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Credit Cards For Bad Credit for december 2022 in Canada

Apply for a credit card for bad credit. On 03.12.2022 you have access to 4 credit cards. Increase your chances of getting money — fill out a multi-application with a free credit rating check.

Offers: 4

Updated
01.12.2022
13:13
Toronto-Dominion Bank
TD® Cash Back Visa Card®
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
Rate
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Effective interest rate on the product

19.99% - 22.99%
Toronto-Dominion Bank
TD® Aeroplan® Visa Infinite Card
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
from $5,000
Rate
i

Effective interest rate on the product

19.99% - 22.99%
Scotiabank
Scotia Momentum® Visa Infinite Card
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
Rate
i

Effective interest rate on the product

20.99% - 22.99%
Submit your credit card application online
Submit your credit card application online

Take advantage of our credit card selection system with a free credit check!

Canadian Imperial Bank Of Commerce (CIBC)
CIBC Costco® Mastercard®
Rating by Finanso®
i

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
0
300
650
1000
Rate
i

Effective interest rate on the product

19.75% - 21.49%

Credit Cards For Bad Credit calculator in Canada

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GoDay
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JUDGEV
JUDGEV
26.05.2022 at 15:46
the application is easy and takes less then 5 mins to fill out. but the funding time is quite long. if looking for instant funding then its not here...
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Credit Cards For Bad Credit for december 2022

Credit score in Canada

The credit score in Canada ranges between 300 to 900. Typically, if your credit score falls between 300 and 574, you are considered a bad credit customer. A good credit score is usually between 660 to 724, while a number anywhere between 725 to 759 might be considered very good. If your credit score is 760 and above, you are considered to be an excellent credit score client.

Major credit bureaus in Canada

Credit scores are determined by three major credit bureaus in Canada:

  • TransUnion;

  • Equifax;

  • Dun & Bradstreet.

A poor credit score means a high likelihood of the customer defaulting on their loan, and the chances of the customer closing a loan agreement are low; thus, the lender ends up with a toxic asset.

Bad credit usually means that credit cards with attractive bonuses, good rebates, and many other features are unavailable for such customers.

However, this is not a desperate situation. There are alternative lenders and special offers for products like credit cards for bad credit, where the answer to a bad credit application is "yes."

What is a credit card for bad credit?

A credit score reflects the borrower’s likelihood to repay the debt to the lender. This score varies from poor to excellent. The higher the credit score, the lower the interest rates banks and other lenders offer to such customers. Conversely, the lower the credit score, the higher the risk lenders take and, consequently, the higher the APRs.

Bad credit in Canada means a customer has a score lower than 574 points. There are usually several reasons that can lead to bad credit:

  • A credit agreement was broken because the borrower was missing payments or exceeding the limit;

  • the complete absence of credit history means, on the one hand, that there are no negative records, but on the other hand, that the borrower is like a black box and one cannot predict whether they will adequately service the debt;

  • too many credit application inquiries reduce the credit score if they are made within a short period;

  • the borrower has filed for bankruptcy in the last six years, etc.

Credits cards for bad credit types

Credit cards for bad credit in Canada fall into three main groups:

  • secured cards;

  • unsecured credit cards;

  • prepaid cards.

There are also bad credit cards for various purposes:

  • consumption;

  • Debt consolidation;

  • restoration of good credit.

The downside of credit cards for bad credit is that such products are more expensive for borrowers. On the other hand, if money is needed and it is the best option to get it, a bad credit card should be used wisely, especially if it is used as a tool to rebuild credit.

Features of credits cards for bad credit

The number of features depends on the issuer and the type of card, but in general, it is safe to say that even with a poor credit score, there are ways to earn cash back and collect and redeem rewards if customers take the time to find the right credit card.

