top credit cards for bad credit Canada
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Capital One Guaranteed Mastercard
Pros
- No annual fee
- Helps build credit history
- Earn cash back on purchases
- Accessible for those with bad credit
Cons
- Requires a security deposit
- Limited credit limit
- High interest rates
Key Features
When searching for credit cards suitable for individuals with bad credit in Canada, it's crucial to understand the key features that these cards typically offer. These cards are designed for those with limited credit histories or lower credit scores (usually below 650). Here’s what to look for:
- Welcome Bonus: Many cards offer a welcome bonus, which can vary significantly depending on the issuer. It's essential to check current offers as they can change frequently.
- Annual Fee: Fees can range from no annual fee to upwards of $100. Some cards may waive the fee for the first year, making them more attractive for those just starting to rebuild their credit.
- Interest Rates: Expect higher interest rates (typically around 19.99% to 29.99%) compared to traditional credit cards. This is a significant consideration, as carrying a balance can lead to high interest costs.
- Rewards Program: While many cards for bad credit may not offer extensive rewards, some do provide basic earning opportunities, typically at standard rates.
- Credit Limit: Initial credit limits are often lower (ranging from $300 to $1,500), which can help manage spending and minimize debt.
- Reporting to Credit Bureaus: It's essential that the issuer reports your payment history to the credit bureaus, as timely payments can help rebuild your credit score over time.
Pros & Cons
Like any financial product, credit cards for bad credit come with their set of advantages and disadvantages:
Pros:
- Build Credit History: Responsible use can help improve your credit score over time.
- Accessibility: These cards are easier to obtain for individuals with poor credit or no credit history.
- Financial Flexibility: Provides a source of funds for emergencies or necessary purchases.
- Potential Rewards: Some cards offer basic rewards programs, allowing you to earn points or cash back, even with bad credit.
Cons:
- High-Interest Rates: Carrying a balance can be costly due to high-interest rates.
- Low Credit Limits: Initial limits can restrict spending and may not meet larger purchase needs.
- Fees: Some cards come with annual fees, which may not be justified for occasional users.
- Limited Rewards: Rewards programs may be less lucrative than those offered by cards for individuals with better credit scores.
How It Compares
When comparing credit cards for bad credit in Canada, it’s helpful to look at a few popular options. Below, we’ll overview three cards that cater to this segment:
| Card Name | Annual Fee | Interest Rate | Welcome Bonus | Rewards |
|---|---|---|---|---|
| Capital One Guaranteed Mastercard | No annual fee | 19.8% | Check current offer | None |
| Home Trust Secured Visa Card | No annual fee | 19.99% | Check current offer | None |
| Refresh Financial Secured Card | No annual fee | 29.99% | Check current offer | None |
Each of these cards has unique features and benefits. The Capital One Guaranteed Mastercard is appealing for its lack of fees, while the Home Trust Secured Visa Card allows you to secure your credit limit with a cash deposit. The Refresh Financial Secured Card, despite its high-interest rate, offers a pathway to rebuild credit with minimal upfront costs.
Who It's For
Credit cards for bad credit are ideal for:
- Individuals with Low Credit Scores: Those who may have faced financial difficulties and have a credit score below 650.
- Newcomers to Canada: New residents who are establishing their credit history and may not have sufficient credit history to qualify for traditional cards.
- Students: Young adults or students looking to build credit while managing limited income.
- Anyone Seeking to Rebuild Credit: Individuals who have previously declared bankruptcy or have defaulted on loans and are looking to improve their financial standing.
How to Apply
Applying for a credit card designed for bad credit involves a few straightforward steps:
- Check Your Credit Score: Before applying, understand where your credit stands. You can access your credit score through various online platforms or request a free report from credit bureaus.
- Research Options: Compare credit cards that fit your profile and needs. Look for features such as annual fees, interest rates, and the potential for rebuilding credit.
- Gather Required Information: Prepare necessary documents such as proof of income, identification, and residency. Issuers may ask for this information to assess your application.
- Submit Your Application: Fill out the application form on the issuer's website or at a financial institution branch. Be honest and accurate in your responses.
- Await Approval: Approval times can vary. If you're denied, consider the reasons provided and take steps to improve your credit before reapplying.
Once you receive your card, use it responsibly by making payments on time and keeping your balances low to improve your credit score.
FAQ
What is considered bad credit in Canada?
A credit score below 650 is generally considered bad credit in Canada. Scores in this range suggest a higher risk to lenders, making it challenging to secure loans or credit cards.
Will applying for a credit card affect my credit score?
Yes, applying for a credit card may result in a hard inquiry on your credit report, which can temporarily lower your credit score. However, responsible use of the card can help improve your score over time.
How can I improve my credit score?
To improve your credit score, make timely payments, reduce your debt-to-credit ratio, avoid applying for multiple credit accounts simultaneously, and regularly check your credit report for errors.
Can I get a credit card if I’ve declared bankruptcy?
Yes, it is possible to obtain a credit card after declaring bankruptcy, especially secured credit cards. However, options may be limited, and interest rates may be higher.
What is a secured credit card?
A secured credit card requires a cash deposit as collateral, which serves as your credit limit. This type of card is often easier to obtain and can help rebuild credit when used responsibly.
Not financial advice. Rates and offers change. Read provider terms.
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BGR's editorial team evaluates every Canadian credit card using a 7-factor scoring model aligned with FCAC guidelines.
Data sources: FCAC, CMHC, issuer websites, Equifax Canada, TransUnion Canada. Last audit: June 2026.