Top 4 Credit Cards For Bad Credit in Canada

Top 4 Credit Cards For Bad Credit in Canada
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If you have been struggling for the past few days trying to get yourself a credit card but keep getting rejected, you may not be aware that your name could be on the high risk borrower list. The people on the high risk borrower list are usually placed there because they have a bad credit score. This score is used by many companies including mastercard and visa to give them an idea of if you will pay your bills back and on time. Regardless, there are still many lenders who will lend to you, albeit usually at higher interest rates.

Finding these companies that lend to higher risk borrowers can be a challenge sometimes. They might even require you to put up something such as a vehicle for collateral, this way the lenders minimize their risk of losing their money.

If you look online you might find many generic websites with little to no content to educate the borrower about their loans, these sites are focused on commissions, including potential scammers. You certainly don’t want to be a victim , this becomes especially difficult after being turned down by other mainstream lenders. We can take a look at some of the best known credit card companies in Canada which offer services to high risk borrowers.

Home Trust Secured Visa Card

A good choice for rebuilding your credit that enables you to make online purchases, phone purchases, vacation booking, etc. This is our top pick and recommended card to apply for. Click the image below to begin the application. Don’t be intimidated by the security deposit, Hometrust will work with you on how you can do the deposit after your application is sent in. The deposit isn’t needed until later.

  • Secured Visa
  • Purchase Interest Rate: 14.90 – 19.99%
  • Annual Fee: $0-$59
  • Requirements and terms: Security deposit, credit limit depends upon the initial deposit. $500 Security deposit required.
  • Anyone can apply, virtually guaranteed approval

Apply Now 14.90% $59 annual fee or $5 per monthApply Now 19.99% No annual fee

Capital One Guaranteed MasterCard

Allows anyone to apply for a credit card no matter what their credit ratings are in the past. With their program, if you performed well, you can easily build up your credit score again.

  • Purchase Interest Rate: 19.8%
  • Annual Fee: $59
  • Not recommended for: Household income of more the $50,000/month and for those who carry a balance of more than $3,000/month

National Bank of Canada MasterCard MC1 Credit Card

A perfect way to build your record that offers easy payment terms. It offers protection against unauthorized purchases and purchase insurance.

  • Purchase Interest Rates: 19.5%
  • No annual fee
  • Gives you the ability to keep your credit limit at $500
  • Quick access of your funds anywhere in the world

Capital One Low Rate Guaranteed MasterCard

This credit card offers another low interest rate for those who have a bad credit scores.

  • Balance Transfer rate: 14.9%
  • Annual Fee: $79
  • Purchase Interest Rate: 14.9%
  • Take note: applicant must not have an existing Capital One account, as well as you do not possess a Capital One card that have a bad standing in the past, etc. (Check their website for more: http://www.capitalone.ca/credit-cards/low-rate-mastercard)

Consolidating Other Debts

Now that you’ve applied for a secured credit card, what do you do with other debts. What if we told you that your monthly payments could be cut in half? Well this is actually happening at Consumerdebtaid.ca and they’re inviting everyone with over $10,000 in debt to talk with them. Register your information and let them negotiate your debts, payments and interest rates. Click the below button to get in touch with them.

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Part 2: Recovery From an Unmanageable Debt Load

Buying on credit and taking out loans have become commonplace but consumers who have gotten themselves into financial difficulty can end up with an unmanageable debt load. First and foremost, it’s important to take control of your debt. Although it can sometimes seem like an impossible task, when you decide to tackle your debt, you can make a plan that will work for you.

If going into debt has harmed your credit rating, you also need to take action to rebuild your credit. Nowadays, there are a number of alternatives for people with bad credit. Once you’ve begun to get your debt paid off and have developed a plan to do so over the long-term, there are even ways for you to get credit cards for bad credit.

Remember, when you decide to take on a credit card again you should do so with the view that you are going to pay off your balance in full. The goal of acquiring a credit card again should be so you can rebuild your credit history and start using credit cards for their convenience not to spend beyond your means.

Canadian credit cards for bad credit

Credit Cards for Bad Credit – Options

If you’ve recently gotten yourself out of a bad credit situation and want to get a credit card, there are a number of options you may want to consider including prepaid, low interest, secured or guaranteed credit cards.

