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Top 6 Credit Cards for Bad Credit in Canada 2019

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This post has been updated on January 10th, 2019 to reflect recent developments in the Canadian financial and credit markets.

Accessing credit is never easy if you have anything but pristine credit score. The most common form of borrowing of course is a credit card, and there are many Canadian financial institutions that offer variety of cards targeted at different market segments. The bad credit credit card market in Canada is really under-served with many of the big players withdrawing their financial products including Peoples Trust who stopped offering their secured credit card, and Affirm financial who also no longer offer their credit cards for bad credit. Home Trust still offer a secured credit card, but they are very picky and getting one from them is not an easy task. Still there is hope for Canadian consumers with bad credit, as a new player called Refresh Financial has entered the secured/bad credit card marketplace. Refresh offer credit cards for borrowers with bad credit, and the good news is they do not do a credit check. The card is relatively easy to qualify for, however keep in mind that this is a secured card, and you will have to come up with the deposit to get one. As the credit conditions get tighter in Canada it will get harder to get a credit card if you have a poor credit, however don’t get discouraged – just check our list of card below and use it as a starting point in your quest for credit card.

There are different options for customers with poor credit, from payday loans and cash advances to secured lines and credit cards for bad credit.

Do You Need a Credit Card if You Already Have Bad Credit?

This depends on your lifestyle, financial literacy, and spending habits but a credit card can actually help build a healthy score. Timely payments allow users to rebuild credit. If you often make financial blunders and are knee-deep in debt, you may want to learn more about credit first.

Can You Get a Credit Card with Bad Credit?

Some lenders offer cards to borrowers with poor and average credit. They often offer cards with a lower limit and higher interest rates because they are considered to be high risk.

Does a Credit Card Help You Rebuild Bad Credit? Secured Credit Cards Explained

A credit card is a useful tool to reestablish credit unless you make late payments. Missed payments also affect your score. Avoid prepaid cards because payments are not reported to the major bureaus. Other cards, including secured and department store cards, help build credit. To get a secured card, clients are asked to make a deposit which is higher or equal to the card’s limit.

Types of Credit Cards for Bad Credit

Secured Credit Cards

securedSecured cards offer many benefits, and one is that it is easier to get approved compared to standard credit cards and unsecured loans. The reason is that financial establishments take no risk. Cardholders use their own money (the deposit made) to make purchases. Lenders will not return the deposit in case of default. They refund the deposit made when the customer decides to close the account. The payments are usually reflected in the borrower’s credit report. The limit normally varies from $200 – $500 to $5,000. Many issuers advertise low annual fees in the range of $10 – $30.

Low Interest Credit Cards

Low interest cards are offered by major unions, banks, finance companies, and online lending services. The main benefit for users is that they save on interest charges. Some issuers offer low interest cards to borrowers with less-than-perfect credit and feature perks such as gas rewards, cash back, payment alerts, and others. The credit line is usually lower, for example, $500 – $1,000, but some companies advertise opportunities for line increases provided that cardholders make timely payments. It is important to ask whether payments are reported to TransUnion or Equifax on a regular basis.

Guaranteed Credit Cards

Guaranteed approval cards by MasterCard and Visa are also offered to borrowers with less than perfect and tarnished credit. While some issuers advertise guaranteed or instant approval, they offer secured versions whereby the deposit serves as a guarantee of timely payments. They are available to consumers who need credit improvement and feature standard benefits such as price protection, travel assistance, baggage delay coverage, and others. Basically, issuers that offer guaranteed cards have more lenient or minimum requirements for approval. They may advertise no employment or credit checks and no application or processing fees.

Prepaid Credit Cards

LOCPrepaid cards allow users to make purchases and payments but are not the best solution for rebuilding credit. Payments are usually not reported. Still this is one option for customers with bad credit and a history of consumer proposals, foreclosure, bankruptcy, and seriously delinquent accounts. There are different reload options, including in person, online, and through direct deposit. Some issuers advertise no-fee cash withdrawals. Prepaid cards also feature online bill pay options, balance alerts, free ATM withdrawals, business and payroll programs, refer-a-friend bonuses, and other benefits. Many issuers advertise no activation or application fees, free online banking, online statements, and free direct deposits.

Store Credit Cards

A department store card is yet another option for borrowers with bad credit and offers plenty of added benefits. Cardholders benefit from perks such as promos and discounts, sales, savings on major or one-time purchases, coupons, and other benefits. Some department stores even advertise interest-free financing. Holders enjoy a zero introductory rate for a certain period, for example, six months. However, department store cards usually go with higher charges than secured and standard credit cards. While the rate is slightly higher, this is one option for applicants with a thin credit file and borrowers who need a credit boost.

Where Can You Find Credit Card Lenders for People with Bad Credit?

Major financial establishments such as RBC, BMO, and other big banks offer cards for bad credit.

Affirm MasterCard®

This card is no longer available.

Affirm Financial Services specializes in providing credit solutions for Canadians who may have difficulty obtaining a credit card or loan from traditional financial institutions. Here are the most important Affirm MasterCard® features:

  • True credit – no security deposit required
  • Credit limit up to $3,000
  • Use it anywhere MasterCard® cards are accepted
  • Fixed interest rate – 29.99% for homeowners and 34.99% for non-homeowners
  • Reports to credit bureaus every month

This card is issued by Peoples Trust Company pursuant to license by MasterCard® International Incorporated. MasterCard® and MasterCard® Brand Mark are registered trademarks of MasterCard® International Incorporated.

No-Fee Scotiabank Value® Visa Card

sbThe Bank of Nova Scotia features the No-Fee Scotiabank Value Visa Card which is available to debt-ridden borrowers with credit problems. The bank offers benefits such as card protection, an introductory rate of 3.99 percent, and car rental discounts. Additional benefits include itemized transactions and supplementary cards. The introductory rate applies to balance transfers and cash advances, which makes it a great choice if you plan to transfer high-interest balances to a low-interest card. The low introductory rate helps borrowers to pay down existing balances faster and get rid of debt.

• Interest rate: 16.99 percent
• Annual fee: zero
• Credit limit: $500 or more

apply

Refresh Financial Secured VisaRefresh Financial Secured Credit Card

This secured card is a new product from Refresh Financial targeted at customers with low credit score or no credit. The card can be used to re-build credit score, and as it doesn’t require a credit check, it may be your best chance for getting a credit card. Here are the main Refresh secured credit card features.

  • Credit limit: $200 to $10,000
  • Purchase Interest rate: 17.99 percent
  • Annual fee: CAD $12.95

apply

Peoples Trust Secured MasterCard®peoplestrust_card

Peoples Trust Secured MasterCard is ideal for those who are new to credit, consumers with credit problems, new immigrants, and students. Holders can use it just like a regular card to make hotel bookings and everyday purchases, car rentals, online purchases, and anything else. This card also allows consumers to make cash advances and build credit over time. Peoples Trust advertises almost guaranteed approval, regardless of credit profile.

