Credit card issuers in Canada do not easily issue credit cards to those with poor or no credit scores. However, such can alternatively apply for credit cards for bad credit Canada.
Though having bad credit may not be favorable in most cases when you need some financial help such as loans and credit cards, it may not always mean that you have a poor financial management behavior. Such cases as loss of job, accidents or divorce may be the cause of your poor credit. Whatever cause for your poor credit score is, credit cards for bad credit Canada will offer you a very good chance to develop a credit history or restore the already damaged credit history. These cards do not require credit evaluations.
What credit card options are there for bad credit Canada?
The following are some of the options you may consider for credit cards when you have bad credit:
Secured credit cards
The issuers of credit cards always approve an application for the secured credit cards easily to people with good or bad credit history. This is because the applicants provide a security deposit that is retained by the issuer to act as collateral for the credit. The security may also be in form of home equity. With secured credit cards, the credit issuers are convinced that you will pay back the money spent on the credit cards.
Guaranteed approval credit cards
Guaranteed approval credit cards are offered by some financial institutions to individuals with poor credit scores. These cards however have larger interest rates which the financial institutions use as a back up to high risks associated with people with poor credits. The interest rates may be as high as 20%. These interest rates apply for cash advances, purchases as well as balance transfers. Some of the issuers of these cards may also require some amount of security deposit.
Prepaid credit cards
The prepaid credit cards use a concept that is similar to that of a debit card. The cards provide more benefits to individuals with bad credit as compared to other types of credit cards. This is because they do not require credit evaluation and they do not have any effect on your credit score. The cardholders can also never overspend since they only use the money they load in their card. These cards can also be received as gifts.
Low-interest credit cards
These cards are appropriate for individuals with low credit. The fact that they have low-interest rates makes them cheap for people who may not be able to make full monthly payments, or those who may carry balances. Individuals could also earn rewards such as cash backs from some of these credit cards.
How to Obtain the Best Credit Cards for Bad Credit Canada
The following are things to consider while applying for credit cards for bad credit in Canada.
- To know the best card, you can qualify for, get to know your credit rating.
- Try to obtain an unsecured credit card before going for the secured ones
- Try using the prepaid credit card before going for the other cards available.
- Flashy credit cards may entice you with reward but eventually, put you in more financial complications. It is always important to avoid such cards.
- Always shop around to know the cards whose terms and conditions are suitable for you.
When you are in any financial difficulty, we at Bonsai Finance can assist you to choose the best credit cards that suit your financial situation. We also help you choose the most suitable financial institution from which to get these cards. There are many options for credit cards for bad credit Canada that Canadians can choose. When you have the knowledge and good understanding of these cards, your credit score will never be a barrier to obtaining these cards.