The Best Credit Cards for Bad Credit in Canada

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Written by SnappyRates Team

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If you have a bad credit score, you may think you’re out of luck when applying for a credit card.

That is correct, on some level, as you won’t qualify for regular or premium credit cards.

However, there are several credit cards specifically for those with bad credit, including secured cards, unsecured cards, and prepaid cards.

Secured credit cards require a security deposit (which is generally your credit limit), and they will report your monthly payments to the credit bureaus, which helps increase your credit score.

There are a few unsecured credit cards which don’t have a high credit score requirement.

Let’s not forget about prepaid cards, either, which are easy to qualify for and generally reward you on your purchases.

Keep reading for our top picks of the best credit cards for bad credit, including unsecured, secured, and prepaid credit cards.

Best Credit Cards For Bad Credit – Secured

You are guaranteed approval for any of the following credit cards as long as you provide a security deposit (typically your credit limit).

Neo Secured Card

  • Annual fee: $0
  • Interest rate: 19.99% to 24.99%
  • Security deposit: $50 or more
  • Top features: earn up to 15% cash back and $25 sign up bonus

Neo Financial offers a Secured Card alongside their regular Neo Card.

It has the same features and benefits, but you will be approved no matter your credit score.

To use this card, you must set aside a security deposit of at least $50. This deposit is your credit limit, so the more you put into it, the more you can spend.

If you pay your balance on time each month, you can improve your credit score and eventually be upgraded to the standard Neo Card.

This card earns you cash back on all purchases.

You earn an average of 5% cash back at Neo partners, plus 15% cash back on most first purchases.

If your overall cashback drops to below 0.5%, Neo will top it up for you.

Home Trust Secured Visa Credit Card

  • Annual fee: $0 or $59
  • Interest rate: 19.99% or 14.90%
  • Security deposit: $500 to $10,000
  • Top features: low-interest rate

The Home Trust Secured Visa Credit Card is either a no-annual fee or a low-rate credit card, depending on what you want the interest rate to be.

It costs $0 annually for a 19.99% interest rate.

However, if you prefer a 14.90% interest rate, you can pay $59 per year.

Anyone who is new to Canada or does not have a great credit score can apply and be approved.

Your credit limit is the deposit amount, which can be anywhere from $500 to $10,000.

Your purchase and payment history is sent to the credit bureaus monthly, allowing you to establish and improve your credit score, as long as you pay your balance on time.

Capital One Guaranteed Secured Mastercard

  • Annual fee: $59
  • Interest rate: 19.8% on purchases and balance transfers, 21.9% on cash advances
  • Security deposit: $75 or $300
  • Top features: travel and purchase insurance

You are guaranteed approval for the Capital One Guaranteed Secured Mastercard, as long as you meet the following conditions:

  • You’re the age of majority in your province or territory
  • You haven’t applied for another Capital One account in the past 30 days
  • You don’t have an existing or pending Capital One account
  • You deposit $75 or $300 for security funds

Once you apply and send the security funds, you can use this credit card like any other.

Capital One reports your credit card activity to the credit unions monthly.

Everyday benefits of using this card include purchase assurance, extended warranty, and price protection service.

Three types of travel insurance plus 24/7 assistance are also included: common carrier accident insurance, baggage delay insurance, and car rental collision/loss damage protection.

Learn more about Capital One Guaranteed Secured Mastercard here

Best Unsecured Credit Cards For Bad Credit

The following top credit cards require no security deposit, unlike secured cards.

These credit cards generally require a fair credit score but no minimum annual income.

Neo Mastercard

  • Annual fee: $0
  • Income requirement: N/A
  • Top features: earn up to 5% cash back

The Neo Card only requires a fair credit score for approval, and you receive a $25 bonus following approval.

It offers the same features and benefits as the Neo Secured Card, but you don’t need to deposit security funds.

This credit card offers unlimited, instant cash back on all purchases.

