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Credit card details are up to date as of May 1st, 2019. For the most accurate and up to date information, visit the issuer's website.
In case you didn’t know, every Canadian has a credit score assigned to them that falls between 300 and 900. The higher your number, the better your credit score. Having a good credit score is important if you ever want to get a credit card or a loan in the future. Generally speaking, if your credit score is at 660 or above, you won’t have any issues getting approved for more credit. However, once your credit score falls below 650, then that’s where you may start getting denied. Keep in mind that your credit score can affect anything from financing a vehicle to renting an apartment, so it’s in your best interest to increase your credit score by using one of the best credit cards for bad credit.
Should You Carry a Credit Card If You Have Bad Credit?
Many people wonder if you should carry a credit card if you have bad credit. It’s a legit question since abusing your previous credit cards may have been the reason why you ended up with debt and a bad credit score to begin with. It’s best to abandon all credit cards and go cash, right?
Well, you could do that, but the problem is, you won’t improve your credit score by using cash. The credit monitoring agencies, Equifax and Transunion, can only determine your credit score based on how you use your credit. If you have a bad credit score now and stop using credit cards, then your credit score would never change.
The good news is that there are credit cards designed to help you improve your credit score. It won’t come with any points or many benefits, but your credit score will increase if you use these cards responsibly.
Best Credit Cards for Bad Credit in Canada 2019
|Credit Card||Type||Card Features||Annual Fee||More Info|
|No-Fee Scotiabank Value® VISA* Card||Unsecured||$500 minimum credit limit, rental car discounts, 3.99% APR for 6 months, 16.99% APR after||$0||Learn More|
|RBC Visa Classic Low Rate card||Unsecured||Fuel savings at Petro Canada, extended warranty insurance, 11.99% APR||$20||Learn More|
|The Capital One® Low Rate Guaranteed Mastercard||Unsecured||Guaranteed approval, $300-$7,000 credit limit, 14.9% APR||$79||Learn More|
|Home Trust Secured No Fee Visa||Secured||High approval rate, 19.99% APR||$0||Learn More|
|Capital One® Guaranteed Secured Mastercard||Secured||Guaranteed approval, $300-$2,500 credit limit, 19.8% APR||$59||Learn More|
The Best Unsecured Credit Cards for Bad Credit in Canada
When choosing the best credit cards for bad credit, it really comes down to two types of cards: secured and unsecured cards.
With a secured credit card, you need to deposit security funds to your account. Since you have bad credit, credit card providers require these funds to show that you’re serious about improving your credit. Generally speaking, the amount you deposit typically corresponds with the credit limit you’re given. You can’t use those funds to pay down your balance, but they will be returned to you if you close your account.
Unsecured credit cards are similar to regular credit cards in the sense that no collateral is required for you to use the card. Once approved, the credit card provider will assign you a credit limit that they believe is appropriate for your credit score. That limit may be low, to begin with, but you may qualify for an increased amount later.
There are quite a few different unsecured and secured credit cards, but we’ve narrowed down the list to help you decide which card is best for you.
Best No Annual Fee Unsecured Credit Card for Bad Credit in Canada
No-Fee Scotiabank Value® VISA* Card
Rebuilding your credit can be tricky – which is why you want a no annual fee, unsecured credit card such as the No-Fee Scotiabank Value® VISA* Card. Besides no annual fee, what makes this card popular is the balance transfer option which comes with a promotional interest rate of 3.99%. This is a great way to reduce what you’re paying with any of your other credit cards, but note that the APR does go up to 16.99% after six months.
Interesting enough, the card does come with some additional benefits. Cardholders will get up to 20% off at participating AVIS locations worldwide. You can also request a supplementary card at no extra cost. As long as you haven’t declared bankruptcy in the last seven years, you’ll likely be approved for this card.
Best Low-Interest Unsecured Credit Card for Bad Credit in Canada
RBC Visa Classic Low Rate Card
If you know you’re going to be carrying a balance, you should apply for the RBC Visa Classic Low Rate Card since it has an interest rate of 11.99%. This rate is lower than all the other unsecured and secured credit cards on our list but note that 11.99% is still a fair amount of interest to be paying. More importantly, if you’re carrying a balance, you could run into cash flow issues if an emergency arises – which is why it’s recommended to always pay off your bill in full every month.
