Top Credit Cards for Bad Credit In Canada - Unsecured & Secured Credit Card Options
If you have bad credit history, one of the fastest and most effective ways to change that is by using a credit card responsibly. If you make sure to pay the balance on time every month and keep your credit utilization below 30%, you can restore your credit score faster than you might think.
Fortunately, even borrowers with a history of bankruptcy, insolvency, or poor financial behaviour can choose from a number of secured or unsecured credit cards for bad credit in Canada.
Secured vs Unsecured Credit Cards
Secured credit cards operate just like a regular credit card, but you need to provide a deposit to match the size of your credit limit. The credit card company holds your deposit in a savings account and will use it to cover the balance if you default on a monthly payment. An unsecured credit card just means that you don’t need to provide a security deposit, and is the type of ‘normal’ credit card that most consumers are familiar with.
The secured and unsecured credit cards we recommend below permit you to build up your credit score even if you have bad credit.
Summary of Best Credit Cards for Bad Credit in Canada in 2018
|Credit Card||Card Features||Annual Fee||Card Review||Apply for Card|
|Home Trust Secured Visa No Annual Fee||No credit check|
|$0||Read More||Apply Now|
|No-Fee Scotiabank Value Visa||No credit history|
Limit: $500-upon request
|$0||Read More||Apply Now|
|Refresh Financial Secured Visa||No credit check|
|$48.95||Read More||Apply Now|
|RBC Visa Classic Low Rate card||No specific credit score range|
|$20||Read More||Apply Now|
Top No Annual Fee Secured Credit Card for Bad Credit in Canada
Though applying for one of the Home Trust Secured cards does involve a credit check, most applicants are approved. Once approved, you can use it like any other credit card, and Home Trust will report your payments to both Equifax and TransUnion, helping you re-establish your credit. The card’s key features are:
- Standard interest rate of 19.99%
- $0 annual fee
- Credit limit is set at the size of your security deposit, beginning from $500 and up to a maximum of $10,000
The card comes with a standard 21-day grace period on all new purchases before you’ll be charged interest, so you can avoid paying the slightly higher interest rate as long as you pay off your balance within that time frame.
Foreign transactions incur a 2% fee, and cash advances are charged a minimum of $2.50, depending on the amount you withdraw at once. The Home Trust Secured Visa No Annual Fee does permit users to go over their credit limit, but you’ll be charged $29 each time this happens.
Top No Annual Fee Unsecured Credit Card for Bad Credit in Canada
No-Fee Scotiabank Value Visa
Obviously, the first reason to get the No-Fee Scotiabank Value Visa is that there is no annual fee. But the card offers more than just its free access. The Visa’s other fees are relatively low, with $3.50 charged for cash advances at any ABM in Canada, $48 for every dishonoured payment, and $29 if you exceed your credit limit. Other key features include:
- 16.99% purchase interest rate – relatively low for an unsecured credit card for borrowers with bad credit
- $0 annual fee
- Minimum credit limit of $500, but Scotiabank invites you to request raising your credit limit whenever you’d like.
Other benefits of using the No-Fee Scotiabank Value Visa are contactless Visa payWave payments, a discount of up to 20% on Avis car rentals nationwide, and the option to add a supplementary card user. Scotiabank allows the standard 21-day grace period after every new purchase. During this time you won’t be charged any interest.
Though this is an unsecured credit card, those without credit history can still apply, making the card ideal for anyone with bad or no credit as long as they haven’t declared bankruptcy within the past seven years.
Top Low-Interest Secured Credit Card for Bad Credit in Canada
Refresh Financial Secured Visa
The Refresh Financial Secured Visa is a rare credit card in Canada that guarantees every application will be successful, as long as the applicant makes the minimum deposit. There’s no credit check before approval, so even if you have a bankruptcy or foreclosure in your financial history, you can still get this card. Other key features include:
- Interest rate of 17.99%
- Annual fee $12.95 if you pay it annually, $3 every month if you choose to pay monthly
- Minimum deposit just $200, up to a maximum of $10,000
Refresh Financial Secured Visa has a 21-day interest-free grace period on all new purchases. Aside from having a low annual fee, its other fees are also low—only $0.10 if your transaction is declined and $0.50 to pay a bill. You’ll be charged $5 for every ATM cash advance in Canada and $5 the first time you go over your credit limit. The penalty for going over your credit limit a second time, however, is severe: your card will be cancelled. It’s also important to point out that Refresh Financial Secured Visa does charge $2 every month that you don’t use the card, so it’s only a good choice for cardholders who are going to use it regularly.
The Refresh Financial Secured Visa is a guaranteed credit card that won’t charge sky-high interest rates. It’s ideal for everyone with no credit history, bad credit history, and/or recent bankruptcies.
Top Low-Interest Unsecured Credit Card for Bad Credit in Canada
RBC Visa Classic Low Rate card
The stand-out advantage to the RBC Visa Classic Low Rate credit card is the extremely low interest rate if offers: only 11.99% on both purchases and cash advances. Plus the annual fee is very low (though not ‘0’ low). The card’s key features are:
- $20 annual fee
- 11.99% purchase interest rate
- No fee for additional cards
While the RBC Visa Classic Low Rate card doesn’t guarantee acceptance for applicants with low credit scores, it stands out from other card application processes in that it (supposedly) doesn’t have a set minimum credit score for applicants that it will approve. RBC claims that it considers applicants’ overall credit history, savings, and debt to income ratio as part of a holistic assessment of your financial standing. All that’s required for you to apply is to be a permanent resident of Canada and to have no current bankruptcies.
RBC Visa Classic Low Rate works with a sliding scale interest rate, with the lowest rate of 11.99% offered to applicants with higher credit scores. The rate you’re offered could be as high as 19.99%, which is less attractive.
Along with (potentially) low interest rates, a low annual fee, and no charge at all for supplementary cardholders, the RBC Visa Classic Low Rate card includes purchase protection and zero fraud liability as well as a discount of 3 cents per litre of fuel and a 20% extra Petro-Points bonus when you use this card to buy gas at Petro-Canada.
Strategies To Get Credit Cards for Bad Credit
If you’re hunting for a credit card in the noble pursuit of improving your credit, remember these two key ideas:
Get an Unsecured Credit Card if Possible
We really recommend that you first try for an unsecured card. The application process is simpler, you won’t risk losing your security deposit, and you won’t tie up your money in a security deposit.
But don’t apply for every credit card under the sun – doing so will further lower your credit score. If you’re in bankruptcy, consumer proposal, or on a debt repayment plan, an unsecured card designated specifically for those with bad credit might be the only realistic unsecured card option you have.
Get a Secured Credit Card but Don’t Pay a High Annual Fee, and Don’t Keep It Forever
If you can’t qualify for an unsecured credit card for bad credit, there are nonetheless advantages to getting a secured credit card instead.
- Rebuild your credit score
- Access the convenience of paying through Mastercard and Visa
We recommend getting one without an annual fee or with a low annual fee. Once you’ve re-established your credit enough to qualify for an unsecured card, you can cancel your secured credit card and move up to a card for those with fair or average credit, which will be more substantive and offer some cash back and rewards.
And, remember; make all of your payments on time. In fact, you should set-up all your credit cards for pre-authorized payments, so you’re never late!