Credit cards for bad credit are available to borrowers with a history of bankruptcies, late or missed payments, defaults, foreclosures, and low credit scores. Some people don’t even know they have poor credit and only come to understand the situation they are in when they apply for a loan, mortgage, or credit card. In fact, data by Simple Rate shows that just 14 percent of Canadians check their score once a year and 56 percent have never checked it. The good news is that virtually all cards can help build or rebuild credit when used responsibly. To help you out, let’s take a look at some of the best bad credit cards in Canada to get your finances back on track.
Instant Approval Credit Cards
Instant approval cards are available to people with poor and fair credit. You can apply online and will receive a decision within a couple of minutes. Applications are denied or approved quickly and if you are approved, you can expect to receive your card, along with the terms and conditions, within 5 – 7 days. One example of such card is the Guaranteed MasterCard by Capital One which reports all activity to the major bureaus and offers travel and everyday benefits such as baggage delay and car rental collision insurance and price protection.
Guaranteed Approval Credit Cards
As the name suggests, guaranteed approval cards have minimal requirements to get approved. Most issuers only require that you show proof of income, have an active checking account, and make a security deposit. You can expect to get approved without a credit check and gain access to a limited amount of credit which is usually equal to the deposit made. Like standard credit cards, guaranteed cards have an annual fee and interest rate which applies to balances that are not paid off within the interest-free period.
Secured Credit Cards
Secured credit cards work much like standard ones in that they allow you to make in-store and online purchases, pay utility bills, or book a vacation. They also come with an interest rate, annual fee, and some of the perks that regular cards offer. The main difference between both options is that you need to make a deposit to qualify for a secured credit card. The deposit is a safeguard for your financial institution in case that you become delinquent on your payments. You should always try to make timely payments, however, whether using a secured or unsecured card. Default will affect both your credit score and your standing with the issuer. Making timely payments, on the other hand, is the best way to improve your credit score. Two Canadian cards to look into and get a credit boost are the Refresh Financial and Home Trust Secured Credit Card.
This secured card offered by Refresh Financial is an affordable solution that almost anyone can get. Virtually everyone gets approved, even borrowers with a low income and poor credit. There is no credit check. To qualify, you have to be of the age of majority and live in a territory or province where Refresh Financial offers this card. Your application will be rejected if you applied for an account or card two or more times over the last 30 days. Additionally, all customers need to make a security deposit of at least $200. The maximum deposit is $10,000. *This card has been discontinued!
- Maintenance fee: $3 per month
- Annual fee: $12.95
- Interest rate: $12.95
Neo Secured Credit Card
If you are looking for a secured credit card on a budget, Neo Financial has you covered. Their card has no monthly or annual fees and the lack of a hard credit check means that anyone can qualify for this card. Approval is guaranteed and instant with Neo so that you can start building or repairing your credit immediately. The security deposit is a minimal $50, following Neo’s principle of making financial wellbeing accessible. On top of all this, Neo makes it possible for you to earn an average 5% unlimited cashback at their many partners. You can get up to 15% on your first purchase with Neo’s participating partners and a 1% cashback across all purchases is guaranteed.
- Rewards: 1% minimum cashback, average 5% cashback at partners
- Annual fee: $0
- Interest rate: 19.99%-24.99%
Home Trust Secured Credit Card
If you are looking to build or rebuild credit, this secured card by Home Trust may be for you as your transactions will be reported to the major bureaus. Once you improve your credit profile, you may be eligible for an upgrade to an unsecured card. To qualify for the secured option, you need to make a minimum security deposit of $500 which will be equal to your credit limit. In addition to offering customers the flexibility to set their own limit, Home Trust features added benefits such as purchase security, guaranteed approval, and a choice of a low interest or no annual fee card.
- Annual fee: $59; interest rate: 14.90 percent
- Annual fee: none; interest rate: 19.99 percent
- Credit limit: $500 – $10,000
To apply for Home Trust’s secured Visa, you need to be of legal age, a Canadian resident, and currently not in bankruptcy. Residents of Quebec cannot apply for this card. If you reside elsewhere in Canada, you should simply fill in the online application and send your deposit. It can take between 2 and 4 weeks to receive a decision on whether you are approved.
It is soooo difficult to get out of bad credit. Improving your credit score is not something that can be done quickly…
Alison, I think you can improve your credit score rather quickly with a secured credit card. I’m in the process of applying for one and actually doing some research now, and it looks like credit score improvements start in a few months of good repayment history.
I agree with Jem, that secured credit card is the way to go. You can get one from HomeTrust or Capital One.
Has anyone tried Refresh? Thanks.
Did they get bought by Borrowell? Are they still offering their secured card?
Hi John, Borrowell acquired Refresh Financial but they still offer their secured card:
Yep! They have easy approval process.