You get an average of 5% cash back at Neo partners and up to 15% cash back as a welcome bonus on many of your first purchases with those retailers.

Neo comes with a mobile app where you can view cash back offers near you, your card balance, and your spending habits.

If you aren’t approved for the regular Neo Card, you can apply for the Secured Card.

Tangerine Money-Back Credit Card

  • Annual fee: $0
  • Interest rate: 19.95%
  • Income requirement: $12,000 personal
  • Top features: earn up to 2% cash back, low introductory balance transfer rate

The Tangerine Money-Back Credit Card has a low annual income requirement of $12,000.

You are not guaranteed approval, but you may be approved if you have a fair credit score.

This Tangerine credit card is one of the best credit cards for bad credit that offers cash back.

You get 2% cash back on 2 categories of your choice, including restaurants, transit, groceries, and entertainment.

If you deposit your cash back into a Tangerine savings account, you get another 2% category. On all other purchases, you’ll earn 0.5% cash back.

Another bonus of this credit card is that Tangerine offers a low introductory balance transfer rate of 1.95% for 6 months. This is a great option if you want to pay off a balance.

Capital One Low Rate Guaranteed Mastercard

  • Annual fee: $79
  • Interest rate: 14.99% on purchases and balance transfers, 21.99% on cash advances
  • Income requirement: N/A
  • Top features: low interest rate, travel and purchase insurance

The Capital One Low Rate Guaranteed Mastercard is very similar to the Guaranteed Secured Mastercard.

The only differences are that it has a low interest rate of 14.99% and is an unsecured card, meaning you don’t have to provide a security deposit.

If you have a fair to good credit score, you will likely be approved for this card.

However, if you are not approved, you will automatically be approved for a Secured card, where you must deposit security funds.

The same everyday and travel insurance benefits are included as with the Secured card.

Scotiabank Value Visa Card

  • Annual fee: $29 (waived in the first year)
  • Interest rate: 12.99% on purchases and cash advances
  • Income requirement: N/A
  • Top features: low interest rate

If you make your minimum payments on time each month, the Scotiabank Value Visa Card can help build your credit history.

It has a low interest rate of only 12.99% and a low $29 annual fee.

This credit card is great for those who have a balance and need to pay it off. It isn’t for those who want to earn cash back or other rewards.

By consolidating your higher-rate balances onto this low-rate card, you’ll save on interest and pay off your debt faster.

Canadian Tire Triangle Mastercard

  • Annual fee: $0
  • Interest rate: 19.99% on purchases, 22.99% on cash advances and balance transfers
  • Income requirement: N/A
  • Top features: earn up to 4% cash back and get 5¢ per litre back in CT Money at Gas+ and Essence+ locations

The Canadian Tire Triangle Mastercard is quite easy to qualify for.

No minimum credit score or annual income is needed to apply, and they do not charge an annual fee.

This credit card is perfect for you if you shop at Canadian Tire-owned stores.

You’ll earn 4% back in CT Money on purchases at Canadian Tire, Mark’s, Sport Chek, Atmosphere, and other stores.

When filling up at Essence+ and Gas+ gas stations, you earn 5¢ per litre back in CT Money.

On the first $12,000 you spend on groceries each year, you get 1.5% back in CT money (excluding Walmart and Costco).

After that, get 0.5% CT money back on groceries and all other purchases.

$1 in Canadian Tire Money is equivalent to $1 off at Canadian Tire branded stores.

RBC RateAdvantage Visa

  • Annual fee: $0
  • Interest rate: prime rate + 4.99% to 8.99% on purchases, prime rate + 4.99% to 8.99% on cash advances
  • Income requirement: N/A
  • Top features: low variable interest rate, purchase security & extended warranty

The RBC RateAdvantage Visa card has a low interest rate that is different for each cardholder.

The interest rate is determined based on your application and credit rating and can change any time. The better your credit rating, the lower the rate.