  • Minimum deposit: $500
  • Interest rate: 12.99 percent
  • Monthly fee: CAD $5.80
  • Monthly fee (additional cards): CAD $2.95

Home Trust Secured Visa Card

The Home Trust Secured Visa Card is another option that requires a security deposit of at least $500. The limit is based on the deposit made and ranges from $500 to $10,000. There is a low-rate option that goes with an interest rate of 14.9 percent. The standard rate is 19.99 percent and there is no annual fee. The low-rate option goes with a fee of $59. This card is offered to consumers with bad credit and everyone gets approved. If you have less than perfect or poor credit, this card will help you to build or reestablish your credit history. You can use it to book a hotel room, make purchases online and by phone, pay bills, pay for gas, and more.

Apply Now 14.90% $59 annual fee or $5 per monthApply Now 19.99% No annual fee

BMO® Preferred Rate MasterCard®

bmThe BMO Preferred Rate MasterCard is a card advertised with no annual fee and an interest rate of 17.5 percent. The card also features a long interest-free period of 21 days. While applicants with bad credit get approved, those with a history of bankruptcies do not qualify. If you have filed for bankruptcy over the last 7 years, your application will be declined. BMO also requires employment and income information. Customers are offered perks and benefits such as:

• Low-rate options (11.9 percent)
• Travel benefits
• Purchase protection
• Extended warranty
• Roadside assistance
• Medical protection
• Trip cancellation coverage

Capital One® Guaranteed Secured MasterCard®

CapThe Capital One Guaranteed Secured MasterCard, for example, features guaranteed approval and a limit of $300 or higher. It is a good choice for customers with no credit and tarnished credit. The good thing about this card is that you can use it like a standard card – to make bookings, for car rentals, online purchases, in-store purchases, and more. Capital One features standard benefits such as emergency cash advances and card replacement and zero liability.

• Interest rate: 19.8 percent
• Annual fee: $59

TD Emerald Visa Card

The TD Emerald Visa Card is also a good choice for bad credit borrowers and goes with benefits such as:td

• Low annual fee of $25
• Security and purchasing convenience
• Automotive benefits
• Travel benefits
• Medical insurance

Applicants are allowed to add up to three cardholders. The card goes with a competitive variable rate of 12.75 percent and is a great option for borrowers with bad credit, students, and newcomers to Canada. Cardholders are offered trip interruption coverage, trip cancellation insurance, car rental discounts, and other perks. TD Emerald Visa is also advertised as a balance transfer card for debt consolidation.

RBC Visa Classic Low Rate

rbThe RBC Visa Classic Low Rate is yet another card with a low interest rate of 11.99 percent and an annual fee of $20. Additional cards are available at no added cost. This option is a great choice for those considering debt consolidation. Major benefits include free travelers checks, worldwide acceptance, easy application, and others. Optional travel insurance is also available to protect customers in case of loss of job or illness. Customers benefit from autopayment options, cash advances, and quick application processing. This card is also an excellent choice for debt consolidation. You can use it to make one-time or larger purchases.

What to Do Next?

Once you have been approved for a low rate, department store, or secured card, it is time to learn how to manage credit responsibly. This means timely and regular payments to avoid penalty fees and charges. Late and missing payments also affect your score and chances to get approved for low-cost unsecured loans, LOCs, and premium credit cards. Avoid using multiple cards because it is more difficult to keep track of due dates, payments, and other details. Check your financial statements regularly to track your spending and payments. Using online banking is a great way to view your statements, payment history, and transactions. Make sure you check your credit report for mistakes and omissions. Consumers are entitled to receive a free report once a year.

If you have other balances, try to pay down your auto, consumer, and other loan balances to boost your score. The goal is to maintain a debt to income ratio of 30 percent or lower. Paying down small balances on different cards helps improve your score. Pick one or two cards with affordable rates and use them for payments and purchases.

Keep in mind that credit cards are intended for regular, small purchases and unexpected expenses, for example, utility and medical bills, auto insurance, plumbing and electrical problems, car repairs, and others. You can use your card for grocery shopping, bill payment, trips to the ER, car maintenance, vehicle registration fees, and other small expenses. It makes no sense to buy big-ticket items on a credit card. It is better to use a low-cost unsecured loan instead. Otherwise, you will end up paying a huge balance, and your score may suffer as a result.

If you have poor credit and find it difficult to manage your finances, you may want to contact a credit counseling service. They offer financial education to teach borrowers how to manage debt responsibly. The goal is to gain financial stability and control and make sound credit and borrowing decisions. Specialists negotiate with creditors, help customers to calculate their debt to income ratio, sort out their finances, and more.

How Would Filing for Bankruptcy Affect Your Borrowing Power?

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Filing for bankruptcy can negatively affect your borrowing power because your credit score is likely to plummet. This depends on your credit profile, however. If you have fair or bad credit and multiple negative items listed, then you would expect a low to moderate drop. Borrowers with spotless or very good credit, however, see a significant drop.

What to Expect

It is a good idea to learn more about bankruptcy as to know what to expect. This is a last resort for borrowers who have exhausted all other options such as counseling, negotiation with creditors, debt consolidation. Consolidation loans, for example, are offered to borrowers to combine multiple debts and benefit from a single payment. It is a form of refinancing for borrowers with a lot of outstanding debt. Bankruptcy is a solution for people who owe more money than the total value of their assets. In fact, if you owe $1,000 or more and are unable to keep up with payments, you meet the criteria.

Bankruptcy is a solution for borrowers who have unsecured debts, including personal loans, vacation loans, credit cards, lines of credit, etc. Those having a lot of equity may not be allowed to keep their home. When it comes to personal belongings, there are certain exemptions to look into. The list includes things like retirement savings and pensions, heating fuel and food, and farm supplies, equipment, animals, and land. When filing for bankruptcy Canada based borrowers are also allowed to keep their vehicle, furniture, clothing, and health aids. Exemptions vary from province to province. In Alberta, for example, you are allowed to keep your social allowance, farm land, principal home, farm property, tools of trade, household appliances, and food. In Manitoba, you are also allowed to keep some life insurance policies, locked-in pension plans, religious items, etc. In any case, bank accounts are not exempt.

The Bankruptcy and Insolvency Act governs receiverships, commercial and consumer proposals, and bankruptcies. A bankruptcy trustee is appointed to represent the borrower’s estate. Once you have filed, you can expect to receive a discharge in about 9 months unless a court orders an extension.

Your Borrowing Power

After you have filed for bankruptcy, your borrowing power will be seriously affected because you are considered a high-risk customer. There are some things to do to improve your chances of getting approved for a loan or a credit card.

Get Your Discharge

The first step is to get your discharge in a timely manner. Once you do this, it is time to start rebuilding your credit.

Apply for a Secured Card

There are several options to look into, among which secured loans and secured credit cards. A secured credit card is easier to get even if you have a tarnished credit score. The reason is that your savings account serves as collateral, i.e. guarantee of repayment. This makes it less risky for financial institutions. Secured cards are offered to borrowers with a history of poor credit and limited credit exposure. The limit depends on the amount deposited and your score.

A Store Card

Another option is to apply for and open a department store card but interest rates tend to be significantly higher compared to other products. This can be a good solution if your department store offers generous discounts but there is more. A store card can help you to improve you score if you make occasional purchases (as opposed to many purchases). This will help you to lower your utilization rate. A low utilization rate proves to financial institutions that you are a low-risk borrower. Aim at a utilization rate of about 15 percent to help rebuild your credit score. This is provided that you make timely payments and use the line in a responsible manner. In fact, responsible use is the key to rebuilding credit. Late and missed payments show on your report and negatively affect your score. You don’t want this if you declared bankruptcy recently.

