Winner: DCU Visa Platinum Secured


The secured card from DCU Bank came out as the winner with no annual fee, the lowest interest rate on balances in the group and almost no fees on anything.

The card comes with two small caveats, first, you must open a savings account with DCU Bank, where your security deposit will be held and second, you need a minimum credit score of 350 to qualify while the other three cards don’t even do a credit check so approval is virtually guaranteed.

The DCU Visa Platinum may be the winner, but the other three secured cards are all good options if opening a savings account with DCU Bank doesn’t sound appealing to you.

DCU Visa Platinum

 

Who are Secured Credit Cards For


Secured credit cards are for people who either have no credit history, or have a very low credit score due to past payment troubles.

Secured cards require you to put money down as a deposit and your borrowing limit is usually set at the same level as your deposit, so a $200 deposit equals a $200 credit limit.

The biggest positive of a secured card is that most banks will approve your application regardless of your credit score making it easy to begin increasing your credit score.

 

Only Use Secured Cards Until you Can Upgrade


Secured credit cards are great for increasing your credit score from a low level in 6-12 months, however, these cards carry higher fees for normal activities than many other unsecured cards.

Think of secured cards as a stepping stone to cards with more benefits and lower fees.

Secured cards only work to boost your score if you pay off your monthly bills on time, so they’re no magic bullet.

 

Beware of Fees


Secured credit cards carry much higher fees than unsecured cards, so you need to be aware of how your daily spending could cost you valuable cash.

We added up all of the fees the four secured cards charge and summarized them in the table below.

Refresh Secured VisaHome Trust No-Fee SecuredHome Trust SecuredDCU Visa Platinum Secured
Cash Advance Fee$5$2.5$2.5
Go Over Your Limit$5$29$29
ATM Borrowing$5$10$10
International Transaction Fee$3.50
Canada Transaction Fee
Monthly Inactivity Fee$2
Bill Payment Fee$0.50
Foreign Transaction %3.5%2.0%2.0%
Statement Fee$2.5$5$5
Replacement Card Fee$39$39
Declined Transaction$0.10$45$45
Late Payment$35

If you don’t think you can pay off your full bill every month (which we highly advise you do) the three most important fees you need to look at are for borrowing over your limit, a declined transaction and cash advance.

The Refresh Secured Card only charges $0.10 for a declined payment for lack of funds, compared to a whopping $45 for the Home Trust Cards.

An overlimit fee is only $5 with the Refresh card compared to $29 for the Home Trust cards and free with the DCU card.

Lastly, cash advances cost $5 with Refresh and $2.50 or 1% of the amount borrowed with Home Trust.

 

DCU Visa Platinum

DCU Bank Visa Platinum Secured


DCU bank offers the secured credit card with the least number of extra fees. You will have to open a DCU Bank savings account for your initial security deposit, but this small step is worth it for the lower fees.

After you apply for the card you will need to become a member of the Digital Federal Credit Union (DCU) before opening the card account. There are several ways to become a member but to open an account will require a minimum $5 deposit.

The best features are:

  • Low interest rate on borrowing.
  • Only card that allows balance transfers.
  • No fee on cash advances.
  • No foreign transaction fee.
  • Works with Apple Pay™.
  • Includes $500,000 in free travel insurance coverage.
  • Rental car insurance and extended warranty on purchases.

Important Note on Late Fees

The DCU card charges a $35 late fee every month you don’t pay off your balance on time making this card more expensive than the rest if you are late with your monthly payment only twice in a year.

If you think you might have trouble paying off your card every month a better card to choose would be the Refresh Secured Visa with no late payment fee.

Other Details

The DCU Secured Visa charges only 13.75% interest on borrowings, or 18% if you make a late payment. This rate is well below peers and will save you $10 a year for every $200 you borrow compared to the other cards.

You need a minimum credit score of 350, making this card out of reach for students or those who recently declared bankruptcy.

A $500 deposit is required to secure the card. If this is out of reach for you, the Refresh Secured Visa only requires a $200 deposit.

The DCU card is very easy to understand with no fees whatsoever as long as you pay off your borrowing in full every month.

 

Refresh Secured Visa

Refresh Secured Visa


The Refresh Secured Visa is the second best card on the list with no minimum credit score requirements, a $0.10 fee for each declined transaction compared to $45 for the Home Trust cards and no late payment fee.

The card requires only a $200 deposit to open, compared to $500 for the three other cards.

Important Features:

  • $2 fee for every month you don’t use the card
  • $3.50 for every transaction outside Canada
  • $3.5% foreign transaction fee
  • $2.50 for paper statements instead of digital
  • Only $0.10 per declined transaction
  • $0.50 fee every time you pay your bill
  • 17.99% interest rate on borrowing

Other Details

The card charges a fee monthly and annually that adds up to $49 a year compared to $59 for the Home Trust Secured Fee card, and no fee for the DCU Bank Card and Home Trust No-Fee Secured card.

Even with all the small fees for different activities, the Refresh Secured Visa will end up being cheaper than the two cards from Home Trust if you have even one declined payment because there is not enough borrowing limit left on your card.

If you plan to be very diligent about paying off your full balance every month and never going over your limit, the DCU Visa Platinum Card is our number one choice.

 

Home Trust Secured No-Fee and Fee Cards

Home Trust Secured No-Fee and Fee Cards


These two cards from Home Trust have the exact same features except for their annual fees and interest rates.

You can save $59 a year by choosing the Home Trust No-Fee card, but the interest rate on balances will be higher at 19.99% compared to 14.99% for the Home Trust card with a fee.

Think about it this way, you would need to carry a balance greater than $1,200 before the interest savings on the fee card would offset the $59 fee you’re paying every year.

Also remember that the limit on a secured card is only as high as the security deposit, meaning a $1,200 spending limit would require you to put up $1,200 before you even begin using the card.

For most users it will be cheaper to avoid the $59 annual fee and accept a higher interest rate.

Important Features:

  • $45 fee for a declined payment.
  • $39 to replace a lost card.
  • $5 per statement.
  • $29 if you go over your borrowing limit.
  • 2% foreign transaction fee.

 

Conclusion


Secured credit cards are the best, and in most cases the only, way to build or repair credit.

Think of them as training wheels for learning how to responsibly pay down debt without getting into too big of a hole if you run into money difficulties.

Only borrow as much as you can pay back in any 30-day period and before you know it you’ll have a solid credit score that can qualify you for cards with much better perks and lower fees.