Building credit is a tricky process for many people for various reasons. For example, many people grew up with financial hardships, immigrated to Canada, or filed for bankruptcy. Whatever the reason for your bad credit, there are credit cards for bad credit Canada banks and institutions offer.
You can build your credit back up with proper use by getting a sound card for bad credit. Getting a credit card is the fastest way to build your credit. Having a good credit score is vital for many reasons. For example, you’re more likely to qualify for better credit cards in the future and secure loans with lower interest rates.
Types of Credit Cards for Bad Credit
If you’re wondering how to get a credit card with bad credit, Canada has several companies offering instant approval, no credit checks, or guaranteed cards. To figure out what kind of credit card is best for you, let’s look at the different available options. Then, please read our other article about the best credit cards in Canada once you improve your credit with the options below!
Secured Credit Cards
These credit cards are an excellent option for those with low or damaged credit scores. Secured credit cards have high approval ratings and low fees associated. When obtaining a card, you’re required to put down a security deposit that the institution uses as collateral for lending you credit. There is typically a $200 to $300 minimum fee, which becomes your beginning credit line. Depending on the card, you can put down more, which adds to the amount of credit you get each month. If you begin missing payments, the institution takes your deposit away to use as payment.
If you have paid off your card in full each month, you will begin to rebuild your credit score. If you decide you want to cancel your account, you can obtain your full deposit back. These are some of the easy credit cards to get in Canada if you’re looking to rebuild your credit.
Guaranteed Credit Cards
Many credit card providers offer cards that you’re guaranteed to get if you meet the application requirements. These cards are great for those looking for a credit card with bad debt in Canada. Companies that offer these cards often require a security deposit, but the stipulations are different from secured credit cards. Rather than the deposit corresponding to your monthly limit, guaranteed cards can give you limits greater than your deposit. The credit limit on these cards varies widely depending on the company offering them.
These are great cards for those looking to rebuild their credit. When you pay off your total balance each month on your card, you’re sure to boost your credit score each month.
Prepaid Credit Cards
These credit cards require no credit checks when applying. This means these cards are available to everyone. However, prepaid credit cards will not rebuild your credit. Instead, they are suitable for educating and getting people ready for a typical credit card.
When you purchase a prepaid credit card, you load a certain amount of money on it each month. Every time you use it, that amount lessens. It’s an excellent tool to track your spending as it functions like a gift card. You can refill the amount on it at any time. If you’re looking to get a credit card with bad credit, Canada has many prepaid credit card options.
Unsecured Credit Cards
An unsecured credit card is the type of credit card most people think of when they hear “credit card.” You must apply and qualify for these depending on various factors determined by the company for each card. For example, they do not require any security deposit for collateral as secured cards do. Depending on how you qualify, you get different credit limits. The better your score, the more credit you’re allowed.
There are unsecured credit cards for individuals with bad credit scores. These typically have higher interest rates and offer low lines of credit. They’re best to use minimally to avoid paying interest and to use for building your credit score. Some guaranteed unsecured cards are easy to get for individuals with bad credit.
Canadian Credit Cards for Bad Credit
|Credit Card||Advantage||Credit Type||Features||Fees|
|Home Trust Secured Visa||No annual fee option, instant approval||Secured||14.99% interest with an annual fee, 19.99% and no fee, $500-$10,000 credit limit||Optional $59 fee or $0|
|Scotiabank Momentum No-Fee Visa||No annual fee, no credit check, cashback deals||Secured||7.99% interest for the first six months, 19.99% after for purchases, 22.99% interest for cash advances1% cashback on qualifying purchases||$0|
|Refresh Financial Secured Visa||No credit check, high credit limit||Secured||17.99% interest rate, $200 – $10,000 credit limit||$12.95 annually plus a $3 monthly maintenance fee|
|Guaranteed Secured MasterCard by CapitalOne||Guaranteed approval||Secured||19.8% interest rate, $300-$2,500 credit limit||$59 annual fee,|
|Low Rate Guaranteed Mastercard by CapitalOne *||Guaranteed approval, high credit limit||Unsecured||14.9% interest rate on purchases and balance transfers, 19.8% interest on cash advances, $300 – $7,000 credit limit||$79 annual fee|
|Guaranteed Mastercard by CapitalOne *||Guaranteed approval, High credit limit||Unsecured||19.8% interest rate, $300-$7,000 credit limit||$59|
|Scotia Bank Value Visa||No credit history needed, low-interest rate, various benefits||Unsecured||0.99% interest for the first six months, 12.99% after, $500 minimum credit limit||$29 annual fee|
* The two unsecured Mastercards are guaranteed if you meet the requirements. However, you will be approved for the secured card if you do not meet them.
Easiest Credit Card to Get Approved for Canada
Refresh Financial Secured Visa
As the easiest credit card to get in Canada, you’re ensured to get the Refresh Financial Secured Visa. There is no credit check required. Depending on how much you put down as security, you can obtain a credit limit from $200 to $10,000. The annual fee only comes out to $12.95. Unfortunately, a $3 monthly maintenance fee is associated with this card. If you hold this card, you get access to Refresh Dashboard, which assists in tracking your credit and gives tips for credit building. You even get benefits with this Refresh card at over 600 retailers around Canada. These range from entertainment to shopping. Many other cards are available that are easy to get; another full-suite you can check out is the Mogo Canada credit card, loans, and more.