An Installment Loan

There are other things to do to boost your borrowing power, and one is to get an installment loan. If you made regular payments on your department store or secured card over the past couple of months, you may want to visit your local bank. Ask what they have on offer. If you get approved for a small installment loan, make regular payments. When it comes to the loan amount, it is always better to be on the safe side and start small. Borrowers with poor credit are usually offered very high interest rates, which adds to the cost of the loan. It is always good to have a credit mix, i.e. personal loans, credit cards, etc. A good mix means diversity and shows financial institutions that you can handle different types of credit. Be careful when applying. Multiple applications can have a negative effect on your score.

Develop Healthy Financial Habits to Deal with Debt

Finally, the most important thing is to develop healthy money and credit management habits to avoid debt and bankruptcy. If you are unsure where to start, you may want to contact a bankruptcy advisor or financial advisor to learn the basics. Your financial advisor will help you learn how to budget, save, and set long- and short-term financial goals. They will help you build a financial cushion (an emergency fund) for a rainy day and emergency situations. A financial advisor will also help you develop a personalized plan based on your individual circumstances. A personalized, step-by-step plan can help you a great deal in terms of rebuilding credit, when to start, what financial products to apply for, and more. When choosing an advisor, make sure you ask whether they offer free information, what services they offer, how much they charge, etc. Ask whether they have monthly or set-up fees.

Once you succeed in rebuilding credit, you will have plenty of choice when it comes to credit cards and loans with attractive terms, low than average rates, and incentives and perks.

CIBC Air Canada® AC conversion™ Visa Prepaid Card

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CIBC features a selection of standard and specialty credit cards for customers with different credit scores and requirements. Cards come with beneficial features such as no foreign conversion fees, no annual fees, cash back, complimentary bonuses, and a lot more. At the same time, while customers with excellent rating have plenty of choice, those with poor and average credit have fewer options to choose from. In fact, a handful of financial institutions in Canada offer prepaid and secured cards, and the CIBC Air Canada® AC conversionTM Visa Prepaid Card is one option to consider.

Overview, Features, and Fees

The CIBC Air Canada® AC conversionTM Visa Prepaid Card is a great choice for borrowers who have a less-than-perfect credit rating and are turned down by other issuers. It is a good option for customers who need a card to shop online, make in-store purchases, etc. Customization is free of charge. АТМ withdrawals are also free on the territory of Canada. The fee varies by country, i.e. it is 3.95 AUD for withdrawals in Australia, 1.95 GBP in Britain, and 349.95 JPY in Japan. The first withdrawal each month is free even outside of Canada. Foreign conversion fees apply in the amount of 2.5 percent over the rate paid by the bank. Conversion fees apply for non-supported currencies. There is a card replacement fee in the amount of $25 CAD. It is important to note that cardholders cannot make recurring payments or non-ATM withdrawals, i.e. withdrawals at a bank or another financial establishment are not allowed. Finally, an optional shipment fee applies equal to $25 CAD.

Application

It is easy and quick to apply for the prepaid card – customers are asked to provide basic information and details, load the card, and review and confirm. There is a minimum amount that customers are asked to load – $100 CAD. The maximum amount that can be loaded is $20,000 CAD in different currencies. The limit on the maximum balance is $20,000. There is also a limit on the amount that can be transferred by a single transaction – $2,999.99 CAD. The maximum amount to withdraw at an ATM per day is $2,000 CAD.Apply NowApply Now

Keep in mind that amounts loaded are not insured by the Canada Deposit Insurance Corporation.

There are eligibility criteria to meet when applying, and one is to be of legal age. Customers who have an address in Canada and are Canadian permanent residents qualify. There is a limit of one prepaid Visa card per cardholder meaning that additional cards are not available.

Supported Currencies

The list of supported currencies includes Swiss Franc, Turkish Lira, Japanese Jen, Australian Dollar, and Hong Kong Dollar. Other supported currencies are Great British Pound, Euro, United States Dollar, and Canadian dollar. Transactions in non-supported currencies can be made as well. However, the amount transferred is converted to CAD to make a transaction.

Customers are free to load money in different currencies of their choice. They are offered the option to load a maximum of 10 currencies and what is more, they are free to lock up the rate while loading. There are no added conversion fees when making purchases at major e-commerce retailers. Given that users are free to load amounts in different currencies, the CIBC Air Canada® AC conversionTM Visa is an excellent choice for frequent travelers and persons making purchases at different retailers worldwide. The fact that customers are free to load funds in 10 currencies means that they can make purchases in 45 countries worldwide, and no foreign transaction fees apply.

Benefits for Cardholders

There are plenty of benefits for cardholders, one being the fact that customers are free to use the card at about 36 million retail locations around the globe. The card can be used at ATMs and to make purchases in-store, over the phone, and online at retailers where VISA cards are accepted.  Another benefit is that the card comes with a chip and PIN technology for safety and peace of mind. The chip and PIN technology is a great add-on to protect customers and their money from theft, fraud, and other incidents. The fact that the CIBC Air Canada® AC conversionTM Visa is not linked to an active bank account means that the bank does not hold personal information for customers. Thus, customers are protected against identity theft and fraudulent activity. A third benefit is that the bank offers 24/7 support should anything happen. In case of a stolen or lost card, holders are free to call the bank to request card replacement. They can request emergency cash as well. Note that a replacement fee applies. Finally, even customers who don’t have a bank account at CIBC are welcome to apply for a prepaid Visa card.

Mobile App and Features

Customers can use a mobile app to move amounts between different currencies, load money, check their balance, and a lot more. The app allows customers to select a currency and shows the exchange rate and load amount. There are plenty of beneficial features for cardholders, one being the option to transfer money between different currencies. Customers are free to access and view their transaction history to check for errors, view latest purchases, or keep track of purchases and expenses. Another beneficial feature is the option to reload the card and choose from different currencies. Once funds have been loaded, the app shows details such as the transfer date and transaction ID. While there are plenty of beneficial features, keep in mind that additional service charges may apply. It is a good idea to contact the bank and ask about additional fees when using the mobile app.

There is a French and English version. The mobile app can be installed and used on Android devices, including mobile phones, tablets, and others.

Checking the Balance

There are different ways to check the available balance – by phone, through the mobile app, or online. Customers can activate the prepaid card in two ways, by using the mobile app or online.

Refresh Financial Secured Credit Card

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Refresh Financial offers a new secured card in light of the fact that credit conditions are tightening in Canada, especially for customers with fair and poor scores and average and low income. Many Canadians use credit cards in emergencies, to pay for car rentals and hotel bookings, to make in-store and online purchases, and so on. Some of them have poor credit and access to fewer options than those with stellar scores. The Refresh Financial credit card is one option for customers with less than perfect scores and stable income.

