Credit cards for bad credit in Canada: guaranteed approval and secured options

The table below lists cards whose provider describes approval as guaranteed on stated conditions, or that take a security deposit, ordered by what each costs a year to hold; first place goes to the Capital One Guaranteed Mastercard and Capital One Guaranteed Secured Mastercard, tied. The Financial Consumer Agency of Canada (FCAC) says a secured card, which needs a security deposit, may be an option for someone with bad credit or no credit history.

Credit cards for bad credit in Canada, ranked

These cards are listed from the lowest yearly cost to the highest, with each provider’s deposit terms and purchase rates, and a minimum income where the provider states one.

Welcome offers, first-year fee waivers and fee rebates tied to a bank account, banking package, profession or another card are not included.

Also a secured card: Home Trust Secured Visa. The deposit, the holder of the funds and how they come back for the two secured cards are on the secured cards page.

Capital One says approval for this card is guaranteed if four conditions are met, listed in full below, and that security funds may be required. Its rate lines give a separate rate for Quebec residents. It is a different card from the Capital One Guaranteed Secured Mastercard in the table, for which Capital One says security funds are required.

What counts as bad credit?

FCAC says lenders look at a person’s credit report and score to decide whether to lend and what interest rate to charge, and that a poor or limited credit history can make a card harder to get. FCAC also notes that errors in a credit report may be why an application for an unsecured card was refused. Score ranges are on the credit score section, and how to get a report is on checking your credit score for free.

FCAC says lenders use the credit report and score to decide; for Capital One’s guaranteed cards in the table, Capital One lists its conditions in the next section.

What “guaranteed approval” means for Capital One’s cards

For its Guaranteed Mastercard, Capital One sets out the conditions on which it says approval is guaranteed:

Capital One says approval is guaranteed if four conditions are met: the applicant is at least the age of majority in their province or territory of residence, has no frozen credit profile and isn't barred from credit for legal or regulatory reasons, has no existing Capital One account or pending application, and has not applied for a Capital One account more than once in the last 30 days, had a Capital One account not in good standing in the last year, or is in legal recoveries with Capital One.

Capital One says "in good standing" means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.

The same conditions apply to Capital One’s Guaranteed Secured Mastercard, which needs security funds; that card and the other cards that take a deposit are on secured credit cards.

A pre-approval check is a separate step from these conditions:

Capital One's Quick Check tool shows whether a person is pre-approved before applying. It requests the person's report and score from a credit reporting agency as a soft inquiry that Capital One says won't affect the score; choosing Apply Now moves the person into an application, and submitting it leads to a hard inquiry that may affect the score. Capital One says a pre-approval means an application will be approved except in limited circumstances, of which it lists several, among them an application for a Capital One credit product in the last 30 days or an account not in good standing in the last year.

What other issuers check before approving is on getting approved, and how a soft check differs from a hard one is on soft vs hard credit checks.

What these cards cost

The rate column shows each card’s purchase rate, with Capital One’s separate Quebec rate. FCAC says interest is charged when a balance isn’t paid in full by the due date.

On store cards, FCAC gives the example that if the balance isn’t paid in full before the interest-free period ends, interest is charged from the date of purchase, and says that since the rate on these cards is usually high, items bought at a discount may end up costing more than the regular price. Store cards are compared on store credit cards.

After a bankruptcy or consumer proposal

The Office of the Superintendent of Bankruptcy says, on its page comparing debt solutions, that a credit score can be rebuilt by making payments to creditors on time, using less than 30% of available credit and maintaining good habits over a period of time.

Capital One’s meaning of “in good standing”, quoted above, names a consumer credit counselling program and bankruptcy, and its condition looks at a Capital One account in the last year. FCAC’s line that a secured card may be an option with bad credit is at the top of this page. How credit counselling works is on credit counselling. More on rebuilding after a bankruptcy or proposal is on rebuilding credit after a bankruptcy, and how proposals and bankruptcy work is in the insolvency guide.

Card offers that ask for money first

The Canadian Anti-Fraud Centre’s warning signs below are written about loan offers:

• The Canadian Anti-Fraud Centre says, in its section on loan fraud, that in most provinces it is illegal for a company to request an upfront fee before you receive your loan, and that you should never send money first.
• The Canadian Anti-Fraud Centre's loan fraud red flags include companies that offer guaranteed loans even if you have bad credit or no credit, and instant approvals.
• The Canadian Anti-Fraud Centre's loan fraud red flags include a company that requests payment by email money transfer, money service businesses or pre-paid credit cards; it says to end all contact if that happens.

The Competition Bureau's page on service-related scams describes a credit card interest rate reduction scam: the caller impersonates a bank or other financial institution, claims to have negotiated with credit card companies to lower your interest rates, guarantees thousands of dollars in interest savings, and says the lower rates are for a limited time only.

The Bureau adds that such callers may ask for a one-time service fee on a credit card, and that only the service provider, financial institution or credit card company can give a better price for its services.

Loans aimed at people with damaged credit are covered on bad credit loans.

Moving up to a regular card: a one-year example

Card issuers give an interest-free grace period to pay for the previous month's purchases, beginning on the last day of the billing period, and federally regulated financial institutions must provide at least 21 days. It doesn't apply to cash advances, cash-like transactions and balance transfers, and interest applies if the balance isn't paid in full by the due date. Neo says that using a secured card and paying on time can help build a credit history. Capital One says it reports a secured cardholder's payment information to the credit reporting agencies each month, which gives the cardholder the opportunity to build a credit history. How interest works when a balance is carried is on how credit card interest works.

How this ranking works

Cards are listed when their provider describes approval as guaranteed on stated conditions or calls them secured cards. They are ordered by yearly cost to hold: the annual fee, plus twelve times the monthly membership a provider says is needed to use a secured limit, which for the Secured Neo Mastercard is the Build membership. Cards with the same yearly cost share a place. Deposits, rates and conditions are shown, not scored, and Capital One’s Quebec rates are printed beside its standard rates. The Home Trust Secured Visa is named without figures. How the tables pick cards from this site’s card data, and print a dash where no checked figure is held, is on best credit cards.

Related pages

• Secured credit cards and prepaid cards.
• Your first credit card and getting approved.
• Building credit and the credit score section.
• Debt strategies for proposals and bankruptcy.