A secured credit card is like a regular credit card, but you need to set aside security funds upfront. You’ll still need to make regular payments.
A secured credit card is ideal if you’re new to credit or Canada because it doesn't require a hard credit check.
How to use a secured credit card
Secured credit cards are just like standard credit cards, except they have a security fund so you can set your own credit limit.
Here's how it works:
- Security funds set your credit limit: Security funds are held as collateral while you use the card. The amount you set aside will be your credit limit.
- Funds are safely set aside: Your security funds will be returned to you when you close your account or upgrade to a standard credit card. Security funds are refundable when the outstanding balance is paid in full and the card account is closed.
- Start with as little as $50: You can increase your credit limit any time by adding more security funds.
Your usage of the card will be reported to TransUnion® and Equifax®. By using the card and paying it off regularly, you can improve your credit history.
If your statement is not paid off by the due date, you are subject to interest charges.
Similarities of secured credit and standard credit
Rewards
Rewards and perks are the same for secured and standard credit.
Transactions
You can use both of these cards anywhere Mastercard is accepted. Any transactions you make with your standard credit can be made with your secured card. This includes cash advances, payments, and refunds.
Build credit
Using both standard and secured credit can help you build your credit history. Here’s what makes up your credit score.
Differences of secured credit and standard credit
Secured cards have a security fund
With secured credit, you decide your credit limit. The amount of funds secured will be your credit limit.
As this isn’t a prepaid card, your security fund won’t be used to pay off the balance on your card. You will have to initiate payments externally or from your Neo Everyday account.
The funds are safely stored in your Neo account and will be returned if you close your card and have paid off your balance.
No credit history required
Applying for a secured credit card doesn't require a credit check. It's the perfect card for you if you have no credit history.
Increase your credit limit when you want
Your security funds can be increased after the initial setup. Here’s how to add funds for your secured credit card.
You can only add increments of $50 when adding funds to your security fund.