Market Conditions

The largest player in the market, People’s Trust discontinued their secured card while other providers tightened up conditions, making it more difficult to qualify with bad credit. People’s Trust is no longer accepting applications but existing holders can still use their cards. This is unfortunate given the low interest rate of 12.99 percent and low minimum deposit of just $500. The Affirm MasterCard Credit Card is another product suitable for borrowers with a poor or fair score.  Similar to People’s Trust, the company stopped issuing new cards. The only option that borrowers with poor credit have is the secured Visa offered by Home Trust. The card goes with no annual fee and a minimum deposit of $500. Customers need a bank account to apply but borrowers with poor credit have better chances to qualify compared to unsecured varieties. In reality, however, Home Trust does not approve many applications. The fact that Refresh Financial offers a secured card is good news for applicants with poor credit. As we all know, there are many ways to get bad credit, including divorce, items in collections, identity theft, bankruptcy, consumer proposal, and loss of job. Other reasons include car repossession, late or missed payments, mortgage foreclosure, and high card balances. People end up with a poor credit score when they cosign, fail to pay bills on time, have a seasonal or part time job, and have low income and too many commitments.

Who Is This Card for?

A secured Visa from Refresh Financial is ideal for borrowers with a blemished credit score. Whether applying for the Refresh secured credit card or another product offered by the company, approval requires banking verification (a bank account), a Canadian ID, and minimum monthly income.

Security Deposit, Perks, and Other Features

The card goes with a security deposit of $200 – $10,000, which is less or equal to the credit limit. Customers are offered free access to a program called Financial Intelligence Training. This is a financial education program to help customers gain basic skills and learn how to set financial goals. Borrowers learn how to save money, avoid credit traps, and build personal wealth. They are offered free short videos which are divided into 7 series. The short videos feature money tips and advice to get a better idea how credit works. In addition, customers are offered access to convenient tools such as credit builder calculators to find out how their credit score impacts the interest rate on their card, vehicle or personal loan, or mortgage loan.

Added Benefits

There are further benefits for customers, one being that borrowers have access to more than 1 million ATM locations across the globe. They are also free to make online purchases and shop at more than 24 million in-store locations in Canada and abroad. What is more, the card goes with all benefits of Visa and helps customers build or rebuild their credit. Visa benefits include roadside dispatch, zero liability, rental collision damage waiver, and reporting for stolen and lost cards. Cardholder inquiry service is an added benefit for Visa holders. The rental collision damage waiver, for example, is a beneficial feature in case of damage due to theft or collision. The coverage is offered to all standard Visa holders. The secured Visa from Refresh Financial also comes with standard benefits such as emergency cash disbursement and card replacement and other convenient features.

Rates and Fees

  • Interest rate: 17.99 percent
  • Purchase rate: 17.99 percent
  • Annual fee: $12.95

The Refresh secured credit card is advertised as the lowest cost card on the market, and no credit is required. All payments are reported to the major bureaus to help borrowers rebuild credit. Customers have the chance to rebuild credit over time provided that they make on-time payments. Like other secured cards, maxing out and missing payments has an adverse effect on the customer’s score.

Other Products Offered by Refresh Financial

The company offers a credit building program as well, which is an alternative to secured cards. There are several benefits for participants, and one is that they do not need up-front money. On-time payments are reported to the major credit bureaus which helps borrowers improve their scores. On the downside, there is an initial commitment fee. In fact, customers can choose from different solutions to rebuild credit. One alternative for borrowers with poor credit is the Fresh Start program offered by Refresh Financial. Customers get approved regardless of their score and provided that they are committed to rebuilding credit. The amount available varies depending on the borrower’s requirements. Payments are reported to the bureaus like payments on an installment loan. Timely payments prove potential lenders that applicants are trustworthy and responsible. A portion of the money paid goes toward fees and interest charges, and borrowers are free to use the remaining amount in any way they like after they finish the program.

Keep in mind that the company does not offer credit repair services but only the Refresh credit card and short term secured savings loans. Repayment terms vary from 36 to 60 months and loan amounts are in the range of $1,200 to $5,500. There is a loan set up fee that can be as low as $200 and as high as $400.

Top 6 Secured Credit Cards for Canadians

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This post has been updated on Oct. 29th to reflect new developments in the Canadian secured credit cards markets.

Many years ago I got my first credit card from CIBC, and because I had no credit history I had to settle for a secured credit card. The card had $500 limit, which I had to deposit with the bank – not much of a credit card :). I used it for 2 years making small purchases and paying it off every month diligently, which helped me establish good credit history. While many of the big banks advertise financial products targeted at recent immigrants, and people who simply have no credit history yet, the fact is that getting even a secured credit card is much tougher nowadays in Canada. Even Peoples Trust out of British Columbia, which was a major player in the Canadian secured credit card space, decided to discontinue their card in July, 2017.

If you are in the market for secured card, you might also consider getting a unsecured credit card with low limit, which should be easier to get. You can try store credit cards like Canadian Tire MasterCard for example. While not perfect this card is somewhat easier to obtain, and with less and less financial institutions offering secured credit cards, it may be the right choice for you.

Find a solution to credit issues – get a secured credit card

Individuals with a thin credit file usually apply for a secured card because they have a more limited choice, especially when it comes to specialty cards with attractive rates and terms. They are also offered to those who are new to credit as well as recent immigrants, newcomers, and students. Secured credit cards are available from unions, small and major banks, and other establishments and help consumers establish credit.

How Secured Cards Work

Issuers require a cash deposit or security funds as a guarantee of on-time payment. It is usually equal to or larger than the limit offered. The only difference between secured and unsecured cards is the fact that security funds are required because financial institutions deal with high-risk borrowers who are more likely to default. Other than that, holders can use the card to make payments online and in-store, to pay bills, and so on.

Benefits for Users

The main benefit for users is that payments are reported regularly to major bureaus such as TransUnion and Experian. Customers who keep their balance low and make on-time payments gradually establish or reestablish credit. The timing of reports and the issuer’s reporting practices determine how long it takes before your card appears on your credit file.

What Is the Right Credit Card for You?

The choice of a secured card depends on whether you are a regular bank customer or a union member and other factors. When comparison shopping, look at the credit limit, grace period, and purchase and penalty interest. In general, whether a product is right for you depends on the issuer’s reporting practices. Some establishments report only missed and late payments while others report all payments and help build credit with time.

Who Is Eligible to Apply

Individuals with any credit profile qualify, from tarnished and fair to stellar. Legal residents and Canadian citizens of legal age are eligible to apply. You must be of the age of majority for the province or territory where you reside. Some major banks like TD even offer secured cards to customers who don’t have Canadian credit history, including international students and foreign nationals (temporary residents). The range of products available depends on different factors, including your credit rating and financial situation. When applying for a secured card, consumers are often asked about estimated monthly payments, including lines of credit, loans, mortgages, and other accounts. Financial establishments also request information about your rent or mortgage payments as well as income amount, employer, and sources of income. Many card issuers require that applicants have a verifiable permanent address in Canada and a verifiable source of income (i.e. proof of income).

