BEST AND BAD CREDIT CARD IN CANADA 2022

DONNY SSD

21 Jan, 2022

Canadians with less than perfect credit will be happy to learn about these new credit cards that are easy to qualify no matter your credit score.

Your credit rating takes into account several factors such as your history of making payments on time, how much debt you have and your overall financial health. when you have a low credit score it can be challenging to apply for an apartment lease, credit card, car loan and mortgage. This is why it is best to keep finances stable otherwise you will run into issues stemming from poor credit.

Although it may hard to rebuild your credit rating, there is still hope. One way to get it done is to apply for a new credit card. In Canada, there are companies offering credit cards even for people with little credit history or a low credit score.

Ways to Rebuild Your Credit

Increasing your credit rating is made possible by properly using a credit card. Remember that one of the major factors that affect a credit report is payment history. This can account for 35% of your entire credit score. Regular payment boosts your score but missed payments stay for a long time in your credit history. Making on-time payments might be hard for some, but using tools like autopay or payment reminders can help.

Credit utilization makes up about 30% of your total credit rating. Utilization refers to the percentage of available credited borrowed by a person. If less of your available credit is used, your credit score will be greater.

By having a new credit card, your available credit will increase which can decrease credit utilization. An example is if the available credit is $1,000 with a balance of $500, credit utilization is equal to 50%. When a new credit card is added with a $500 limit, it will be added the $1000 available credit which will then be equal to a total of $1500. This will mean that instead of 50%, your utilization will go down to 33%.

Of course, if you use the new credit card for purchases it will naturally increase your utilization. This can negatively result in a lowered credit rating. Each month, it is recommended to fully pay off the balance to keep a low credit utilization.

Guaranteed vs Secured Credit Cards

Having a low credit score or bad payment history can lead to low chances of getting a regular credit card. You will find it easier to get approved for a guaranteed or secured credit card in order to rebuild your credit score.

The card that offers guaranteed approval for most is called a guaranteed credit card. Although the approval rate is not really 100%, applicants still have the option to choose from various institutions that offer credit cards regardless of having bad credit. There are some qualifications that need to be fulfilled.

There is a pre-qualification questionnaire to determine if you’ll get approved without you having to go through a credit check. This means you don’t have to undergo a hard inquiry which can negatively affect your credit score.

The other type of credit card is called a secured credit card. This requires a security deposit to get approved. Usually, it is equivalent to the credit limit of the card. The fee can be as low as to $200 or as high as $1000 or even more. This deposit is refundable when the card will be closed with the condition of having a paid off balance.

When you provide a deposit, you will be approved for a secured credit card no matter how low your credit rating is. When the balance is paid in full every month, your credit rating will improve.

Top Choices To Get The Best Credit Cards

There are quite a few companies that offer credit cards to help you rebuild your credit score. It is best to do some research to uncover available options for you. Below you can find some of the best cards for bad credit status.

Guaranteed Credit Cards

a. Capital One

This Capital One Guaranteed Card can help improve your credit. You are eligible for guaranteed approval so long as you are the age of majority in your province, do not own any other Capital One card yet, have not applied for a Capital One card in the last month and do not have a bad debt with Capital One.

The bank may offer a secured or unsecured type of card depending on your credit rating. The annual fee is $59 with APR of 19.8% and a credit limit can range from $300 to as much as $7,000. It is advisable to make regular payments to ensure the balance remains low for the goal of boosting your credit rating. Keep in mind that every month, Capital One is reporting the credit card activity to credit agencies.

An application can easily be made online through the website of Capital One.

b. Refresh Financial

The Refresh Financial Secured Visa is offered with guaranteed approval to anyone who can post a security deposit. All that’s required is a minimum monthly income, bank account and Canadian ID. There are no credit checks, so this card is perfect for anyone with a limited credit history or poor credit.

The credit limit varies depending on the security deposit amount. It ranges from $200 to $10,000. The card has a minimal annual fee of $12.95 and 17.99% APR. A free financial literacy program known as FIT is also being offered by Refresh Financial. This is a good for those looking for better ways to improve the credit rating.

To apply, simply visit their website, fill out the form and wait for a representative to contact you for verification.

Secured Credit Cards

a. Bank of Montreal

This institution offers a reloadable BMW Secured Mastercard that requires $100 to $10,000 of security deposit for approval. The deposit is equivalent to the credit limit. This card gives you access to more than 30 million merchants. It has a $6.95 annual fee.

