Canada’s best credit cards for people with bad credit 2022
If you want to improve your credit score you’ll have to show you can handle credit responsibly—and, used properly, the right credit card can assist in rebuilding bad credit.
If you want to improve your credit score you’ll have to show you can handle credit responsibly—and, used properly, the right credit card can assist in rebuilding bad credit.
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Conventional wisdom may lead you to believe that if you have bad credit, you should swear off credit cards. However, if you want to improve your credit score, you’ll have to prove you can handle credit responsibly—and one way to do that is (you guessed it) to have a credit card. When used responsibly, having and using a credit card can actually be a helpful tool to assist in rebuilding bad credit. While a low credit score might limit which credit card you can qualify for, luckily, there are a whole host of products catered to people with this issue. While these often come with higher interest rates and lower spending limits, they can be a good starting point to re-establishing a respectable credit score, which in turn will help you get approved down the line for loans, a line of credit or even a mortgage. Some of these cards even earn you rewards, too.
Card | Details | Annual fee |
---|---|---|
Plastk Secured Visa (get more details)* |
|
$120* |
Neo Secured Card (get more details) * |
|
$0 |
Home Trust Secured Visa (get more details)* |
|
$59 |
Capital One Low Rate Gold Mastercard (get more details) |
|
$79 |
Refresh Secured Visa (get more details)* |
|
$49 |
BMO Air Miles Mastercard for students |
|
$0 |
Koho Premium Visa |
|
$84 |
Scotiabank Momentum No-Fee Visa |
|
$0 |
*The Plastk Secured Visa has a $48 annual fee and a $6 monthly maintenance fee.
Sure, a poor credit history will limit the cards available to you, but that’s not to say you don’t have much choice. For starters, when using a credit card to rebuild your credit score, you’ll first need to choose between a secured and an unsecured card. A secured credit card is offered on the condition that you “secure” it with collateral, usually in the form of a refundable deposit that can be claimed by the lender if you default on your payments. These cards are marketed directly to those with bad credit, so they have an easier approval process and come with no frills. And lenders report back your activity to the credit bureau, which builds up your score as you continue to repay responsibly. A prepaid card is a type of credit card where the credit limit is directly based on the holder’s deposit.
Alternately, while not generally available to those with bad credit, unsecured cards are occasionally offered to consumers with “fair” credit scores—generally in the 600 to 650 range. As the name suggests, an unsecured card doesn’t require a deposit. Plus, unlike secured cards, many unsecured credit cards offer rewards (think points or cash back, which is a nice perk, isn’t it?). That said, they can command tougher approval requirements than unsecured cards. And like all contracts, it’s always a good idea to read the fine print when selecting your card.
The Plastk secured Visa offers users with poor credit a little bit of everything: rewards and welcome bonus, credit tracking features and a below-average interest rate. The earn rate is modest—1 point per $1 spent—and you’ll need 250 points for $1 in cash back, making 1 point worth about $0.04. In addition to using them for cash back, you can redeem your points for merchandise, travel and hotel rewards, or gift cards. And you won’t be starting from scratch: the card comes with a welcome bonus of 5,000 points (worth $20) plus 0% APR for your first three months. More reasons to slide this into your wallet: The Plastk card offers a slightly-below-average interest rate of 17.99%; there’s an easy payment system with Interac e-Transfer; and you get monthly updates of your credit score, so you can track your progress. and because it’s a Visa card, it’s widely accepted. There is no minimum income requirement. Instead, to use the card, you’ll have to make a security deposit of $300 to $1,000. (Also note, there’s a $48 annual fee.)
It’s encouraging to see a rewards card aimed at those with poor credit. That said, it’s important to resist overspending to earn rewards. Everyone, regardless of credit rating, should be mindful of spending within their means and aim to pay off their balance in full each month.
Get more details about the Plastk Secured Visa Credit Card *
•Annual Fee: $0
•Interest rate: 19.99%-24.99% on purchases
•Min. Deposit: $50
Get more details about the Neo Secured Card *
Normally, this card has a standard 19.99% interest rate, but when you opt into the $59 fee, it goes down to 14.90%—a big difference if you’re carrying a balance. You can use this card with a minimum deposit of $500 and the limit on the card corresponds to the deposit amount. If you need a higher credit limit, you can deposit more—up to $10,000. You also have the option of paying the annual fee in a lump sum or in installments. Be aware, though, that the card carries a $12 inactivity fee for accounts unused for a year. Note: This card is not available to residents of Quebec.
Min. Deposit: $300
Get more details about the Home Trust Secured Visa*
The Capital One Low Rate Gold Mastercard is a solid choice for people with a low credit score. For a fee of $79 per year, cardholders get an eyebrow-raising competitive interest rate of 14.9%, and access to perks including price protection, travel benefits and insurance. Plus, if you don’t qualify for the unsecured Capital One Low Rate Gold, Capital One will still approve you for its alternative secured product, the Capital One Guaranteed Secured Mastercard. This makes for a good fail-safe, and helps people access a credit card with a security deposit as low as $75 and a $59 annual fee.
