At Financial Canadian, we understand the challenges of building credit.
A Platinum Secured Credit Card can be an excellent tool for those looking to establish or rebuild their credit history.
These cards offer the prestige of a platinum card while providing a more accessible path to credit for many Canadians.
In this post, we’ll guide you through the process of obtaining a Platinum Secured Credit Card and highlight some of the best options available in Canada.
What Are Platinum Secured Credit Cards?
Definition and Key Features
Platinum secured credit cards are financial products designed to help individuals build or rebuild their credit. These cards require a cash deposit as collateral, which typically becomes the credit limit. The “platinum” label often indicates a higher level of benefits compared to standard secured cards.
Platinum secured cards often come with higher credit limits than standard secured cards. Some issuers offer limits up to $5,000, depending on the deposit amount. They also frequently report to all three major credit bureaus (Equifax, TransUnion, and Experian), which is essential for building a credit history.
Many platinum secured cards offer rewards programs, a feature once rare in the secured card market. Some cards offer 1% cashback on all purchases, while others provide travel points or retail discounts.
Differences from Unsecured Cards
The main difference between platinum secured and unsecured credit cards lies in the security deposit. While unsecured cards don’t require collateral, platinum secured cards do. This deposit reduces the risk for issuers, allowing them to extend credit to those with limited or poor credit history.
Benefits of Platinum Secured Cards
Platinum secured credit cards can be a strategic move for credit building. These cards often have lower fees compared to other secured options. While some secured cards charge annual fees of $50 or more, many platinum secured cards have no annual fee.
Moreover, platinum secured cards typically offer a clear path to upgrading to an unsecured card. Some issuers review accounts after just six months of responsible use, potentially returning the security deposit and transitioning the account to an unsecured status.
Users of platinum secured cards often see a significant increase in their credit score within the first year (provided they maintain low credit utilization and make timely payments).
As we move forward, let’s explore the specific requirements for obtaining a platinum secured credit card, including credit score considerations, income requirements, and necessary documentation.
Requirements for Obtaining a Platinum Secured Credit Card
Credit Score Considerations
Platinum secured credit cards cater to individuals with limited or poor credit. Unsecured credit cards often require a minimum credit score, though secured cards may not have this requirement.
Income and Employment Requirements
Applicants for platinum secured credit cards in Canada must demonstrate a steady income source. Issuers may request proof of employment or inquire about employment status during the application process.
Security Deposit and Credit Limits
The security deposit forms the cornerstone of platinum secured credit cards. Using a secured credit card requires an up-front security deposit equal to that card’s credit limit. This can be used just like an unsecured credit card.
Required Documentation
Applying for a platinum secured credit card requires several documents to verify identity and financial status:
- Government-issued photo ID (driver’s license or passport)
- Proof of address (utility bill or bank statement)
- Proof of income (recent pay stubs or tax returns)
- Social Insurance Number (SIN)
- Bank account information for the security deposit
Newcomers to Canada might need to provide additional documents, such as landing papers or a permanent resident card.
Application Process
The application process for platinum secured credit cards often proves simpler than for unsecured cards. Many issuers offer online applications with quick approval decisions (sometimes within minutes). This streamlined process makes these cards more accessible to those looking to build or rebuild their credit.
As we move forward, we’ll explore some of the top platinum secured credit card options available in Canada, comparing their features, benefits, and requirements to help you make an informed decision.
Top Platinum Secured Credit Cards in Canada
Capital One Guaranteed Secured Mastercard
The Capital One Guaranteed Secured Mastercard is designed to help rebuild or establish credit in Canada. While it doesn’t offer rewards, it provides an opportunity for those looking to improve their credit standing.
Home Trust Secured Visa Card
The Home Trust Secured Visa Card requires a minimum deposit of $500, which becomes the credit limit. It has a $59 annual fee, but a no-fee version exists with a higher interest rate. The standard interest rate is 19.99%. This card allows users to increase their credit limit up to $10,000 with additional deposits.
Refresh Financial Secured Card
The Refresh Financial Secured Card offers flexibility with a minimum deposit of $200. Users can increase their limit up to $10,000. It has a $48.95 annual fee and a 17.99% purchase interest rate. This card reports to both TransUnion and Equifax, which can potentially boost credit scores faster.
Neo Financial Secured Card
The Neo Financial Secured Card offers a unique proposition with a minimum deposit of $50 and guaranteed approval. It has no annual fee and offers an average of 5% cash back with Neo retail partners. Neo Financial provides a user-friendly app for easy account management.
Choosing the Right Card
When selecting a platinum secured credit card, consider specific needs. For those focused solely on building credit in Canada, the Capital One Guaranteed Secured Mastercard might be the best option. The Home Trust Secured Visa Card could be ideal for those who want the potential for a higher credit limit. The Neo Financial Secured Card offers an attractive cashback program for those looking for rewards.
The key to success with any secured credit card is responsible use. Try to make payments on time, keep credit utilization low, and monitor credit scores regularly. With consistent effort, users can improve their credit scores and potentially qualify for an unsecured card in the future.
Final Thoughts
Platinum secured credit cards provide Canadians with a valuable opportunity to build or rebuild their credit. These cards minimize risk for issuers through a security deposit while allowing cardholders to demonstrate responsible credit use. Users should make timely payments, keep credit utilization low, and avoid carrying balances to maximize the benefits of their platinum secured credit card.
Research different options to find the platinum secured credit card that best suits your needs. Consider factors such as minimum deposit requirements, annual fees, interest rates, and potential rewards programs. Once you’ve selected a card, gather the necessary documentation and submit your application.
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