  1. Prepaid cards: A prepaid Canadian credit card looks just like any other major credit card, are accepted wherever standard credit cards are accepted and many can be used to purchase items online. They are anonymous prepaid cards that can be bought in stores as well as registered prepaid cards. However, since there is no requirement for a credit history, they won’t have any impact on your future credit rating. Since these are issued as an alternative to cash or gift cards, they act in the same way. If you are mainly looking for a card that can give you the convenience of a MasterCard or VISA, a prepaid is a good option – if you’re looking for more than it probably isn’t the way to go.
  2. Low interest cards: If you can get approved, you may want to look into a low interest card. If you’ve just come out of a bad credit situation, taking on a low interest card will help you ease back into the world of credit cards. These cards offer individuals a lower rate of interest than most standard credit cards. This way if you can’t pay your balance off every month, you can save yourself some money from the typically high interest fees. Although you should go into a new credit card assuming to pay the balance off, at least if you don’t get into that habit right away, you won’t bear the consequences of high interest rates. Higher interest rates will only dig you deeper into debt which needs to be avoided at all costs obviously.
  3. Secured credit cards: A secured credit card is a standard credit card but requires that you provide security funds as collateral before you can receive your card and access your credit. A secured credit card requires you to make a deposit against the card’s credit limit. Your credit limit will usually be a percentage of your security deposit or it may be the same as your deposit. Many banks place your deposit into an interest-bearing savings account where it stays until you close your account, upgrade to an unsecured credit card, or default on your credit card balance. Maintaining a positive track record can help you rebuild your credit later on. However, this is best suited towards new immigrants who have a solid cash flow but don’t have any local credit history.
  4. Guaranteed credit cards: Guaranteed credit cards are a great solution for those who have gone through a personal bankruptcy or other likewise credit-damaging event. The best part of getting a guaranteed credit card is that applicants can rebuild their credit by using their cards and will no longer have to be inconvenienced when they want to implement purchases that require a credit card. In order to obtain the card, you need to keep a certain amount of funds in deposits in a special account at the issuing institution – this is where the word “guarantee” comes into play. So, they operate similarly to secured credit cards but are often used more heavily for individuals for bad credit.

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Managing Credit Wisely

The most important part about getting credit cards for bad credit is to understand the question of why. If you’re in the midst of a bad credit situation, it’s probably not the best idea to get yourself further into one. When you are tackling with issues with bad credit or rising debt, in Canada, there are luckily a number of places you can go. There are a range of non-profit centres that can help you develop a plan for getting your debt under control. Taking control over your debt is the first step, not applying for another credit card.

If you’re just coming out of a bad credit situation and want to rebuild your credit history, credit cards are one option. However, before you start applying for credit cards it’s always wise to take advice from a financial professional. Again, you don’t need to spend money on hiring a financial planner – you can always access resources in your local community. Check out Canada’s Credit Counseling Services website, which will provide you with a list of non-profit credit counseling providers. You can also look at some of the online resources such as Creditwalk.ca or Moneysense.ca. If, after this research, you are ready and believe getting a credit card is the right move, remember to consider the four options listed above.

Having bad credit can feel awful at times so it’s important to take all the steps possible to minimize this debt so it doesn’t hurt your credit rating. Use credit cards for what they are good for – convenience and added benefits. Good luck and don’t forget, there is help available for your debts. Get a head start, start consolidating today, there’s no obligation.

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  1. Another reason to refinance your mortgage is to pay it off faster.

    Set Mortgage Rate: The interest rate here does not change
    throughout the entire period of the mortgage. And naturally the knock-on effect
    of a lowlevel of mortgage approvals is that there are fewer house purchases and the stagnation of the market continues.

  2. Hello,
    Yes – this is all very true. Do you feel using credit cards or paying them off quicker can assist in this? Miriam

  3. If you have bad credit, but own your car and home outright. No debt can you use them to acquire a credit card

  4. Unfortunately not Jannet. There is a $500 deposit required, however, we encourage you to apply for the card anyways as the customer service team may be able to help figure out payments with you.

  5. If my wife will be a secondary applicant for the home trust secured visa, will she be able to rebuild her credit as well?

  6. Hi
    You should be able to but I would recommend asking the credit card company if they will be reporting credit history on the 2nd applicant – some do and some don’t. You want to ensure that on-time payments will be reported so it helps her credit score.

    Good luck, Miriam

  7. As far as I know, secured credit card doesn’t help to rebuild your credit file, since you will be using your own money (The secured deposit).
    Secured Credit cards are not shown in the credit file. Someone from the bank told me this, so it must be true.
    He said : it’s better get any Credit Card from any store even if the credit limit is for 500$.

  8. Hi Paul, I wouldn’t want to argue with whoever you spoke to at the bank. However, any time you take out credit and a report is sent back to the credit bureau, this will help to rebuild your credit. So, if you have a secured card and pay your bills on-time (i.e. are not going into the secured funds to cover your expenses) this should theoretically be reported back to the bank. If you are able to qualify for a store credit card or any others than this will also help your credit score. Even if you are granted a car loan, a loan for furniture etc, this should all be reported back to the credit bureau.

    I would check with a couple of banks to verify that they don’t report back to the credit bureau. See this link too – http://www.bankrate.com/finance/credit-cards/10-questions-before-getting-a-secured-credit-card-2.aspx#7 – and view #7.

    Thanks & good luck, Miriam

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