Top 6 Secured Credit Card Picks

#1 – First Place
No-Fee Scotiabank Value® VISA Cardsb

A yet another secured card by Scotiabank, this is a great solution to transfer existing balances. The introductory rate is just 3.99 percent and is in effect within 6 months of opening the account. The intro rate applies to credit card checks, balance transfers, and cash advances. The interest-free period is 21 days. Special discounts are offered, including car rental discounts. Optional credit card protection coverage is also available in the event of job loss, disability, or another unfortunate event.
• Balance transfer fees: none
• Interest rate: 16.99 percent
• Annual fee: none

apply

#2 – Second Place
Refresh Financial Secured VisaRefresh Financial Secured Credit Card

This is a brand new secured credit card from Refresh Financial targeted at customers with bad or no credit, and people looking to build or re-build their credit. This secured Visa doesn’t require a credit check, so it should be very easy to get. Here are the main Refresh secured credit card features.

    • Credit limit: $200 to $10,000
    • Purchase Interest rate: 17.99 percent
    • Annual fee: CAD $12.95

apply

#2 – Old Second Place
Peoples Trust Secured MasterCard®peoplestrust_card

This card is no longer available.

This secured card is a flexible solution designed for customers with limited or no credit exposure, new immigrants to Canada, students, and anyone looking to build credit. It is also ideal for borrowers with poor ratings such as discharged bankrupts and those with serious credit problems. Similar to standard cards, this MasterCard helps holders to improve their rating with time. Customers with a verifiable source of income qualify.

  • Credit limit: $500 or higher
  • Purchase Interest rate: 12.99 percent
  • Monthly fee: CAD $5.80
  • Interest rate on cash advances: 24.50 percent

 

#3 – Third Place
Home Trust Secured Visa CardHomeTrustSecuredVisaCard

Home Trust also offers a credit card that helps consumers to enhance their credit profile. Virtually everyone applying for a secured Visa gets approved, and there are two options available:
• No annual fee with 19.99 percent interest rate
and
• Annual fee of $59 with 14.9 percent interest rate

In addition to attractive terms and interest rate, this card goes with benefits such as the option to add an authorized user and a credit limit that can be as high as $10,000. The minimum limit is $500. This card can be used to book a vacation, make purchases online and over the phone, and access cash.

#4 – Fourth Place
Vancity enviro Secured Visa

Vancity features a secured card with a deposit of just $500 and plenty of added and optional perks, including delay and lost baggage insurance, price protection, travel accident insurance, and others. This card is available to applicants who don’t have a previous Canadian credit history and to recent immigrants. There are different options to look into, for example, enviro Classic which is a good choice for customers who pay the full balance. This card helps borrowers to rebuild credit and is intended for customers who have experienced financial problems in the past.
• Annual fee: none
• Interest rate: 19.5 percent

#5 – Fifth Place
DCU Visa® Platinum Secured Credit CardDCUvisa-secured-platinum

This card is a low-cost alternative to other secured products and goes with travel and everyday benefits and optional overdraft protection. Added benefits include travel insurance coverage, auto rental collision damage waiver, and extended warranty. A major benefit is the fact that there is no minimum interest charge. As an added benefit, balance transfers and cash advances are free. The card also goes with Visa Checkout for safe and convenient shopping.
• Interest rate: 11.50 percent
• Penalty charges: 18.00 percent
• Annual fee: none

#6 – Sixth Place
RBC Visa Classic Low Raterb

RBC features a low-cost card designed for customers who carry a balance. The card features optional and standard add-ons such as travel insurance and chip and PIN technology and can be used as a tool for debt consolidation to save on interest payments. Users are also offered additional cards with no annual fee. There is a card registration service for important documents and cards and auto payment service for ease and convenience.
• Interest rate: 11.99 percent
• Annual fee: $20

#7 – Seventh Place
Capital One® Guaranteed Secured MasterCard® guaranteed-secured-Cap-One

This card is ideal for individuals who need to establish credit history and goes with guaranteed approval. The credit limit varies and can be $300 or higher. The minimum security funds to deposit with the bank and access credit are in the amount of $75. Standard benefits that go with this card include referral to the closest ATM, zero liability, and others. Holders are free to make internet and in-store purchases, hotel reservations, car rental bookings, gas purchases, and more.
• Purchase rate: 19.8 percent
• Annual fee: $59
• Grace period: min 25 days

Fees, Limits, and Rates

The interest rate varies by issuer and is usually around 20 percent. It is in effect once the account has been activated. The rate on balance transfers and cash advances can be the same or different. In general, the rate is slightly higher compared to unsecured cards because financial institutions take more risk. Many applicants have a history of missed or late payments, maxed out cards, defaults, foreclosure, and even bankruptcy. This is why fees and service charges are usually higher as well. At the same time, there are many banks that feature credit cards with no annual fee, including Scotiabank and TD Canada Trust.

The grace period also varies from 19 to 25 days and applies to regular bank transfers and new purchases. Secured cards have a zero-day grace period on special bank transfers and cash advances. The available limit and security funds required depend on your financial circumstances and can be as high as $10,000 and as low as $500. Some banks even offer cards with lower credit limits. If you plan to make large purchases (one-time and big-ticket items), it is better to choose a card with a larger limit provided that you make timely payments and pay at least the minimum before the deadline (grace period). The minimum payment can be $10 or 3 percent or fees plus interest but this depends on the card of choice. Make sure you check the minimum monthly payment, especially if you only pay the minimum.

5 Ways to Improve Your Credit Score

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There are plenty of ways to improve your credit score and become a trustworthy borrower who uses credit responsibly. Eliminate outstanding balances, pay your bills on time, and never go over your limit to boost your score.

1. Eliminate Card Balances

This is the first step to make, and there are different ways to go about this. If you have high-interest cards, you may want to shop around for balance transfer cards with low promotional rates. In fact, some banks offer zero interest over a period of 6 to 12 months. Another way to eliminate outstanding balances is to focus on one of your cards first and pay as much as you can. Financial experts advice to start with the lowest balance, i.e. set a short-term goal that brings quick results. Meanwhile you can pay the minimum toward your other balances. The next step is to lower your utilization rate because this is what brings your score down. Simply divide the balance by the credit limit for each card to find the utilization rate. Then pick the card with the highest utilization rate and pay as much as you can to reduce the outstanding balance.

2. Pay Bills on Time – Try to Pay Your Bills in Full by the Due Date

Paying your bills on time is yet another way to boost your score because delinquent bills usually show on your report. In fact, if you are behind with your payments, including phone, electricity, gas, or other bills, it is likely that your provider contacts a collection agency. Your credit score will suffer because information about late payments and delinquent bills is forwarded to the credit bureaus.

3. Reduce the Number of Credit Applications You Make

A large number of credit applications can affect your credit score because lenders usually pull your report to see whether you are able to manage debt responsibly. They will do this regardless of whether you apply for a personal loan, car loan, credit card, or anything else. The problem here is that the number of new applications is one factor that affects your score. In fact, applications make 10 percent of your score. A major mistake to avoid is to apply with multiple providers over a short period of time. This will cost you more score points than applying for credit with one lender. Wait for some time before you apply with another provider unless you are desperate for credit. If this is the case, yes, your score may suffer, but there are other factors that lenders take into account (like whether you make regular payments and if you have a good or tarnished score). Plus your score is based on other factors such as the length of your history, your utilization rate and credit mix (vehicle and personal loans, mortgages, lines of credit and credit cards, etc.)

