Canada’s best credit cards for people with bad credit 2021
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. But if you want to improve your credit score, you’ll have to show you can handle credit responsibly—and the only way to do that is (you guessed it) to have a credit card. When used properly, having and using a credit card can actually be a helpful tool to assist in rebuilding bad credit—and, luckily, there is a whole host of products catered to people with poor credit scores. While these often come with higher interest rates and lower spending limits, they can be a good starting point to re-establishing a good credit score, which in turn will help you get approved for loans, a line of credit, or even a mortgage down the line.
Card | Details | Annual fee |
---|---|---|
Home Trust Secured Visa (No Fee) (get more details)* |
|
$0 |
Home Trust Secured Visa (get more details)* |
|
$59 |
Plastk Secured Visa (get more details)* |
|
$120* |
Capital One Low Rate Gold Mastercard (get more details) |
|
$79 |
Refresh Secured Visa (get more details)* |
|
$49 |
*The Plastk Secured Visa has a $48 annual fee and a $6 monthly maintenance fee.
Sure, your credit history will limit you in what card you are approved for, but that’s not to say you don’t have any choices. In fact, using credit to rebuild your credit score, you’ll need to choose between a secured and unsecured credit card. A secured credit card is one that’s 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.
That said, 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 Home Trust Secured Visa stands out because it’s a secured credit card with no annual fee (a nice bonus when getting a new card). To open an account, you need to make a $500 deposit. And while the interest rate is standard at 19.99%, this won’t kick in unless you carry a balance—and if you’re looking to build your credit, you should aim for that not to happen. As with other secured credit cards, you can improve your credit score by making payments on time, and preferably in full. Note: If you don’t use your card at least once a year, there is a $12 inactivity fee. So make to charge at least one purchase to the card annually.
Note: This card is not available to residents of Quebec.
Get more details about the Home Trust Secured Visa (no fee)*
Note: This card is not available to residents of Quebec.
Get more details about the Home Trust Secured (low interest)*
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. Still, the ability to earn anything with this type of card is a big draw. 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 Plastk Secured Visa gets you started with a welcome bonus of 5,000 points (worth $20) plus 0% APR for your first three months. (APR is the annual percentage rate, which includes the interest and fees.)
Another reason to slide this in 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. As a Visa card, it is widely accepted.
There is no minimum income requirement. Instead, to use the Plastk Secured Visa you’ll have to make a security deposit of $300 to $1,000. Also note, there is 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.
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 14.9% interest rate and access to a few perks including price protection, travel benefits and insurance.
If you don’t qualify for the unsecured Capital One Low Rate Gold, Capital One will still approve you for their alternative secured product, the Capital One Guaranteed Secured Mastercard. It 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 on the list 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—it offers further tools for those with bad credit 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 you know to sign up for the card, which isn’t going to dig you out of debt on its own but is a nice incentive.
Credit card | Annual fee | Best | |
---|---|---|---|
1 | Home Trust Secured Visa | $0 | Secured card with no annual fee |
2 | Plastk Secured Visa Card | $48 | Secured card with rewards |
3 | Home Trust Secured Annual Fee Visa | $59 | Secured card for low interest |
4 | Capital One Low Rate Gold Mastercard | $79 | Unsecured card for bad credit |
5 | No-Fee Scotiabank Value Visa | $0 | No fee unsecured card for bad credit |
6 | Refresh Secured Visa | $48.95 | Honorable mention |
Once you’ve chosen a card from above, it’s time to think about rebuilding your credit score. Remember that as time passes and you use your credit responsibly, the credit bureau will automatically adjust your score. Here are some other rules to keep in mind:
If you’re struggling under the burden of a bad credit score, finding an appropriate credit card can be a strong first step. With consistent and responsible use, you can rebuild up your reputation and, over time, access the financial benefits you need.
If you’re a newcomer to Canada, unfortunately your credit score from your home country won’t follow you here. While your credit card choices may be more limited, this also means you can start building a new score from scratch which, for some, can be a positive. One way 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, bank account, 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.