Credit Cards for Bad Credit


Updated: Sep 29, 2020
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Search, compare, & apply online for Canadian Bad credit credit cards.

Cards for bad credit or limited credit are notorious for their unfavourable terms and conditions and abstract rates and fees. But that's often an exaggeration. These cards are far from ideal when compared to cards for good and excellent credit. However, they're instrumental in boosting your credit rating and building up your history when used responsibly. Higher fees and fewer bonuses accompany them, but they provide the cardholder with an opportunity to get back on track and regain better financial health quickly.

See Credit Cards for Bad Credit Suggestions Summary
Editor's suggestion: Credit Cards for Bad Credit - Nov 28, 2020

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Let’s take a look at everything these cards for bad credit have to offer, their features, pros, and cons, and dispel many of the myths surrounding them.

Types of Cards for Bad Credit and No Credit History

With a credit score under 599, your credit card options will be limited. And while it could be difficult getting approved for a card, it’s far from impossible. Many issuers will provide at least a few suitable choices to cardholders with poor or no credit.

It’s always crucial to weigh all your options and do thorough research on the issuer and their financial products before applying for their card. All banks and credit unions will have their terms, conditions, rates, and fees, and some will offer better choices than others.

Secured Credit Cards

If you have a poor credit score or no credit history, your best option could be applying for a secured credit card. To use them, you’ll first need to make a deposit, which the bank will use if you fall behind with your payments.

In most instances, your deposit will equal your credit limit, although some exceptions are standard. The deposit will also unlock credit card perks such as cashback rewards, lower interest rates, and lower APRs.

Most secured credit cards will report your activity to the major bureaus and help you build up your score when used responsibly. If you decide to close your account or upgrade to an unsecured credit card, you will receive your deposit back if you’ve cleared your balance.

Instant Decision Credit Cards

Instant decision credit cards have exceptionally low application requirements, and almost anyone can get approval. They’re usually unsecured cards, but they come with high fees and unfavourable terms. These cards are not your best option, but they can still help you along if you pay all your debts on time. It’s a good idea to upgrade to a better card as soon as you improve your rating.

RELATED: See Instant Decision Offers

Student Credit Cards

Student credit cards can be an excellent option for college students hoping to establish a credit history. Their application requirements are low, so to qualify, you need to:

  • Be of the age of majority (18+ or 19+ in some provinces)
  • Be an enrolled student
  • Have a source of income (part-time jobs included)
  • Be a legal resident in Canada

These cards are more forgiving, featuring better rates and fees than cards for poor credit. They’re still far from perfect but are a great choice if you’re starting to work on your credit history.

Shopping Credit Cards

Shopping credit cards are unique because they’re designed to be used only in select stores and locations. They come in both secured and unsecured versions, and most will report your activity to credit bureaus. They can be a good choice for cardholders trying to limit their spending and prefer to use their cards infrequently.

Cards for Bad Credit – Features

Credit cards for bad credit are simple. They come with no bells and whistles as they serve only one purpose – to help you establish a better credit rating and upgrade to a better card.

Although every card offer from different issuers will be unique, there are several similar features that all credit cards for poor credit share. Take a look.

Credit Limit

Most poor credit cards will have a low limit, and in case you’re using a secured credit card, your limit will be only as high as your deposit. If you have some extra cash lying around, you might want to consider depositing a substantial amount.

Fees

Since fees are used to guard the bank from riskier cardholders who might fall back on their debts, you can expect credit cards for poor credit to always have rates and fees that are much higher than average. You’ll almost always have high annual fees, monthly maintenance fees, and more.

Interest Rates

Interest rates on poor credit credit cards can easily go well above 25%. They’ll quickly stack up and make your card very expensive to hold if you’re not careful.

PRO Tip
The only way to avoid paying high interest is by paying off your balance in full and on time. If this is not possible, try to meet the minimum monthly payment, and don’t wait until the very last day to pay your debts.

Rewards and Benefits

Unfortunately, cards for bad/ no credit aren’t known for their rewards and benefits. The best that you can expect is free credit score checks and secondary card network perks.

RELATED: See card offers with rewards

Secured credit cards can unlock additional benefits such as cashback rewards, but they require a hefty deposit.

Cards for Bad/ No Credit Pros

While cards for bad/ no credit aren’t ideal, they can help you establish a better credit history, and they boast several advantages.