With RBC, you may not qualify for the card if you have a low credit score, but they claim to look at your overall financial picture (e.g. your savings, income to debt ratio and more) when deciding on whether to approve you for the card or not. If you are approved, you get benefits like purchase protection, zero fraud liability, and 3¢ off each litre of gas at Petro-Canada gas stations.
Top Guaranteed Approval Unsecured Credit Card for Bad Credit in Canada
The Capital One® Low Rate Guaranteed Mastercard®
Capital One has always strived to help Canadians improve their credit score, which is why the Capital One® Low Rate Guaranteed Mastercard® is such a popular option. As the name implies, you’re guaranteed to be approved as long as:
- You can provide $75-$300 in security funds
- Be at least the age of majority in your province or territory of residence
- Not applied for another Capital One product more than once in the 30 days before your Capital One Low Rate Guaranteed Mastercard application
- Not had an existing account in the last year
Once approved, Capital One will let you know how much you need to deposit in security funds and they’ll assign you a credit limit. As you make your payments on time, Capital One will report that to a credit bureau. If your account is in good standing, your credit score will slowly increase.
Click here to apply for the Capital One® Low Rate Guaranteed Mastercard®.
Top No Fee Guaranteed Approval Secured Credit Card for Bad Credit in Canada
Home Trust Secured No Fee Visa
If you don’t qualify for any of the unsecured cards or the Capital One Low Rate Guaranteed Mastercard, then the Home Trust Secured No Fee Visa may be your last choice. This isn’t a bad thing, as this card typically has a high approval rating.
Since this is a secured card, you do need to deposit some funds to be able to use it. The good news is that your credit limit can range anywhere from $5,000 to $10,000 so this could be a good option for you if you plan on making a large purchase in the near future.
Best Overall Secured Credit Card for Bad Credit in Canada
Capital One® Guaranteed Secured Mastercard®
The Capital One® Guaranteed Secured Mastercard® is the best overall secured credit card because of its brand. As mentioned, Capital One has always made it a point to help Canadians with their credit and this card is designed for people with lower credit scores.
Assuming you meet the conditions, you’re guaranteed to be approved. As you increase your security funds with this card, your credit limit will increase too. This is a great way to help you become more comfortable with how you use your credit card.
Guaranteed Approval Credit Cards for Bad Credit
As you may have figured out by now, “guaranteed” can be a bit of a loose term. Credit card providers typically still have some criteria that you must meet. Although those conditions are easy to meet, one small thing could mean your application is denied.
You could try applying with other credit card providers, as every one of them looks at your creditworthiness with their own eyes. But don’t stress, you should be approved for at least one secured credit card.
If you’re not approved, you could still get a credit card such as KOHO, which is a prepaid card. Basically, you can only use what you’ve deposited on your card with KOHO. Since KOHO acts more like a debit card, your credit score won’t increase, but you will at least have access to the Visa network so you can make online purchases or wherever Visa is accepted.
Applying for a Credit Card with a Bad Credit
If you’re ready to apply for a credit card and you know you have bad credit, start with one of the unsecured cards we have listed. These cards are designed for people who have lower credit scores so don’t bother trying to apply for a credit card that gives you a big welcome bonus. Remember, your goal here is to improve your credit score.
Now let’s say you’re not approved for any unsecured cards. It’s time to turn your attention to a secured credit card. These types of credit cards have a much higher approval record, but there are still a few things you should look out for. The most important thing is arguably the annual fee since you want to keep your costs down, but don’t ignore the interest rate, especially if you know you’re going to carry a balance.
You may not have a ton of options when it comes to secured and unsecured credit cards for bad credit, but at least you’ll likely be approved for a card. Once you’ve increased your credit score, consider applying for one of the best credit cards in Canada that offers more benefits.
The Best Credit Cards by Category:
- The Best Travel Rewards Credit Cards in Canada
- The Best Credit Cards in Canada
- The Best Low-Interest Rate Credit Cards in Canada
- The Best Balance Transfer Credit Cards in Canada
- The Best Cash Back Credit Cards in Canada