  • The first and most noticeable feature of credit cards for customers with bad credit is that they can even get instant approval and use a credit card;

  • sign-up bonuses and promotional interest rates;

  • no foreign currency fees;

  • possibility to have a prepaid card and use your own money to rebuild credit without incurring new debt;

  • repayments reported to Equifax and TransUnion, or either organization;

  • no credit checks are run;

  • there are options with low-interest rates;

  • possibility to get credit cards for customers with bad credit ratings;

  • live support helps to solve problems related to credit cards 24/7;

  • some cards have no annual fee;

  • no balance transfer fee;

  • ability to switch from a secured to an unsecured credit card;

  • rewards for changing spending categories;

  • rewards program for maintaining good scores;

  • the applicant needs to prove income;

  • some issuers offer the option of returning a secured deposit to the cardholder, depending on creditworthiness.

Some credit cards offer more benefits to customers with bad credit, others less.

Secured and unsecured credit cards for bad credit

Customers with poor credit ratings are considered high risk to lenders' card issuers. Understandably, a low credit score puts pressure on card issuers to compensate for this circumstance with an efficient lever: a security deposit.

If the credit card is secured, the borrower must post a security deposit at the time of account opening, according to the card issuer's applicable rates. The deposit amount varies by the card issuer and can range from $50 to hundreds of dollars. For some borrowers, paying such a large amount is an obstacle even though they would have been able to service the loan and make regular monthly payments. A few other things that should be mentioned are that the deposit cannot be paid in installments and is often used to finance the borrower's expenses using a secured credit card. In addition, secured credit cards allow for rebuilding credit, sometimes called credit rebuilding instruments.

An unsecured credit card means that the issuer provides the borrower with a certain credit line according to its internal procedure, which can be used again and again upon repayment. Since the customer has a poor credit rating, it is clear that the risk category is higher, and this is compensated by higher interest rates, higher fees, lower credit limits, and higher fees.

According to internet sources, unsecured credit cards are not as commonly offered to customers with poor credit as secured cards. But even if the fees are higher, this offer is attractive to customers who cannot afford a security deposit.

Both products would eventually affect borrowers' credit history for good or for bad, depending on their financial habits and behavior.

Where to get a credit card for bad credit in Canada

Typically, credit cards are issued to customers with poor credit ratings by:

  • banks;

  • alternative lenders;

  • Fintech companies;

  • credit unions.

The borrower should check the eligibility criteria and shop around. Even with a poor credit score, it is worth checking the credit report because it may be lower than it can be due to a discrepancy or error and can be corrected.

What is the most accessible credit card to get in Canada with bad credit

According to the available information, there are pretty good options for bad credit credit credit cards that are getting points and earning rewards, with some sort of premium card, low-interest card, etc.

  • Among secured credit cards, Credit Builder's Neo Card stands out (no annual fee and interest rates between 19.00%-24.99%, but the minimum deposit is $50 and the maximum deposit is $10,000, and there is a cashback up to 15%);

  • a good option among prepaid cards for rebuilding good credit is that of KOHO, Reloadable Premium Prepaid MasterCard (which has a free 30-day trial and maximum deposit is $200,000, low monthly reporting fee to credit score companies, but it is not the classic credit card because spending on the prepaid principle you are your lender);

  • a low-interest credit card could be the Plastk Secured Rewards Card;

  • another credit card with a low-interest rate is the Capital One Low Rate Guaranteed MasterCard;

  • no-fee secured Visa for bad credit with no annual fee is the Home Trust Secured Visa;

  • a credit card for travelers with poor credit to earn miles is an Air Canada AC Conversion Prepaid Visa Card.

It is essential to remember that prepaid credit cards do not report your financial behavior to credit bureaus, so these tools will not help you to build a positive credit history.

Ratings are being renewed regularly, but each borrower should have their criteria of what works best and apply for the best possible option of a credit card under current conditions.

How to apply for a credit card for bad credit in Canada

The application for a credit card for customers with a poor credit rating can be made online, offline, and via the mobile app. It depends not only on the personal preferences of the applicant but also on the conditions and procedures of the card issuer.

MasterCard, for example, provides information about partner institutions in Canada that issue credit cards to people with poor credit ratings.

The decision to apply is the responsibility of the credit card issuing institution.

Each application begins with the product name and rates to ensure that the customer is adequately informed and agrees to the terms. Then, electronic forms are submitted online, and use an electronic signature to confirm that the form was not presented in error.