Low Requirements

As mentioned, these cards come with low application requirements, and they’re fairly easy to qualify for. Typically, you’ll only need to mee the age, residency, and income requirements.

Easy Approval

With low requirements comes easy approval. Virtually anyone can receive a bad/ no credit card as soon as they apply.

PRO Tip
If your application’s denied for some reason, wait at least six months before applying for another line of credit. Every new application leaves a trace on your report and temporarily lowers your score, making you less likely to be approved for another card.

Reporting to Major Bureaus (Equifax TransUnion)

Cards for bad credit are designed to help you improve your score, so most issuers will report your activity to both Equifax and TransUnion every month.

Be careful, however, as this is a double-edged sword. Both good and bad behaviour will be reported, so you can damage your score just as quickly as you can improve it. Use the card responsibly!

Easy Credit Checks

Most issuers will allow you to check your credit score for free several times a year if you have a card for poor credit. That is an excellent opportunity to see how your different financial habits and behaviours reflect on your report.

Cards for Bad/ No Credit Cons

Of course, there are a few disadvantages of holding a card for poor credit. These are some of them.

Low Credit Limits

A credit card for bad credit won’t allow you to make larger purchases as your credit limit will be significantly reduced. Reserve this card for paying your recurring bills or covering only necessary purchases.

PRO Tip
Remember to keep your credit utilization ratio low. Anything over 30% will reflect poorly on your report and can be detrimental to your score.

Hefty Fees

High-interest rates, annual fees, and more are a huge drawback of these credit cards. Avoid carrying balance and debt at all costs.

Limited Rewards and Bonuses

Cards for bad/ no credit rarely come with any rewards or welcome bonuses, except secured credit cards. So, don’t expect to receive more than a simple opportunity to improve your financial health. You can always upgrade to a better card with more perks once you’ve improved your score.

The Bottom Line

Cards for bad/ no credit aren’t perfect, but they can help you work your way up to better offers reasonably quickly. Just remember to be responsible, pay off your debts on time, and keep your credit utilization low.

And always do your research to find a card that suits your needs and financial situation.

Card Offers for Bads credit Recap



Bad Credit FAQs. What People Ask About Credit Card for Bad Credit Offers

What is the best credit card for bad credit?2020-08-31T22:38:48-07:00

There isn’t a single best credit card that will be suitable for all individuals with bad credit. Each card is different, and each person’s financial circumstances are different, so a card that might be ideal for your friend who has the same credit score as you might not be ideal for you.

With this in mind, secured credit cards are often considered to be the best choice. They unlock many additional benefits and perks that don’t usually come with regular cards, but they require a cash deposit.

How do I check my credit score?2020-08-31T22:39:17-07:00

Your credit report will not contain information about your credit score. The only way to check your score is through your bank or credit union, or directly through a Canadian credit bureau. Many banks will offer free credit score checks to their clients through online banking.

If you decide to check your credit score from Equifax or TransUnion, you will need to do so in person, online, or via mail, and you’ll need to pay a fee.

Keep in mind that different bureaus calculate your score differently, so there may be discrepancies between them.

Can I upgrade to a better card if I improve my score?2020-08-31T22:38:59-07:00

Banks and credit unions will allow you to upgrade to a better card when you improve your credit score. It’s in your best interest to upgrade to a more favorable account within the same bank as you can boost your credit history by keeping your accounts open.

Opening new accounts can be detrimental to your credit as account age is an important factor considered when calculating your score.

What is credit history?2020-08-31T22:39:23-07:00

Credit history is a record that shows your financial health and your ability to pay your debts off in time. Your credit report will show your credit history, and the information it contains will be used by banks, credit unions, and other financial institutions to determine your creditworthiness.

The health of your credit history is expressed through your credit score. It ranges from 300 to 900, depending on the scoring system, with 800 to 900 being considered excellent, 720 to 799 as very good, 650 to 719 as good, 600 to 649 as fair, and 300 to 599 as bad credit. The higher your credit score, the more creditworthy you’ll be. So, you can expect better terms and conditions and lower fees.

How can I build/ improve my score?2020-08-31T22:39:09-07:00

The best way to build or improve your credit score is by being responsible with your finances. This includes:

  • paying off your debts on time,
  • keeping your credit utilization ratio below 30%,
  • keeping your old credit accounts open, and
  • not applying for new credit lines.
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