And even if you credit score does not suffer due to multiple applications, providers may turn your application down. This is because you applied for multiple cards at the same time.

4. Make Sure You Have a Credit history

If you don’t have credit history, it is difficult for lenders to determine whether you are a trustworthy customer. There are several ways to start building a credit history, and one is to apply for a card with a small limit. You can also use a department store card to this end, but remember that department stores usually offer higher than average rates. Another option is to apply for a small loan with your local union or bank, especially if you are a regular customer. If you have a savings or checking account with a local bank, it is a good idea to visit them first. Regardless of whether you apply for a credit card or a personal loan, make sure that you make payments on time. Late payments are one of the reasons to have a fair or poor credit score.

5. Don’t Go over the Credit Limit on Your Credit Card

This is a no-no if you have a tarnished credit score. Your score will be affected even more if you go over your limit and do this regularly. The limit on a credit card is the amount you are allowed to charge when making payments. You are free to opt out so that you don’t go over the limit by mistake. In this case, your card will be declined when you try to make a transaction. While this can be embarrassing, your credit score is unlikely to suffer. What is more, you will save on over the limit fees that some providers charge. Over the limit fees are often equal to the amount by which you exceeded the limit. If you go over by $20, for instance, the fee will be $20.

What Else You Can Do

There are other ways to boost your credit score and surprisingly, one thing to do is to leave debt on your report. Bad debt will be removed in several years anyway. Good debt, however, shows that you are capable of managing credit in a responsible manner. And the longer your credit history, the better – leave good accounts on your credit report for as long as possible. If you have credit cards with a solid record of payment, it is a bad idea to close them. Another way to boost your credit score is to contact your financial institution and ask them to erase debt. If you have a good reason, say you were unemployed over the last couple of months, your bank may be willing to do this for you. Finally, it pays to request a free copy of your report and check for any errors and omissions that affect your credit score.

HBC Credit Card

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HBC credit card is offered by Hudson’s Bay Financial Group in Canada. It is tied to the loyalty rewards program offered by the company.

Overview

The HBC credit card is marketed as the best way to earn Hudson’s Bay rewards points at approved stores around Canada. It functions as a rewards program as well as a store card. Though people can apply separately to the rewards programs, HBC cardholders can double the points they earn at stores. Each $1 spent using this credit option can earn as much as 4 points. Regular rewards program subscribers only get 2 points per dollar spent.

Cardholders can stack up points without time limits. People who can earn up to 2,000 points receive a $10 gift voucher. Rewards points can be redeemed as Hudson’s Bay gift vouchers to use online on thebay.com and Home Outfitters.

For this credit card, HBC does not charge an annual fee. But the annual interest rate is 29.9% by default. Customers should refer to the Disclosure Statement provided following approval for detailed legal information. Cardholders who pay off their balances by the due date can enjoy an interest-free grace period for 21 days for all new purchases. Customers should note that the grace period does not apply to balance transfers or cash advances.

Cardholders can earn even more points by using this rewards credit at “exclusive events.” These events will be announced online and users can get notification of them by signing up at thebay.com. Cardholders can get the best returns by using the HBC card at Hudson’s Bay Company stores. Using it can get customers free shipping and up to 90-day returns on purchases on the thebay.com

The HBC credit program should not be confused with the Hudson’s Bay MasterCard. The MasterCard can be used anywhere regular MasterCards are accepted, both online and offline. The HBC credit card can only be used at thebay.com, Home Outfitters, and Hudson’s Bay. With the MasterCard, users can earn 2 rewards points per each dollar spent on non-Hudson’s Bay Company stores. Cardholders can earn up to a 25% bonus each year for all such points. With the credit program, each point earned can be doubled at the stores.

Though the two are separate, customers must present a Hudson’s Bay MasterCard when making purchases at Hudson’s Bay Company outlets to get store points for the HBC credit card. When the MasterCard is used at other stores, the reward points will be automatically added to the account associated with the credit card.

Earlier, The Bay allowed cardholders to convert points to Air Miles and Esso Extra points. However, this is no longer possible. The Air Miles and Esso partnerships ended on September 30, 2015. In its place, the company added a third-party service called points.com to allow cardholders to add extra points.

Certain associated transaction fees and service charges, such as for foreign currency conversions, may occur when using the attached HBC account. Customers who subscribe to the special payment plan must pay $99 unless the fee is lowered or waived upon request. Payments and cheques that bounce cost $30 each. Rush cards cost $20. The over limit for this card is $29 if the account balance per billing periods exceeds the preapproved amount. Customers will be charged a fee equal to the existing balance if the accounts are inactive for six consecutive billing periods (usually months).

Customers do not have to be enrolled in The Bay Rewards program to apply for or receive a HBC credit card. Those who are approved will be automatically enrolled in the program. Customers can earn more points with the rewards program by spending more. Customers who spend more than $1,200 using one of these accounts can get VIP benefits, which mainly mean more points per each dollar spent. VIP and Plus customers also have better chances of doubling the points they earn.

The Hudson’s Bay rewards program was quite popular in the Canada in the past. However, participation has dwindled because most Canadians don’t value the program as they used to. The new HBC rewards program that Canadians apply for is a completely revamped version not offered in previous decades. The new program rewards customers more for spending at The Bay and for combining the credit card with the MasterCard.

Pros and Cons

Pros

  • No annual fees associated with the HBC credit card.
  • The more a customer spends, the more points he or she can earn per dollar spent. Customers who spend more can upgrade accounts to VIP or Plus to increase chances of doubling points.
  • Excellent option to save money at thebay.com and Home Outfitters.
  • Rewards program can be extended to third-party stores when used with a Hudson’s Bay MasterCard.
  • Free $10 gift voucher awarded to customers who earn 2,000 points.

Cons

  • HBC credit cards only earn rewards at thebay.com, Home Outfitters and other Hudson’s Bay companies. Customers need a Hudson’s Bay MasterCard to earn points from third-party stores.
  • High annual interest rate close to 30%.
  • Rewards can only be redeemed on an annual basis.
  • The number of outlets available to earn points is limited.
  • Air Miles and Esso Extra points are no longer offered as redeeming option.

Comparison to Canadian Rewards Credit Cards

The most popular Canadian cash back rewards programs, such as Tangerine and American Express Simply Cash, offer wider shopping options in comparison to HBC. This card is designed mainly as a loyalty program. The shopping options of customers are largely limited to Hudson’s Bay Company stores and affiliates.

In addition, rewards programs like Tangerine offer cash back rewards on a monthly basis. With the HBC card, customers can only redeem points once a year. Customers can mostly benefit only by combining the HBC MasterCard with the credit card. On the plus side, there are no annual fees that are charged to associated accounts. But there’s a 29.99% interest rate.

This card is best suited for customers who already frequently shop at places like Home Outfitters and thebay.com.

Top 5 Canadian Travel Credit Cards

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Credit cards with travel perks are truly the best. You can benefit from these if you enjoy traveling, are a frequent flyer, love getting a bargain on something, bonus hunter, or all of the above. Subscribing to one of the best credit cards in Canada will save you a lot of money on airplane tickets, travel insurance, luggage claims, and many other similar things.

