Struggling with poor credit in Canada but need to get a credit card? It can seem like a never-ending cycle. However, getting your hands on a credit card for bad credit may just be the solution you need. In this article, we'll explore the best credit cards for bad credit in Canada, breaking down their features and how they can help you rebuild your credit score. Let's dive in!
Credit Cards For Bad Credit In Canada Table of Contents
What are Credit Cards for Bad Credit?
Factors to Consider When Choosing a Credit Card for Bad Credit
What are Credit Cards for Bad Credit?
Credit cards for bad credit, also known as secured credit cards, are designed to help individuals with a poor or limited credit history to build their credit score. These cards require a security deposit, which acts as collateral, to open an account. The credit limit is often set to the amount of this deposit, and as you use the card and make timely payments, your credit score will gradually improve.
Factors to Consider When Choosing a Credit Card for Bad Credit
When looking for the best credit card for bad credit, it's essential to consider the following factors:
- Annual fees: Most secured credit cards will have an annual fee, so compare the fees and choose a card that offers the lowest cost.
- Interest rates: These cards usually come with higher interest rates than regular credit cards. Compare and select the card with the most competitive rate.
- Credit limit: Consider the initial credit limit offered on the card, as this will impact your ability to spend and repay debts.
- Deposit requirement: The security deposit can vary between cards, and a larger deposit can mean a higher credit limit. Make sure you can comfortably provide the required deposit.
- Graduation to unsecured cards: Some cards allow for "graduating" to an unsecured card after you've demonstrated responsible use and improved your credit. Choose a card that offers this option.
Best Credit Cards for Bad Credit in Canada
Now that we've touched on the factors to consider, let's explore some of the best credit cards for bad credit available in Canada:
1. Capital One Guaranteed Secured Mastercard
- Annual fee: $59
- Interest rate: 19.8%
- Credit limit: $300 - $2,500 (based on security deposit)
- Pros: No income requirements, possible credit limit increase without additional deposits, and can help improve credit quickly
2. Home Trust Secured Visa
- Annual fee: $0 (with a higher interest rate of 19.99%) or $59 (with a lower interest rate of 14.9%)
- Interest rate: 14.9% - 19.99%
- Credit limit: $500 - $10,000 (based on security deposit)
- Pros: Flexible options for annual fee and interest rate, high credit limit, and no income requirements
3. Refresh Financial Secured Visa
- Annual fee: $48.95
- Interest rate: 17.99%
- Credit limit: $200 - $10,000 (based on security deposit)
- Pros: Low deposit minimum, no income requirements, and offers credit building program
Credit Cards For Bad Credit In Canada Example:
For example, Sarah has a poor credit score, and she is struggling to find a credit card to help rebuild her credit. She decides to apply for the Home Trust Secured Visa card with a $1,000 security deposit. Over the next year, Sarah uses her credit card responsibly by keeping her balance low and making timely payments every month. As she continues to do this, her credit score gradually improves. Eventually, her responsible use of the card may allow her to graduate to an unsecured credit card and regain control of her financial health.
Now that you know the ins and outs of credit cards for bad credit in Canada, it's time to take action. Choose the card that best suits your needs and start rebuilding your credit score today. Be sure to share this article with your friends and family that might also benefit from these cards. Don't forget to explore other guides on Flik Eco for more life-changing personal finance tips and tricks. Good luck on your credit rebuilding journey!
