If you have bad credit, it may seem like you'll never qualify for a credit card in Canada. However, there's hope! There are credit cards designed specifically for people with bad credit, so you don't have to miss out on the benefits of having a card. Not only can these cards help you establish credit, but they can also provide a more secure way of carrying cash and create convenience when shopping online. In this comprehensive guide, we at Flik Eco will walk you through the best options for credit cards in Canada for individuals with bad credit so you can make an informed decision that fits your needs.
Credit Cards Canada For Bad Credit Table of Contents
Why consider a Credit Card for Bad Credit?
Bad credit may hinder your chances of getting a conventional credit card, but credit-building cards exist to help those in such situations. These credit cards typically have lower credit limits and higher interest rates, which discourage spending beyond your means. By utilizing these cards responsibly, you can improve your credit score, build your credit history, and qualify for better financial products in the future.
Secured Credit Cards for Bad Credit
Secured credit cards are the most common option for those with bad credit. These cards require a security deposit, which serves as collateral in case you default on your payments. The credit limit on a secured credit card is typically equal to the amount of the security deposit, minimizing the risk for the card issuer.
Home Trust Secured Visa
- Annual fee: $0 or $59, depending on the version of the card
- Interest rate: 19.99% or 14.9%
- Minimum deposit: $500
The Home Trust Secured Visa comes in two versions: a no-annual-fee card with a 19.99% interest rate and an annual-fee card with a 14.9% interest rate. Both cards require a minimum deposit of $500, and your credit limit will be equal to the security deposit. This card requires no credit checks, making it a great option for those with bad credit.
Refresh Financial Secured Visa
- Annual fee: $48.95
- Interest rate: 17.99%
- Minimum deposit: $200
The Refresh Financial Secured Visa offers a lower interest rate of 17.99% and requires a minimum deposit of $200. The annual fee is slightly higher than the Home Trust Secured Visa, but the lower interest rate may make it worth considering, depending on your financial situation.
Guaranteed Approval Credit Cards for Bad Credit
Guaranteed approval credit cards are another option for those with bad credit. These cards do not require a security deposit, and approval is guaranteed as long as you meet the basic requirements such as being of legal age and having a Canadian address. However, guaranteed approval cards often come with higher fees and interest rates.
Capital One Guaranteed Mastercard
- Annual fee: $59
- Interest rate: 19.8%
- Guaranteed approval as long as you meet basic requirements
The Capital One Guaranteed Mastercard requires no security deposit and has an annual fee of $59. With an interest rate of 19.8%, this card may be a suitable option for those looking to start building credit without the need for collateral.
Credit Cards Canada For Bad Credit Example:
Imagine you have bad credit, and you apply for the Home Trust Secured Visa with no annual fee. You provide a $500 security deposit, which becomes your credit limit. You use the card to make small purchases, such as groceries or gas, and pay off the balance in full each month. This demonstrates responsible usage, and over time, your credit score begins to improve. After a year or two, you may be eligible for an unsecured credit card with better terms and conditions, allowing you to continue your credit-building journey.
Now you know that having bad credit doesn't mean you can't access credit card benefits in Canada. Choose the right card for your situation, whether it's a secured card or a guaranteed approval card, and start building your credit history and improving your financial standing. Remember, responsible spending and timely payments are key to turning your credit situation around. Share this article with others who may be struggling with bad credit, and explore more valuable guides and tips on personal finance from Flik Eco.