Sometimes unexpected events, such as a job loss, force people to seek new ways to pay for life's expenses. One of the most convenient ways to tap new funds is through a credit card. However, credit cards are typically an expensive form of financing. With interest rates upwards of 18%, a few missed payments can send people, and their credit scores, spiraling down a black hole. Once there, it can be hard to recover. This article is for those with bad credit histories who are trying to dig themselves out and get back on the track to a good credit profile.
Credit Card Options for Bad Credit
People with bad credit will have limited options when it comes to getting a new credit card. Banks will view people with damaged credit histories as high-risk, and the rates, fees, and terms of the offers will be less favorable. However, with responsible use of a new credit line over time, your credit should improve.
Secured Cards - Some credit card companies offer cards that are secured with a deposit. That means you will need to deposit funds into the account, and the amount deposited will be your credit limit. Small credit lines above the deposit are sometimes available and depend on the bank's assessment of your credit. Click here to view Canadian secured credit cards.
Prepaid Cards - If your goal is to simply have the convenience of a Visa or MasterCard, then a prepaid card might be a good option. However, prepaid cards do not report your account information to the credit bureaus, so these cards have no impact on your credit profile.
Catalogue Shopping Cards - Catalogue cards can only be used at specific shopping destinations such as websites or specialty stores. There is typically an upfront membership fee and monthly account fee. These cards allow you to buy merchandise on credit and pay the balance over time. These cards can benefit your credit profile by reporting your account activity to the credit bureaus. An example of these types of cards is the Provincial Trust card.
