Best Credit Cards in Canada

It’s tricky to access a new credit line when your credit history is poor, but it can be done. And, in fact, it needs to be done if you are to rebuild your credit score. A good score is important if you ever plan to seek funding for a house or a new car.

In this article we talk about the various types of credit available for people with bad credit in Canada, as well as detail a few specific products that you can apply for. There are a few different types of credit card available for people with bad credit.

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Secured Credit Cards

Secured cards are relatively easy to get because you are asked to make a down payment to minimize risk on the part of the financial institution. You will still pay a monthly bill while the prepaid amount is held in the case of your default. Only when you close the account do you receive your down payment back.

The limit on a secured card can range from $200 all the way up to $5,000 and the required down payment varies, too. Secured cards often come with an annual fee of $10-$30.

Low Interest Credit Cards

Low interest cards can be found backed by major banks, credit unions, and online lenders. They offer low interest rates but also low credit lines from $500-$1,000. This is actually great for people who are trying to rebuild their credit by charging only as much as they can pay back in full each month.

With that strategy, you don’t need a huge credit line. However, before you choose a low interest credit card, be sure to ask if payments are reported to the credit monitoring bureaus TransUnion and Equifax on a regular basis. If not, you won’t really be building better credit.

Store Credit Cards

Credit cards linked to a particular store are another good way to rebuild credit and get some perks in the process. As long as the store is one you will regularly shop in anyway, you benefit from discounts, sales, and coupons offered by the store that are not always available to everyone.

You may also find that store cards offer an interest-free period during which to pay off your bill with no added fees. However, if you don’t pay the balance within the promotional period, store cards often charge steeper than average interest rates on the balance.

Prepaid cards

If you are striking out with other types of cards but still need one in order to buy things online or pay certain bills, there are prepaid cards available. They work much like a debit card and draw upon funds you have pre-loaded when you make a purchase. There is no monthly bill to pay.

You can generally reload a prepaid card in person at the store or online by transferring funds from another account. But as long as you have a bank account and an associated debit card, there is little need to use a prepaid card. There can be fees associated with it and it doesn’t build your credit.

Transactions made with a prepaid card aren’t reported to the major credit monitoring agencies.

Credit Card Products to Try

The following cards are solid options for people with bad credit.

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No-Fee Scotiabank Value® Visa Card

From the Bank of Nova Scotia comes the No-Fee Scotiabank Value Visa Card with a great introductory interest rate of 3.99%. This applies to balance transfers, which allows you to transfer the balance from a card with a higher rate and bring your debt down more quickly.

Additional benefits of the No-Fee Scotiabank Value Visa Card include card protection, itemized transactions, car rental discounts, and supplementary cards if needed. The annual fee is zero and your credit limit will be $500 or more.

Note that the interest rate goes up steeply to 16.99% after the introductory period expires.

Refresh Financial Secured Visa Credit Card

This secured card from Refresh Financial is relatively new on the scene and is specifically targeted for people with low or no credit. There is no credit check required to receive it. However, there is an annual fee of $12.95.

Credit limits are based on income and range from $200 all the way up to $10,000. Required deposits will vary based on your credit limit. The interest rate is 17.99%.

Refresh offers a couple of nice features with this card. One is that you can receive a $100 referral bonus for everyone you introduce to the company who ultimately signs up for the card.

BMO® Preferred Rate MasterCard®

The BMO Preferred Rate MasterCard is available for people with bad credit but not for those with bankruptcies within the past 7 years. To apply, you’ll need to provide employment and income information.

There is a 17.5% interest rate but also a 21 day interest-free period. Some people may qualify for a special offer of 11.9% interest based on their income and credit history.

Some extras offered by the BMO Mastercard include travel benefits, roadside assistance, purchase protection, and trip cancellation coverage.

TD Emerald Visa Card

The TD Emerald Visa Card is a good choice for families who wish to share a credit card account. You’ll be able to link up to 4 cards. The interest rate is great, too, at a relatively low 12.75%. The annual fee is a reasonable $25.

You’ll also receive trip interruption coverage, trip cancellation insurance, and car rental discounts. With the low permanent interest rate, this is also a smart choice for debt consolidation.

RBC Visa Classic Low Rate

The RBC Visa Classic Low Rate is another credit card that could help you pay down debt more quickly as it has a low 11.99% interest rate and an annual fee of just $20. With this card you get free travelers checks and optional travel insurance.

Additional cards are available for free, making it a good card to share with the family. You will appreciate the autopayment feature that allows you to set recurring payments. This means you’ll never be late and make steady progress toward rebuilding your credit.

 

A Word of Caution

Don’t undertake the credit rebuilding process if you’re not ready and are likely to miss payments on the new card. That will only drag your credit further down. Commit to paying for all non-necessities in cash until you have paid back your old debt and have a little bit of savings to work with.

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Sources:

https://refreshfinancial.ca/credit-card/

https://www.lifeoncredit.ca/top-6-credit-cards-for-bad-credit-in-canada/

https://www.lowestrates.ca/card/no-fee-scotiabank-value-visa

https://www.bmo.com/main/personal/credit-cards/preferred/single/

https://www.td.com/ca/en/personal-banking/products/credit-cards/low-rate/emerald-flex-rate-visa-card/

https://www.rbcroyalbank.com/credit-cards/low-interest/rbc-visa-classic-low-rate.html

https://www.nerdwallet.com/article/credit-cards/secured-credit-cards-vs-unsecured-difference

https://www.creditcardinsider.com/learn/definitive-guide-how-to-build-credit-with-credit-cards/