit cards may offer rewards or benefits, such as cash back or travel insurance, which can help you save money or earn rewards on purchases.
5. They may have lower interest rates: Some secured line of credit cards may offer lower interest rates compared to other types of credit cards, which can save you money on interest charges.
6. Defaulting can result in loss of collateral: If you default on your payments, the credit card issuer may take possession of your collateral to cover the outstanding balance, which could result in a loss of funds.
7. They may have limited acceptance: Some merchants or vendors may not accept secured credit cards, which could limit your ability to make purchases or payments.

Secured Line of Credit Cards FAQs

Here are some frequently asked questions about secured line of credit cards:

1. What is a secured line of credit card? A secured line of credit card is a type of credit card that is secured by collateral, typically in the form of a cash deposit or savings account.
2. How does a secured line of credit card work? The credit limit on a secured line of credit card is typically equal to the amount of collateral provided. The card can be used for purchases and payments, and the balance must be paid off over time. If payments are missed, the credit card issuer can take possession of the collateral.
3. How does a secured line of credit card differ from an unsecured credit card? A secured line of credit card requires collateral, while an unsecured credit card does not. The credit limit on an unsecured credit card is based on the individual’s creditworthiness, while the credit limit on a secured credit card is based on the amount of collateral provided.
4. What are the benefits of a secured line of credit card? The benefits of a secured line of credit card include the ability to establish or rebuild credit, potential lower interest rates, rewards and benefits, flexibility in managing finances, and potentially higher credit limits.
5. What are the potential drawbacks of a secured line of credit card? The potential drawbacks of a secured line of credit card include the requirement for collateral, potential higher fees, limited credit limits, the potential loss of collateral if payments are missed, and limited acceptance at some merchants.
6. How can I use a secured line of credit card responsibly? To use a secured line of credit card responsibly, make payments on time, keep balances low, and avoid defaulting on the credit card. Additionally, compare the features, benefits, and fees of different secured line of credit cards before choosing one that is best suited for your financial situation and credit goals.
7. What type of collateral can be used for a secured line of credit card? The most common forms of collateral for a secured line of credit card are cash deposits or savings accounts. However, some credit card issuers may allow other forms of collateral, such as a certificate of deposit or a piece of property.
8. Can a secured line of credit card help improve my credit score? Yes, a secured line of credit card can help improve your credit score if used responsibly. Making on-time payments and keeping balances low can demonstrate responsible credit behavior and help establish or improve your credit history.
9. How long does it take to receive a secured line of credit card? The time it takes to receive a secured line of credit card can vary depending on the credit card issuer and the application process. It may take a few weeks or longer to receive the card.
10. Can I upgrade from a secured line of credit card to an unsecured credit card? Some credit card issuers may allow you to upgrade from a secured line of credit card to an unsecured credit card if you have demonstrated responsible credit behavior. This may involve applying for a new credit card or converting your existing secured credit card to an unsecured credit card.
11. How much collateral do I need for a secured line of credit card? The amount of collateral required for a secured line of credit card varies depending on the credit card issuer and the credit limit requested. Typically, the credit limit on a secured credit card is equal to the amount of collateral provided.
12. Can I get a secured line of credit card if I have bad credit? Yes, secured line of credit cards are designed for individuals with limited or poor credit history. Since the credit limit is secured by collateral, credit card issuers may be more willing to approve individuals with bad credit.
13. Can I use a secured line of credit card for cash advances? Yes, you can use a secured line of credit card for cash advances. However, cash advances typically come with higher interest rates and fees compared to regular purchases, so it’s important to use them sparingly and pay off the balance as soon as possible.
14. Can I get my collateral back from a secured line of credit card? If you close your secured line of credit card account or upgrade to an unsecured credit card, you may be able to get your collateral back. However, if you default on your payments, the credit card issuer may take possession of your collateral to cover the outstanding balance.
15. How can I apply for a secured line of credit card? To apply for a secured line of credit card, you typically need to fill out an application with the credit card issuer and provide the required collateral. The application process may involve a credit check and verification of income and employment.
16. How long does it take to build credit with a secured line of credit card? Building credit with a secured line of credit card can take time, typically several months or longer. Making on-time payments and keeping balances low can help establish or improve your credit history over time.
17. Can I have multiple secured line of credit cards? Yes, you can have multiple secured line of credit cards. However, it’s important to use them responsibly and avoid accruing high balances or missing payments.
18. How can I choose the best secured line of credit card for my needs? To choose the best secured line of credit card for your needs, consider the features, benefits, and fees of each card. Look for a card with a low interest rate, low fees, and rewards or benefits that align with your spending habits. Additionally, consider the credit limit and the amount of collateral required.
19. How can I use a secured line of credit card to establish or rebuild credit? To use a secured line of credit card to establish or rebuild credit, make on-time payments, keep balances low, and avoid maxing out the credit limit. Additionally, check your credit report regularly to monitor your progress and identify areas for improvement.
20. Can I use a secured line of credit card for online purchases? Yes, you can use a secured line of credit card for online purchases. However, make sure to use secure websites and avoid entering your credit card information on unsecured or suspicious websites.