Best All-Around Secured Credit Card
Guaranteed Secured MasterCard by CapitalOne
With a high credit limit and guaranteed approval, this card is the best-secured credit card available. All you need to do is apply and pay the minimum fee of $75 or $300 to start building your credit back up! Although there is a $59 annual fee, we feel this card is still your best option for bringing your credit back up. Also, as it’s a Mastercard, you’re protected against lost, stolen, or unauthorized charges on your account.
Best Low-Interest Secured Credit Card
Home Trust Secured Visa
The best low-interest rate secured card is the Home Trust Secured Visa. With an annual fee of $59, you’ll pay 14.9% interest. When you apply, you are instantly approved for this card. You can set your limit ranging from $500 to $10,000. Additionally, you get purchase security for 90 days after making purchases on eligible items. This Visa card is a great option to build credit while paying low-interest rates for those with bad credit.
Honourable Mention Secured Credit Card for Bad Credit
Scotiabank Momentum No-Fee Visa
Although this card is an honourable mention here, it’s still a great card for building your credit. This credit card had to be included with no annual fee, no credit check required, and cashback deals. When you get this card, you’ll pay 7.99% interest for the first six months and 19.99% after that for purchases. For cash advances, you’ll pay a 22.99% interest rate. At gas stations, grocery stores, drug stores, and recurring bill payments, you can get 1% cashback. In addition, there are other purchases where you can get 0.5% cashback. This card also offers deals for car rentals and no extra fees for getting users an additional card.
Best All-Around Unsecured Credit Card
Low Rate Guaranteed Mastercard by CapitalOne
Unfortunately, there is no guaranteed unsecured credit card Canada offers, but this is the next best. If you meet CapitalOne’s criteria, you’re guaranteed approval for this card. The card comes with a $79 annual fee but has a $7000 max credit limit and only a 14.9% interest rate for purchases and balance transfers. You’ll be paying a 19.8% interest rate when it comes to cash advances. This is an excellent choice for an unsecured credit card if you’re looking to build your credit score. This card has a relatively low-interest rate compared to many credit cards for individuals with bad credit. As it’s a CapitalOne Mastercard, you get excellent protection against theft, purchase assurance, and price protection services. You even get travel assistance, standard accident travel insurance, and basic car rental accident coverage.
Best Low-Interest Unsecured Credit Card
Scotiabank Value Visa
Scotia Bank offers an unsecured credit card with a low-interest rate. If you have no credit history, this is a great card to get. It’ll help you build credit as long as you stay on top of your payments. You’ll only pay 0.99% interest on balance transfers for the first six months of holding this card. With this low balance transfer interest rate, you can transfer a balance on a credit card with high interest to this one to lower interest payments. After the initial six months, you’ll pay 12.99% interest, which is still a very low-interest rate credit card. The annual fee of the Value Visa Card is only $29. Additionally, you get deals from various car rental companies. You can also add an authorized user to your account to give them another credit card with added benefits.
Honourable Mention Unsecured Credit Card for Bad Credit
Guaranteed Mastercard by CapitalOne
Although this is only an honourable mention, some may find this the best option in their case. For example, if you’re someone who knows you have the money to pay off your balance in full each month, this might be the card for you. Although it has a higher interest rate, the annual fee is lower. So if you’re paying your card off in full each month, you pay less over a year than a card with a higher annual fee but lower interest rates.
Again, it would be best if you met the necessary criteria to qualify for this card. You get up to a $7000 credit limit with a 19.8% interest rate and an annual fee of $59. Like the other unsecured cards, this is great for building your credit back up. Again, like the other CapitalOne Mastercards, this card has excellent benefits.
Other Bad Credit Credit Card Options
We’ve compiled a list of 7 great options for those with bad credit to consider. Some cards give instant approval, while some require applicants to meet specific criteria. All the cards have different strengths and weaknesses, which each person must weigh individually. However, there is at least one card suitable for everyone.
We previously mentioned Pre-Paid Credit Cards as an option for those with bad credit. A couple of prepaid options are the KOHO Prepaid Visa Card and the Scotiabank Prepaid Reloadable Visa. Both cards have minimal fees and are easily reloadable.
Sometimes a credit card may not be what you need; if you need to consolidate some debt or need a large sum for an unexpected expense, you should check out bad credit personal loans for Canadians.
Store Credit Cards
Another option for those with bad credit is to go through a store to obtain a credit card. Most stores that hold credit cards typically allow individuals with bad credit to qualify. With these cards, you get great benefits for in-store purchases. However, they usually have high-interest rates along with annual fees. Check out a local store you shop out for more details!
Finding a suitable credit card for your needs isn’t always easy for those with bad credit. Even worse, you find a credit card you think fits, but you get turned down. Here, we presented a list of credit cards with many companies offering guaranteed approval.
No matter the type of card you obtain, make sure to pay off at least the minimum balance each month to increase your credit score. Also, when using your card, try to keep your balance around or below 30% of the credit limit you have for the best improvement results. Hopefully, this has helped you find a suitable credit card and given you some ideas to improve your credit!