Consumers often evaluate credit cards rewards programs based on value offered per point. A good way to measure is to check how may air miles or associated perks each dollar you spend on the card gets you. While value points are important, it’s also important to consider other factors. For example, the annual fee should not cancel out the rewards you earn per point.

The cost per reward should also match the rewards on offer. Once all the fees have been considered, the credit card should offer a number of perks such as insurance coverage, low foreign transaction fees, travel opportunities, and so on. Travel credit cards that combine the best cost per reward with an increased number of perks are the best to subscribe to.

Here is a list of five of travel credit cards in Canada that offer the best value as described above:

1.     American Express® Gold Rewards Card    amex-goldrewards

Amex Gold is really the gold standard for travel credit cards in Canada. Points earned can be used for any travel-related purchase either online or offline. In some cases, you can convert points to frequent flyer programs. The welcome bonus is 25,000. For purchases made for $1,500 or above during the first three months, members get rewards points that can convert to close to $550. The annual fee for the first year is automatically waived, which will save you $150.

The biggest advantage with this card is that you can double your points easily by spending money at gas stations, grocery stores, and pharmacies. Plus, travel-related expenses incurred for road, air, rail, or water transport also counts. In some cases, lodging and tour operator charges paid with the card can earn you points.

An Amex point is equivalent to one cent. That makes the base rewards rate 1% and the bonus rate 2%. These rates can be increased by transferring points to Aeroplan. You will earn points for booking a flight, renting a hotel room, or hiring a rental car. Then, these earned points can be redeemed at full value to pay off any travel expense that shows up on the statement plus taxes and service charges. No extra charges incur when you transfer points for Aeroplan or British Airways AVIOS program.

2.     TD® Aeroplan® Visa Infinite Card

This is an excellent card to start collecting Air Miles with. You don’t have to pay any annual fees for the first year of use and you will receive a welcome bonus of 30,000 miles. You will earn 15,000 miles with the first purchase you make using the card. If you keep the card active for 90 days following approval, you receive 10,000 miles more. You can receive 5,000 miles per authorized card user you add. For the first year, the primary cardholder can get an annual rebate of $120. This is a lot of incentive just for signing up.

Stack up 25,000 points on the TD card and that will be enough to fly from Canada to any city in the United States or Mexico. Each air mile you receive using this card will amount to roughly 1.28 cents per mile for economy tickets. For business class, it would amount to about 2.2 cents per mile. This is definitely a bargain. Earning mile points is not that difficult. The card offers an extra 1.5 points per dollar spent buying gas, groceries, or pharmaceutical items. At this amount, your earn rate will be at about 3.3%.

There are many other cherries on top of this cake, including coverage for travel insurance, trip cancellations, baggage rental, car rental, and flight interruptions, among others.

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3.     MBNA Rewards World Elite MasterCard®mbna-elite_en

There are many incentives offered for signing up, including a sign in bonus of up to $100 and a waiver for first year annual fee. This card does not have a minimum spending requirement. Everything earns a 2% reward rate. This card allows users to redeem cash credit points for anything, which includes your travel-related expenses.

MBNA offers 2 points per dollar spend on all purchases, which is a solid advantage this card has over the others. There are no cap limits on how many points you can earn either. If you are a frequent flyer, you can redeem points for anything travel related. Keep in mind that points can be redeemed against any purchase regardless of whether it’s travel related. So, if you only fly periodically or once every two or three years, this is the best travel credit card to have.

4.     Rogers™ Platinum MasterCard®rogershome-credit-card

Most travel credit cards have a downside: hefty foreign transaction fees. Rogers is actually one of the few travel credit cards to subsidize transaction fees incurred overseas. You can earn a whopping 4% cash back on any foreign purchase. The rewards rate for all other purchases is 1.75%. Points can be redeemed regardless of the type of expense.

There’s no annual fee during the first year, and you will receive a $25 welcoming bonus. Cash rewards can be redeemed once annually, which will include travel expenses. It’s possible to not pay any annual fee at all by pre-authorizing payments. Also keep in mind that Rogers offers one of the best travel insurance policies in Canada with this card.

5.     Desjardins Visa Odyssey Golddesj-odyssee

The travel credit cards mentioned above on this list require hefty monthly income levels. Desjardins travel credit card is one of the most egalitarian offered in Canada. You can get approval without earning a six-figure salary.

This card comes with a solid travel medical insurance policy that will cover you and your family for 60 days straight when out of your province. This is a significantly longer coverage period than the industry average. Also, the policy covers up to $5 million in claims in comparison to others that offer only one or two million. In addition to insurance, there’s car rental, lost baggage, baggage rental, trip delay, flight cancellation, purchase protection, and accident coverage as well.

So, if you are on the hunt for a really good travel credit card, choose one from the above list for the best perks and consumer options.

Tangerine Cashback Credit Card

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Money-Back Credit Card
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Tangerine cashback credit cards are offered by Scotiabank-owned Tangerine bank. They are available exclusively in Canada. It’s one of the most popular cash back credit cards available in Canada.

Overview

The main draw of the Tangerine cashback credit cards is that there is no annual fee attached to it. Each purchase a user makes using the Tangerine cards earns cash back. The earned rewards can be deposited directly back to the credit card account so that it applies towards the balance.

A user has to select 2% money-back categories to get 2% cash back on these purchases, plus 1% on all other purchases. Tangerine credit cards are usually attached to a Tangerine savings account, so the rewards can easily be deposited. Cashback rewards deposited to the savings accounts are treated just like other savings deposits and will earn interest. Users can choose the redemption option on the savings accounts and choose two 2% cash back categories. The other option is to have the money directly deposited into a credit account, where the rewards will be applied against the other balance.

The advantage of Tangerine is that rewards do not need to be requested in advance. Rewards are also unlimited and are not subject to a throng of restrictions. Lack of annual fee means users can get cashback without rewards being deducted by service charges. Money-back rewards are also awarded on a monthly basis, rather than an annual basis.

It’s important to note that white there is no annual fee, there are several charges for other transactions. Each foreign currency exchange will have a 1.50% charge added to the converted transaction amount. Cash advances are $2.50 in Canada and $5 outside Canada. Balance transfer charge is 1% of the transfer amount or a minimum of $5. Dishonoured payments cost $25. The overcharge limit is $20, and only one overcharge payment is allowed each month. If you want to print a past statement, it will cost you $5. No charges apply to print current monthly statements.

Tangerine cashback cards are for personal use only, and businesses are not issued these cards. A single card can have up to 5 authorized users attached to the account. These authorized users will be able to make purchases and can take cash advances on the individual credit cards issued to them. However, authorized users cannot change the credit limit on the account or request balance transfers to other accounts. The primary cardholder will be responsible for paying the total balance on the account. It’s important to note that the primary cardholder is responsible for any and all transactions authorized users make.

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Users can change the 2% money-back categories after activating the card anytime. Changes will take effect once the first monthly statement arrives. Users have the freedom to request changes throughout. However, existing categories must have been in place for 90 days before the changes can be implemented.

