Are you trying to apply for a credit card with a bad credit score? Worry that your application might get rejected? Fortunately, you can still get a credit card despite the bad credit score. Just remember, though, you won’t get one of those credit cards with exclusive perks and rich rewards.
There are three different credit card types you can use to rebuild your credit. Whatever the issue, with financial discipline and the right cards, you can overcome your poor credit score.
Secured Credit Cards
The first option is a secured credit card. This requires you to make an upfront payment, sometimes in the form of a security deposit. The payment will match the credit card’s limit. The funds will stay with the credit card issuer for the most time until you close your account, and the balance is paid off in total amount.
In other words, the security deposit serves as insurance. So, if you don’t pay your credit card bill, the bank will use the security deposit to pay off your debt.
Many of the big banks in Canada offer secured credit cards. Unfortunately, not all are for fixing bad credit. For example, banks like BMO and RBC offer secured credit cards for newcomers and immigrants.
But there are other banks such as TD and Scotia Banks that offer secured cards as a regular offering. You can get them to restore your credit and earn rewards and perks. However, keep in mind you can’t apply for one online. You have to visit the nearest branch and apply in person.
There’s one credit card you can apply for online, though. It’s known as Home Trust Secured Visa Card. It offers no annual fee and no income requirement.
The best part, they will send the payment information to Equifax and TransUnion monthly, helping you rebuild your credit and boost your credit score. The deposit ranges from $500 to $10,000. Many people usually get approved, even those declared bankrupt.
Prepaid Credit Cards
This kind of credit card doesn’t require you to provide a security deposit. It’s a common credit card that most people opt for because it’s easy to manage.
It’s a good option if you don’t want to pay a security deposit. It’s also good for those who can’t trust themselves with a credit card. The best part, you get instant approval.
There are two different types of prepaid cards:
- One-time prepaid gift card as a credit card – This kind of credit card is available online or in-store for a fixed amount. However, they can’t be reloaded. They also have an expiration date.
- Reloadable credit cards ‒ Many banks issue this type of card. You can fund it as much as you want using your bank account. The best part is it works like a normal credit card.
Keep in mind, though, that prepaid credit cards can’t help your credit score. If you’re looking for a credit card to improve your credit card, this is not the one for you.
If you still want a prepaid credit card, here are three great options for you.
- Stack Prepaid Mastercard – The card entails no fee and no foreign exchange fees. It also lets you earn rewards from its partner retailers.
- KOHO Prepaid Visa card – This card has no annual fee and offers a 1.5% foreign transaction fee with amazing rewards.
- Mogo Visa Platinum Prepaid Card – The card offers a zero monthly interest and zero interest on purchase transactions. But it charges fees for ATM transactions: domestic at $1.50 and international at $3.
Guaranteed Credit Cards
This kind of credit card is also easy to acquire if you have bad credit. It’s also one of the rarest cards in the market. Thankfully, Capital One provides more than one credit card.
- Guaranteed Mastercard ‒ Annual fees are $59 with a 19.80% interest rate on balance transfers and purchases. Down payment may range between $75 and $300.
- Low Rate Guaranteed Mastercard ‒ This is a cheaper choice because the interest is relatively low at 14.90% on balance transfers and purchases. However, the annual fees are $79. Down payment may be required between $75 and $300.
- Guaranteed Secured Mastercard ‒ The annual fees and interest rate are similar to Guaranteed Mastercard. The only distinction between this card and the first one is that you have to put a down payment between $75 and $300.
This guide for the best credit cards for bad credit will help you find the right one. Remember, never miss a payment or you’ll have to face the consequences.