Secured credit cards are crucial tools for individuals who want to build their credit, are newcomers to Canada, and especially for borrowers with bad credit. They differ from unsecured credit cards that don't require a security deposit.
This article will examine how secured credit cards work, what they require, and their advantages and drawbacks. We'll also cover the Neo Secured Card and why it's among the best secured credit cards to build your credit.
How Does a Secured Credit Card Work?
A secured credit card is a type of credit card that requires a cash deposit that will serve as collateral or a guarantee for purchases you make using your credit card. This way, your card issuer has protection in the event that you default on your payments.
A secured credit card works just like any other credit card: You swipe it for purchases without exceeding your credit limit and subsequently pay your balance on time each month. If you miss a payment, you can't use your deposit to make the card payments, but your card issuer can take money from it to cover your dues.
Provided that you keep your account in good standing by making timely payments, the deposit remains with you. Depending on the conditions of your card issuer, the deposit will be returned to you after a specific timeframe or when you close your account.
Advantages of a Secured Credit Card
Cons of a Secured Credit Card
Best Secured Credit Card in Canada
The Neo Secured Credit card is a cut above other cards of its type. It has no annual fees and only requires a low and easily accessible minimum security deposit of $50. Regardless of your credit score, you get instant approval when applying for this secured credit card, making it one of the best secured credit cards to build credit.
Furthermore, it comes with a cash back rewards program that earns you up to 5% on eligible purchases. Online application is also fast and can be completed in 5 minutes.
Neo Secured Credit is available in free and premium plans. The free version comes with basic money management tools, offers cashback at Neo partners, and up to 1% cashback on gas and groceries.
To enjoy better features and benefits, you can upgrade to the Premium service at $4.99 a month. It offers boosted cashback opportunities and up to 3% cashback on groceries and gas. It also comes with all features of the free version, credit score monitoring tools, and more.
The Neo Secured Credit card helps you build your credit while earning cashback rewards. You can use it like any other regular credit card at thousands of places with no monthly or annual fees.
You can get a $25 welcome bonus when you apply and are approved.
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