Pros and Cons

Pros

  • No annual fee being charged. Most money-back credit cards have annual fees of close to a $100.
  • Cash back is unlimited.
  • Users receive 4% cash back as a welcome bonus for the first 90 days.
  • After the first three months, users can receive 2% cash back on any two categories of their choosing, and an additional 1% cash back on all other purchases.
  • No earning caps or restrictions imposed on non-category purchases.
  • Cardholders can choose two categories from 10 options, which covers expenses such as gas, clothes, electronics, pharmacy, and certain recurring bill payments.
  • Freedom to change categories any time as wished.
  • Cash back rewards can be deposited to a savings account if desired.
  • Rewards are granted automatically. No requesting process necessary.
  • Add up to 5 authorized users to a single account.
  • Schedule automatic payments online.

Cons

  • No travel perks.
  • While the Tangerine cashback card can be used outside Canada, transactions may be limited or restricted considering international banking regulations and safety of overseas transactions.
  • A 1% balance transfer charge applies.
  • Balance transfers between authorized users is not allowed.
  • Overcharging is limited to only $20, and only one overcharge is allowed per month.

Comparison to Other Canadian Cashback Credit Cards

Currently, Tangerine cashback credit cards are highly favoured by consumers over other Canadian credit cards available on the market such as American Express Simply Cash Card and Rogers Platinum MasterCard.

One of the biggest advantages that Tangerine has is that cash back is unlimited and is deposited automatically without the need for formal requests. Users often have to make requests and sort through complicated bonus rewards programs to get the money-back on other similar cards.

Most cashback rewards programs offer bonuses at the end of each year. Tangerine cards offer cashback rewards on a monthly basis. Redeeming rewards is effortless and convenient. The rewards can be arranged to be deposited to a savings account or towards the balance of the account. This is an option absent from many other similar programs.

While the Tangerine card charges 1.5% foreign transaction fee, this is quite low compared to what many other money-back credit cards charge. Most offer rates closer to 2.5%.

There are other cards offering flat 2% to 4% rewards and bonus points for all purchases. However, these also require cardholders to show a minimum monthly income of $6,000 or more. The Tangerine card’s monthly income requirement is much lower. So, this is a good option for entry-level workers and those firmly in the mid-income category.

As there is no annual fee, the Tangerine credit card stands as a desirable alternative to cash back cards that demand premium yearly service charges.

Other similar programs, like American Express’s Simply Cash, offers 1.25% money back on all purchases. Tangerine offers only 1% money back on all purchases.  But remember, this is in addition to the 2% you get on selected categories. It’s easy to apply the higher rate for transactions you tend to conduct more frequently, like paying for gas, and also earn rewards for non-frequent transactions, like buying clothes, as well.

Capital One Costco Platinum MasterCard Review

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Capital One® Costco Platinum is a credit card available to Costco members which offers money back and plenty of added incentives. Rewards credit cards that feature cash back save money and also offer travel and other rewards.

Quick Overview of the Card

Capital One® Costco allows holders to earn generous cash back on regular, restaurant, and gas purchases but the percentages vary. You will earn 1 percent on daily purchases, 2 percent on gas, and 3 percent on your restaurant purchases.

  • Interest rate (cash advances, transfers, purchases): 19.75 percent
  • Annual fee: none

Note that transferring balances is currently not an option. On the good side, the card comes with added perks such as platinum benefits, including extended warranty and price protection, as well as insurance and travel benefits such as travel assistance, baggage delay, and travel accident insurance.

It is a good idea to check for fees and rates that apply, including default rates, foreign currency conversion, minimum payment, etc. The current default rate is 25.9 percent if you miss your due date and are late on your payments. It also pays to check the foreign currency conversion rate if you frequently travel or shop in a foreign currency. With Costco MasterCard® Canada, the current foreign currency conversion rate on this card is 2.5 percent of the converted amount. There are other fees to watch for, including dishonored payment, balance transfer, over the limit, etc.

Who Is This Card for: Target Demographics

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This Costco MasterCard® is an excellent choice for customers who make frequent purchases and want to earn cash back. The more purchases you charge on the card, the more you earn based on the percentages above. Keep in mind that this card is the perfect choice only if you are a Costco member, allowing you to take full advantage of all benefits. And if you are not, you are free to apply for membership and then apply for the card. To do this, you will be asked to select a region to join Costco. You are also free to choose from gold star, business, and executive membership. Business membership, for example, is offered to ranchers, farmers, government agencies, non-for-profits, managers, and business owners.

How/Where to Apply?

There are different ways to apply with Capital One® Costco, and one is to verify that you are a Costco member and fill out an online application. All you need is to fill your names and membership number. If you need help, you can call Costco Card Capital One®, and they will be happy to assist you. The Costco MasterCard application is easy to fill, whether online or in-store, you are asked to provide your financial and personal information.

Pros of the Card

There are plenty of benefits for members, one being that cashback credit cards save money, and there is no threshold or limit on the amount you can earn. The Capital One® Costco Platinum MasterCard® offers money back in the form of rebate coupons that can be used in-store. Purchase assurance is an added benefit and so is car rental collision in case a rental vehicle is stolen or damaged. Zero liability is also an added benefit to protect members in case of unauthorized use. You can rest assured that your account will be monitored on a regular basis for fraudulent activity.

Cons of the Card

On the downside, customers only get 0.5 percent cash back on the first $3,000 spent on purchases. This is an incentive to spend more but it is a bad idea to go over the limit in an attempt to earn more. On the good side, members earn money back everywhere (at the pump, while dining, etc.) and not just at Costco locations.

How Does the Card Compare to Other Issuers and Major Canadian Competitors?

The Costco Canada credit card offers a good alternative to other cashback options but it pays to shop around and compare different rewards credit cards. Cashback cards are offered by major issuers such as the Scotiabank, MBNA, and other banks, unions, credit card companies, etc. Scotia Momentum Visa Infinite, for example, is offered by Scotiabank and features 1 percent cash back on regular purchases. However, in comparison to Capital One® Costco, customers earn 4 percent back on gas purchases. The SimplyCash Card is also a cashback option offered by American Express that features money back in the form of statement credit. Customers earn 2 percent back.

Any Better Alternatives to This Card?

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This depends on a number of factors such as whether you use one or multiple cards, whether you pay the minimum only, the annual fee and interest rate, etc. If cash back is your thing, then there are plenty of options. TD Canada Trust, for example, features a cashback card that allows you to earn 0.75 percent back. This looks like a less generous offer than Costco’s but customers benefit from perks such as free authorized users, automotive features, travel benefits, and a lot more. Optional coverage is also available.

Were There Any Customer Complaints/Scandals after the Launch?

While the launch was quite successful, the number of people who chose to become Costco members was larger than expected. Customers complain about problems such as confusing statements, slow resolution, frequent fraudulent activity, and relatively low credit limits. Other major issues are no automatic monthly payments, slow payment processing, and long hold times. Costco representatives announced that they were working hard to resolve these by allocating more resources.

How Does This Card Compare to the Old Costco Partner AMEX?

The major reason to choose an AMEX card was their long-time partnership with Costco. Costco assured existing and new customers that they would have the opportunity to earn generous rewards despite the split-up with AMEX.

In the end, how does the former AMEX card compare to the new Platinum MasterCard? It seems that the launch is a win for cardholders in that the old card has an annual $4,000 limit in purchases. The best part, of course, is that the transition has no effect on your credit score.