Purchase security and extended warranty insurance are included with this card, which protects against theft, loss, or damage of purchases for 90 days and doubles the manufacturer’s warranty for up to one year.

Additional features include:

  • Save 3¢/L on fuel and earn 20% more points at Petro-Canada
  • Earn 50 Be Well points for every $1 spent at Rexall
  • Get a 3-month complimentary DashPass subscription

PC Financial Mastercard

  • Annual fee: $0
  • Interest rate: 20.97% on purchases, 22.97% on cash advances
  • Income requirement: N/A
  • Top features: earn & redeem PC Optimum points

To be approved for a PC Financial Mastercard, you’ll need a fair to good credit score.

This is a perfect credit card if you are loyal to PC Financial stores.

You earn PC Optimum points on every purchase, as follows:

  • 10 points per $1 at their grocery stores (Loblaws,  No Frills, Valu-Mart, etc.)
  • 25 points per $1 at Shoppers Drug Mart
  • At least 30 points per litre at Esso Mobil gas stations
  • 20 points per $1 at PC Travel
  • 10 points per $1 everywhere else

As soon as you have 10,000 points, you can redeem them for $10 off at participating grocery stores, Shoppers Durg Mart, Joe Fresh, PC Express, or Pharmaprix.

You can also redeem 4,000 points for 10 cents off per litre at Esso.

image showing woman upgrading her credit score

Best Prepaid Cards For Bad Credit

Prepaid cards can help build your credit score.

They are easy to apply for and generally require no minimum credit score or annual income. Here are four of the best prepaid cards if you have bad credit.

KOHO Prepaid Mastercard

  • Annual fee: $0
  • Top features: Up to 5% cash back on purchases, credit builder

The KOHO Prepaid Mastercard is a top cash back credit card in Canada that gives you instant cash back on most purchases.

You can build your credit history for an extra $5 to $10 per month – perfect for those with bad or poor credit.

KOHO will open a line of credit, and as long as you make monthly payments, it will be reported to the credit bureaus and can help boost your credit score.

With the free KOHO account, you’ll also earn interest on your spending and savings account.

KOHO Extra Prepaid Mastercard

  • Annual fee: $84 or $9 monthly
  • Top features: earn 2% cash back

If you pay a little extra for KOHO Extra, you can earn 2% instant cash back in 3 categories (groceries, restaurants, and transportation), as well as up to 5% cash back on purchases at Neo partners.

The card will pay for itself if you spend a lot of money on certain categories. KOHO Extra also charges no FX fees, saving you up to 3% when you use it abroad.

Here’s a detailed explanation of KOHO prepaid cards and how they work.

Our Methodology:
The Snappy Rates team assesses the best credit cards for bad credit based on their annual fees, interest rates, security deposit amounts, rewards, top features, categories, insurance coverage, and other features. We carefully evaluate each credit card and place more weight on the value of the long-term rewards each card offers. Only credit cards we would personally use are recommended. While these credit cards are some of the best on the market, but may not be right for you. Always do your own research before choosing a credit card.

Pros of Credit Cards For Bad Credit

No matter your credit score, you will be automatically approved for secured credit cards and prepaid cards, which means you have options if you don’t have a good credit score.

Secured credit cards help build your credit, as payments are reported to the credit bureaus.

If you make all your payments on time, you could improve your credit score in as little as a few months.

Some credit cards, like the KOHO Prepaid Card and the Tangerine Money-Back Credit Card, include great benefits like 2% cash back.

Cons of Credit Cards For Bad Credit

When you’re applying for a secured credit card, you need to put down a security deposit, which is generally your credit limit.

If you don’t have a lot of funds available, your credit limit will be quite low.

If you have a bad credit score, you may not be approved for regular unsecured credit cards, so you’ll need to provide a deposit and apply for a secured card.

Most credit cards for bad credit do not include many benefits or insurance perks.

The most you’ll get for any card on this list is 2% cash back or rewards points.