  • The application requires personal data, name, surname middle name of the borrower;

  • Canada residency information;

  • residential address;

  • date of birth;

  • social security number;

  • contact phone number, etc.

Depending on the issuer's procedure, it is possible to get pre-qualified or to get approved.
Applying for the card intended for bad credit clients means the first step toward a higher credit score and a higher credit limit is done.

Requirements

The applicant for a bad credit card in Canada must meet the following criteria:

  • Age of majority, i.e., eighteen years of age or other age provided for in provincial legislation.

  • source of income;

  • if it is a secured credit card, the applicant must deposit a minimum security deposit;

  • must be a Canadian citizen or permanent resident;

  • customer must be able to enter into legally binding agreements and sign legal documents.

Other criteria for credit cards intended for rebuilding credit (secured card or unsecured card) should be checked immediately with the chosen credit card issuer, which is ready to help you out from a bad credit score.

Pros and cons

Pros

  • some credit cards for bad credit require a small minimum deposit, and even with minimal resources, a client can get access to active use of such a card for bad credit;

  • some issuers of bad credit credit cards do not make hard credit checks, and it does not pull down the score even lower at the start point;

  • some cards allow to have a test period at no cost for services (trial period up to 30 days);

  • it may be the case that there is a 0% promotional interest;

  • it is possible to earn rewards on purchases;

  • guaranteed approval;

  • some cards for bad credit have no foreign transaction fees, and it saves up to 4% of the purchase price;

Cons

  • annual fees;

  • fees for dishonored payments;

  • the necessity to provide a security deposit, and for some cards, it is 50-500$ (if it is a secured credit card);

  • restrictions for redeeming within a rewards program;

  • some cards offer no rewards program;

  • restrictions on transferring money from bad credit credit cards to family and friends;

  • some cards do not offer miles reward programs;

  • interest rates are primarily high;

  • if the credit score is not improved security deposit might be retained by the card issuer.

Summing up, credit cards for bad credit can be an adequate instrument to build credit. However, one should watch out for high annual or hidden fees and fees for balance transfers. Normally, secured credit cards require a refundable security deposit starting from $50.

Tips for applying for a credit card with bad credit

Look around, keeping in mind what is most important to you. This may be the absence of the annual fee, cash back, no transfer fee, a rewards program, no high-interest rate, etc.

  • Consider the option of a secured credit card, keeping two things in mind: it can be upgraded to an unsecured credit card, and the deposit will then be refunded if the issuer does not offer another option, and the second thing is that such cards have an almost 100% approval probability;

  • Check a retail credit card that offers almost 100% approval probability but usually starts with a small limit;

  • Go through the eligibility test to see the prequalification;

  • Become an authorized user of the credit card;

  • Try to improve your credit score with the help of Experian. Experian compiles alternative information that can positively impact your credit score and earn you 10-50 points, depending on the situation.

Being an authorized user of someone's credit card means double responsibility because irresponsible financial behavior may ruin the good credit score of the main borrower. And probably no need to say that authorized users must repay their loans.

How can I improve my credit in Canada

There are several credit enhancement tools in Canada. Some are proactive; others are more reactive. Proactive prevent credit score problems mother both methods are eligible.

  • The main credit score improvement tools are:

  • monitoring credit history and requesting corrections;

  • make on-time payments;

  • do your best to make regular payments online;

  • always pay your bills without delay;

  • use credit wisely (including not abusing electricity);

  • Having a mix of installment loans and revolving credit on your credit reports;

  • stay away from credit cards and do your best to stay away from emotional spending, etc.

FAQ

Which Canadian banks can issue me a credit card with bad credit?

Alternative lenders issue most such cards, but banks are also ready to work with high-risk borrowers. If you are interested in the bank as an issuer, check out Scotiabank, National Bank, Capital One, and BMO.

Is it true that after seven years, your credit is clear?

It depends on the occurrence. Some types of bankruptcy stay on record during 7-10 years; apart from this, most negative information about the borrower's creditworthiness remains in the records for seven years. If the credit file was not constantly updated with new problematic issues after seven years, there is a chance to start credit life anew.

How long can debt collectors be trying to collect in Canada?

Legal action against the debtor is limited under Canadian law to six years.