The Refresh Secured Visa is in line with the other cards on this list in terms of its interest rate (17.99%), but it earns its place here for two distinct reasons. First, you’re guaranteed to be approved without a credit check, which means you can avoid a hit to your credit score. Second, with its Financial Intelligence Training—a free online educational program—those with bad credit can access tools to improve their financial picture. (Who couldn’t benefit from learning more about finance?) As an added bonus, you can earn $100 each time you refer someone to sign up for the card—which isn’t going to dig you out of debt on its own, but it’s a nice incentive.
Min. Deposit: $200
Get more details about the Refresh Secured Visa*
•Min. Deposit: None
The KOHO Premium Prepaid Visa is designed to keep you on track with all of your finances, since it offers free financial coaching and handy budgeting tools. It’s also makes seperating your spending money easier, since you simply load your card with the amount you want to spend and go. It still offers rewards that compare to regular credit cards, like 2% cash back on three spending categories of your choice, meaning you could earn 2% back on your groceries, transportation, or dining out. While this card won’t help you build your credit score, it gives you the perks and convenience of using a credit card without the risk of overspending. And if you do want to repair your score, you can use their credit building feature.
•Min. Deposit: None
Having a credit card and using it responsibly are pretty powerful ways to repair your credit history and credit score. But you’ll have to be strategic with the card you choose to apply for. Expect to qualify for cards with fewer perks than the popular credit cards available, as well as less favourable terms or even cards that require a deposit. Once you begin establishing your creditworthiness, you can upgrade to a card with better rewards and terms.
There are several ways to go about getting a credit card if you have bad credit.
Search for credit cards, personal loans. Once you’ve researched which cards you might qualify for… wait. Every application you send in will affect your credit score, so you want to be thoughtful about when and how you apply. Compare your options, paying close attention to fees, interest rates, repayment terms and available perks. When you’ve made your prioritized list, it’s time to submit your first application. And be completely honest with your application. Wait for the response before moving down your list. Most creditors have a very quick turnaround so it’s not worth making multiple submissions to only jeopardize your credit score.
Your credit score is expressed as a number, generally between 300 and 900, that represents how credit-worthy you are. Meaning: How much of a risk you could pose to lenders or creditors to not pay money back. Your score is affected by all sorts of variables including the amount of debt you carry, whether you repay in full and on time, and even how long your credit history is. The higher your credit score, the better.
Category
Range
Poor
300 to 659
Good
660 to 724
Very Good
725 to 759
Excellent
760 to 900
Credit scoring models do differ, so each institution can have its own metrics for what scores of “good” and “bad” are. But generally, a credit score of 760 and over is considered “excellent.” Scores between 660 and 759 are “good” or “very good.” And most lenders will accept the risk associated with these borrowers. If your credit score is below 660, you may have trouble finding a creditor—or if you do, the terms may not be optimal.
Just as your financial habits created your credit score, so they can improve it. Here are the five variables that most affect your credit score, with the most impactful first.
Unfortunately, if you’re a newcomer to Canada, your credit score from your home country won’t follow you here. As a result, your credit card choices may be more limited, but this also means you can start building a new score from scratch—which, for some, can be a positive. One approach is to use a secured card to help you get started, with the goal of graduating to a better, unsecured card.
Another way to build your Canadian credit score might be through a program for newcomers at one of the banks. For example, Scotiabank’s StartRight program is designed specifically for newcomers to Canada, providing access to credit, a savings account, no-fee international money transfers, and help from the bank’s financial advisors. Similarly, BMO’s NewStart Program can issue you a credit card, a bank account, a safety deposit box, and even mortgage options.
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i like it
i like this card because good
I am looking for a secured credit card that includes insurance for car rentals.
Have bad creditscore looking for credit card
Plastk is not setup for credit bureau reporting. So if you’re looking to improve your credit with a Plastk secured credit card you need to explore other options. Seeing as this has been established in 2019 and it’s now July 2021 there’s no telling how long they’ve been telling customers that credit bureau reporting will start soon. (See below)
————————————————
Hi Robert,
Thank you for contacting Plastk! Thank you for contacting Plastk! At this time, we have sent all our customer files over to Equifax and are in the final stages of implementation. We know you have been waiting patiently and it has been a long time coming, but we are almost there as our customer credit files are now with Equifax. We’re just asking that our customers please give us a little more time to be able to get the reporting live so all your credit history with Plastk will hit your credit report.
We will be reporting to both Equifax and Transunion.
Once reporting commences it will be monthly reporting.
Hope this helps!
Vivien
Client Success Team
Call:1-855-485-0102
Email: [email protected]