How to Get a Credit Card with Bad Credit

You might assume that having bad credit means you cannot apply for a credit card. But that’s not the case.

While it is harder, and you will have fewer cards to choose from, you still have several options.

Here’s a further breakdown of the different types of credit cards available to you:

Secured Credit Card

Secured credit cards are often one of the most accessible card types for people with bad credit.

With these, you pay a security deposit (e.g. $500), and you can borrow up to that amount.

Because the card issuer has your deposit, they can afford to take a risk with you even though you have a bad credit score. You then make your monthly payments as normal and build your credit score. 

Secured credit cards often have very few perks, and they tend to be quite basic because the main purpose is to use them to build your credit score. However, this is not always the case. Some come with cashback and other rewards too.

Some secured cards may be guaranteed approval credit cards. In this case, as long as you meet the requirements, like the minimum income requirement, you will be approved. So this is worth looking out for if you want to increase your chances of getting approved.

Store Credit Card

Store credit cards, or retail credit cards, are offered by retailers. These cards are often closed-loop cards, which means you are limited to using them at the issuing store or a group of stores. Open-loop cards, on the other hand, can be used anywhere.

Store credit cards often come with good rewards programmes at the issuing stores. In addition, they are often more lenient regarding application requirements.

As such, people with fair or even poor scores may have a better chance of being accepted when they apply for store credit cards.

Unsecured Credit Card

Most credit cards are unsecured and are not typically available to people with bad credit scores.

However, some unsecured credit cards may be available for people with fair credit scores.

These are worth looking for. However, you may find it best to use a secured credit card to improve your score before applying for one.

Student Credit Cards

Many students do not have credit histories, so special credit cards are targeted at them.

These usually have low annual fees and come with rewards to tempt students to apply. As long as you are a student and can prove it, you may find these are a good options to start building a credit history.

New Immigrant Credit Cards

New immigrants are similar to students because they have no credit history in Canada.

The major banks in Canada have credit cards specifically for people in this situation, and the credit amount is often limited.

Prepaid Credit Cards

Prepaid cards are not credit cards, but they are worth looking into. They have the same convenience factor because you can use them in the same places. However, you won’t build your credit score by using one.

Some cards, like KOHO Prepaid Mastercard, come with additional credit-builder options. With these, you can pay extra to use a credit builder service while you use the card.

How to Use a Credit Card to Build Credit

Using a credit card to build credit is straightforward. The idea is that the more you use it and make your credit card payments on time, the higher your score will be.

Choose your card carefully. Some cards make it clear that they will report your activity to the credit bureaus, which is what you want.

But whichever card you use, try to borrow a small amount each month, perhaps just making one or two payments using your credit card.

Then pay off the whole balance by the payment due date. This way, you can avoid paying any interest, and you can start building your credit score at the same time.

Even if you cannot pay back the balance in full, make sure you always make the minimum payment, so you don’t hurt your credit score.

FAQs

Can you get a credit card with a bad credit score?

You can get a prepaid or secured credit card with a bad credit score. Secured credit cards require a security deposit, and your credit score will improve if you pay your balance on time each month.

What credit score is needed for a BMO credit card?

Generally, a fair to good credit score (600-700) is required for any credit card. There is no set credit score requirement, and each application is reviewed individually.

What type of credit card is usually given to someone with bad credit?

Someone with bad credit could either get a secured credit card or a prepaid card, as those do not require a credit check.

Can you get approved with a 500 credit score?

It can be nearly impossible to qualify for a regular credit card with a credit score of 500. You can get approved for a secured credit card or a prepaid card, instead.

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SnappyRates Team

The SnappyRates Team comprises personal finance writers who have reviewed and personally tested hundreds of financial products in the Canadian space. With over 20 years of combined experience to draw from and expertise in all things credit cards, banking, insurance, and mortgages, our goal is to provide you with the most comprehensive guides and resources to help you on your financial journey.

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