Top Credit Cards in Canada for Bad Credit with Guaranteed Approval

Having bad credit can make it difficult to qualify for many financial products, including credit cards. But don’t worry, there are still options available to you. This guide explores some of the best guaranteed approval credit cards in Canada for people with bad credit, along with valuable advice on how to choose the right card and rebuild your credit score.

Secured Credit Cards: A Stepping Stone to Better Credit

Secured credit cards are a great way to establish or rebuild your credit history if you have bad credit. They function similarly to traditional credit cards, but require a security deposit that acts as collateral for the issuer. Since the lender faces less risk, they’re more likely to approve you for a secured card even with a poor credit score.

Important Links
1. Best 10 No-Fee Chequing Accounts in Canada for 2024
2. Top Cash Back Credit Cards in Canada with No Fees for April 2024
3. Comparing Neo Financial and KOHO for 2024
4. Review of Neo Financial’s High-Interest Savings Account 2024

Here are some of the top secured credit cards in Canada to consider:

  • Neo Secured Card: This popular option boasts features like unlimited cashback rewards at a rate of up to 5%, a flexible credit limit that you can increase as needed, and no annual fee. Plus, new cardholders get a $25 bonus upon approval, making it a great choice for budget-minded individuals building credit.
  • KOHO Prepaid Mastercard (With Credit Builder): This prepaid Mastercard allows you to earn cashback on groceries, gas, transportation, and even offers rewards of up to 5% at partner stores. It goes beyond simple spending by incorporating a credit-building tool (for a monthly fee) that helps you improve your credit score. Here’s how it works: you take out a line of credit and repay it over time, with KOHO dutifully reporting your payments to credit bureaus. New users can also enjoy a $20 bonus when they sign up using the code CASHBACK and complete their first purchase.
  • Home Trust Secured Visa Card (Low Rate): With a near-guaranteed approval process and a security deposit requirement ranging from $500 to $10,000, this card from Home Trust caters to a wide range of applicants. There’s no annual fee for the version with a higher APR (19.99%), but you can opt for a lower interest rate (14.90%) by paying a $59 annual fee. This card also offers Visa Zero Liability protection for added security against fraudulent charges.

Unsecured Credit Cards for Rebuilding Credit

If you’re looking for a credit card without a security deposit, there are unsecured options available for those with bad credit. While the interest rates and rewards programs may not be as attractive as those offered for cards requiring good credit, they can still be a valuable tool for rebuilding your credit score. Here are some unsecured credit cards to consider:

  • Capital One Low Rate Guaranteed Mastercard: This card offers guaranteed approval, subject to meeting a few basic requirements, and comes with a reasonable annual fee of $79. The interest rate on purchases and balance transfers is 14.9%, which is lower than many unsecured cards for bad credit.
    It also provides essential benefits like Zero Liability protection, travel accident insurance, and extended warranty coverage.
  • Scotiabank Value Visa Card: This card stands out for its low annual fee of $29 and a very competitive interest rate of just 12.99% on both purchases and cash advances. This can significantly reduce your interest charges if you carry a balance. With this card, you can make larger purchases or transfer balances from high-interest cards to save money on interest.
  • Tangerine Money-Back Credit Card: This card offers a $0 annual fee and the benefit of earning unlimited cashback rewards. You can earn 2% cashback on two spending categories of your choice, such as groceries and gas, and 0.5% on everything else. Cashback is conveniently paid out monthly. It features Mastercard Zero Liability protection, and the APR is 19.95%.

Additional Options to Consider

  • RBC RateAdvantage Visa Card: This card boasts a no-annual-fee structure and a low variable interest rate that starts from a very attractive 4.99% and goes up to 8.99%, depending on your creditworthiness. It also includes purchase security and extended warranty insurance, RBC Offers discounts and savings at various merchants, and optional add-on coverage for travel insurance.
  • Canadian Tire Triangle Mastercard: This card allows you to earn Canadian Tire Money for your purchases. There’s no annual fee, and you can earn up to 4% cashback at partner stores, 1.5% at participating grocery stores (on the first $12,000 spent annually), and 0.5% on all other purchases. You can also earn additional rewards of 5 cents per liter of gas pumped at Gas+ locations, with the ability to redeem your Canadian Tire Money for discounts at Canadian.
Top Credit Cards in Canada for Bad Credit with Guaranteed Approval
  • Scotia Momentum Visa Card: This card comes with a $39 annual fee, with additional cards costing $15 annually. The APR is on the higher side at 19.99% for purchases and 22.99% for cash advances. However, the potential to earn up to 2% cashback on groceries, gas, subscriptions, and drugstore purchases, along with 1% on other eligible purchases, can be appealing for those who spend heavily in these categories.

Important Factors to Consider When Choosing a Guaranteed Approval Credit Card

  • Guaranteed Approval vs. Meeting Requirements: While some cards are marketed as “guaranteed approval,” it’s important to understand that there may still be eligibility requirements you need to meet. These may include being the legal age of majority in your province, having a valid Canadian social insurance number, and not having a history of bankruptcy or past-due debts.
  • Interest Rates and Fees: Be mindful of interest rates, especially if you tend to carry a balance. Annual fees can also add to the cost of using the card, so factor this in when making your choice.
  • Rewards Programs: Not all guaranteed approval cards offer rewards programs. If earning cashback or points is important to you, compare the reward rates and redemption options before applying.
  • Credit Building Potential: If your primary goal is to rebuild your credit score, choose a card that reports your payment activity to credit bureaus. Timely payments are a significant factor in improving your credit score.

How to Improve Your Credit Score with a Guaranteed Approval Credit Card

  • Make Your Payments on Time: This is the single most important factor in improving your credit score. Pay your credit card bill in full and by the due date whenever possible. Even a single late payment can significantly damage your credit score.
  • Don’t Max Out Your Credit Limit: Using a high percentage of your available credit can negatively impact your credit score. It’s generally recommended to keep your credit utilization ratio (the amount of credit you’re using divided by your credit limit) below 30%.
  • Monitor Your Credit Report Regularly: Check your credit report for errors or inaccuracies that could be lowering your score. You can obtain a free copy of your credit report from Equifax and TransUnion, the two major credit bureaus in Canada, at least once a year.
Important Links
1. Top High-Interest Savings Accounts Across Canada for 2024
2. Ontario’s Top High-Interest Savings Accounts for 2024
3. Top Savings Accounts in Canada for April 2024
4. Reviewing the EQ Bank Mastercard: Get Cash Back and Avoid ATM Fees

The Bottom Line

Rebuilding your credit score takes time and effort, but it’s definitely achievable. By using a guaranteed approval credit card responsibly and following the tips above, you can establish a positive credit history and unlock access to better financial products and opportunities in the future.

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