Secured vs. Unsecured Credit Cards: How to Choose

The type of credit card that’s best for you will depend on your financial situation and what you hope to accomplish with the card. If you have a low credit score, a secured card may be a better fit, as it will be easier to qualify for and, if used responsibly, will strengthen your credit profile over time. If you have a strong credit score, and are looking for a card that offers lots of perks and rewards, an unsecured credit card might be a better fit. Many people who start with a secured card eventually upgrade to an unsecured credit card at some point.

Secured cards require a cash deposit that often serves as your credit limit — which might be quite lower than an unsecured card. Secured cards may charge higher interest rates and offer fewer perks or rewards.

The speed at which you can positively impact your credit score is generally the same whether you’re using a secured or unsecured card. If you’re just starting to build or rebuild your credit history, it may be easier for you to qualify for a secured card.

Minimum security deposits for secured credit cards in Canada generally range from $200 to $500, but can be as low as $50.

Yes, some secured credit cards come with the ability to earn points and rewards, including cash back and retail discounts.

Canadian credit card issuers don’t commonly disclose the exact credit scores that are required to qualify for a card. However, a score that falls in the good to excellent credit score range is typically required for unsecured cards.

Many unsecured credit cards in Canada have annual income requirements. These can vary anywhere from $12,000 to $200,000 for individuals, but the most common requirement is $60,000 to $80,000. In general, cards with the most benefits and lucrative rewards have higher income requirements.