This reloadable card is perfect for those who are having a hard time rebuilding their credit score. To apply, all you need is to fill out the online form found on their website. Upon the application, you will immediately know its result.

b. Home Trust

With Home Trust Secured Credit Card, a $500 to $10,000 security deposit is required for processing. Since this will determine the line of credit that you can get, you are able to increase it anytime by adding more to your deposit. The annual fee is $59 and the interest rate is 14.9% APR. There is another option without an annual fee but the APR is 19.9%.

The application is online and the security deposit should be sent through the mail. It is also possible to mail both the application and security deposit. This company offers 95% approval rate. The only likelihood for a rejected application is those who are in bankruptcy. You can rest assured that the disapproved application will refund the security deposit.

Best Credit Cards in Canada

Whether you’re looking for rewards, cash back or no annual fee there are credit cards out there to suit your needs. These are the best no fee credit cards currently available in Canada.

It’s important for people to pick the right credit card to maximize the benefits they receive. Making all of your purchases on a credit card instead of a debit card has a lot of advantages. For instance, you have the ability to accumulate rewards worth up to 5% or even 10% of your purchase price. That is like an immediate discount on whatever you just bought. When applied to all your purchases over an entire year, these savings can add up fast. Other advantages include features such as purchase protection, extended warranties and fraud protection that cash and debit cards cannot match.

Best No Fee Credit Cards

First we will take a look at the best no fee credit cards available to Canadians. These no fee credit cards offer the best of both worlds – the opportunity to accumulate impressive perks and absolutely no annual fees.

1) BMO Cash Back Mastercard

The BMO Cash Back Mastercard is the best no annual fee cad in the market. Currently you can qualify for 5% cash back on all purchases for your first 3 months. Once that period is over you can expect to earn 3% cash back on all groceries, 1% cash back on recurring bills and 0.5% cash back on all other purchases.

There are some other sweet deals from this card as well like 25% of car rentals that are booked and paid for on your card.

2) Tangerine Money Back Credit Card

The Tangerine Money Back Credit Card does exactly what you would expect – it offers you money back on each purchase. This card has no annual fee and offers 2% cash back on your top 3 spending categories. The great thing with this card is that you get to choose the categories. It can be groceries, gas, bills, travel or anything else you would like. Cash back rewards are unlimited, so the more you spend the more you earn.

All other purchases outside of your top 3 categories earn 0.5% cash back. This simple card offers some powerful cash back rewards for no fees.

3) Rogers World Elite Mastercard

The Rogers World Elite Mastercard offers a powerful 1.5% cash back on absolutely all purchases and no annual fee. There’s some extra benefits to this card if you happen to buy a lot of items in the United States or shop at American websites. All purchases made in US Dollars earn a special 3% cash back.

Best Rewards Credit Cards

Rewards credit cards are where savvy consumers can get the best bang for their buck. Although these cards might have an annual fee, the rewards and benefits almost always make up for it.

1) American Express Cobalt Card

The American Express Cobalt Card tops our list as the best rewards card available to Canadians. The rewards for this card are nearly endless. Credit Card Genius reports that you can earn 8.75% on all restaurant, grocery and food purchases with this card. Perhaps even more impressive is that this card has a 3.76% earn rate across all purchasing categories. Simply put, there isn’t anything else that even comes close. The fee is only $10 per month and we are quite confident that you’ll earn that back within just a few days of having this card.

2) American Express Gold Rewards Card

The American Express Gold Rewards Card comes in second place in our rankings. You earn 2 points for every dollar spent on gas, grocery stores or pharmacies. Credit Card Genius estimates that this works out to be roughly 5% earn rate on all gas purchases.

3) Scotiabank Momentum Visa Infinite

The Scotiabank Momentum Visa Infinite Card is one of the top ranking rewards card every single year. This is because it is a simple card with generous benefits. Cardholders can earn 4% cash back on groceries, 2% on transit and gas and 1% cash back on all other purchases. The annual fee is only $120 and this fee is waived for the first year.

In addition to these generous cash back rewards, this credit card comes with significant insurance coverage for when you travel or buy anything.

In Conclusion

If you are looking for a new credit card, we recommend checking one of the above options out. These cards will help you earn generous rewards and cash back. And the best part is that it might not even cost you a penny to collect all of the rewards.