The 4 Best Credit Cards for Bad Credit with No Security Deposit

Whether it’s to cover unexpected expenses, build a financial safety net, or establish a solid credit history, the importance of having access to credit cannot be understated. While traditional credit cards might seem elusive for those with less-than-ideal credit scores, a ray of hope shines through in the form of credit cards designed specifically for this situation. What’s even more promising is that the cards we present in this article are not secured cards, which means they don’t demand a security deposit upfront.

KOHO Prepaid Essential: Best for Credit Building

The KOHO Essential Prepaid Mastercard stands out as an exceptional option for Canadians aiming to enhance their credit score despite a challenging credit history. This card offers a compelling array of features tailored to support credit-building journeys, which has earned its status as one of the best credit cards to rebuild your credit in Canada.

A significant draw of the KOHO Essential Prepaid Mastercard is its accessibility. Designed to accommodate individuals with bad credit, the card boasts guaranteed approval, bypassing the need for a hard credit check. Importantly, the card operates on a prepaid basis, eliminating interest rates on purchases and cash advances. Moreover, it provides a unique opportunity to earn 5% interest on the entire balance, incentivizing responsible financial habits. Particularly attractive are the cash back rewards, with 1% cash back on transportation, restaurants and groceries, further promoting prudent spending.

But one of the greatest benefits for people with a bad credit score is KOHO’s credit building feature. Available with the Essential plan for a fee of $10 per month, this feature empowers users to rebuild their credit history by responsibly managing a line of credit with KOHO and making timely repayments. On average, users see a 22-point increase in their credit score within just three months of using this feature.

KOHO also prioritizes security, safeguarding up to $100,000 of deposited funds with CDIC protection. The convenience of unlimited free e-Transfers serves as an additional advantage, regardless of frequency. Overall, the KOHO Essential Prepaid Mastercard emerges as a versatile tool, not only assisting with immediate financial needs but also actively supporting the pursuit of a brighter credit future.

EQ Bank Card: Best for Replacing Your Debit Card

The EQ Bank Card stands out as a highly advantageous prepaid credit card tailored to Canadians with a less-than-ideal credit score who require a credit card for their day-to-day financial activities.

One of the most appealing features of this card is its prepaid nature, which means that users can make purchases without being burdened by interest rates. This is especially beneficial for individuals with bad credit scores, as it prevents the accumulation of additional debt through interest charges. Additionally, the EQ Bank Card’s lack of an annual fee further enhances its accessibility and affordability.

An exceptional perk of the EQ Bank Card is that it is tied to EQ’s Savings Plus Account, which allows you to earn a competitive interest rate of 2.5% on everyday banking, plus 0.5% bonus interest when you direct deposit your pay or set up recurring pre-authorized debits. Furthermore, this card also offers you 0.5% cashback on all purchases, meaning that for every $100 spent, users receive a complimentary $0.50 cashback.

The convenience of the EQ Bank Card is further magnified by its array of fee-free services. Cardholders can enjoy free withdrawals from any ATM across Canada, and even if they are charged by another bank’s ATM, EQ Bank pledges to refund the incurred fee within 10 business days. Moreover, the card does not levy any fees for online and in-store purchases, bill payments, or transactions of any kind, be it domestic or international. This comprehensive fee waiver ensures that users can manage their finances without worrying about hidden charges.

One aspect to consider is that, unfortunately, the EQ Bank Card is not available to residents of Quebec at present. This caveat aside, the card’s range of benefits makes it a robust option for Canadians who seek a credit card solution that aligns with their financial needs and credit score challenges. The EQ Bank Card’s prepaid structure, cashback rewards, fee-free services, and commitment to aiding individuals with bad credit scores solidify its position as an excellent choice for everyday financial transactions and responsible budgeting.

Neo Credit: Best for Cash Back Benefits

The Neo Credit Card emerges as an exceptional choice for Canadians with a tarnished credit history who seek a credit card offering substantial cashback rewards.

What sets the Neo Credit Card apart is its unique proposition: although not a guaranteed approval card, Neo extends its acceptance to individuals with a minimum credit score of 600, providing them with a legitimate credit card as opposed to using one of the best prepaid credit cards in Canada.

What sets the Neo Credit Card apart is its accessibility and reward potential. In a landscape where annual fees are the norm, Neo graciously bucks the trend, devoid of any such charges. Nevertheless, its purchase interest rate of 29.99% and cash advance rate of 31.99% requires prudent financial management to avert potential pitfalls for individuals grappling with poor credit scores or financial instability.

However, one of the most alluring aspects of the Neo Credit Card is the potential to earn substantial cashback rewards. The card facilitates an average of 5% cashback through Neo’s extensive network of 10,000 partner stores. Furthermore, users can enjoy 2% cash back at gas stations, 2% on groceries, and an impressive 6% cash back at restaurants. Additionally, the card offers a generous 4% cashback on all purchases conducted through the Shell App, making it a lucrative choice for everyday spending.

Furthermore, if you sign up for the Neo Credit Card through Hardbacon, you get a welcome bonus of $25. This incentive amplifies the card’s value proposition for Canadians seeking to revive their credit scores with the added benefit of lucrative cash back rewards.

Capital One Guaranteed: Best for Guaranteed Approval

The Capital One Guaranteed Mastercard stands as an exceptional option for Canadian individuals grappling with low credit scores who aspire to secure a credit card. This financial tool not only facilitates access to credit but also offers a pathway towards credit score recovery. With an annual fee of $59 for the primary cardholder and no annual fee for supplementary cardholders, the card is budget-friendly and accessible for those looking to improve their financial standing.

One of the standout features of the Capital One Guaranteed Mastercard is its assured approval, providing a lifeline to those with limited or damaged credit histories. By using the card for everyday purchases and adhering to the credit limit, cardholders can establish a pattern of responsible credit usage. Meeting minimum monthly payments and punctually clearing dues further solidifies this credit-building journey. CapitalOne routinely reports these financial behaviors to credit bureaus, gradually reconstructing credit scores.

In addition to its credit-enhancing attributes, the card offers a spectrum of advantages. Purchase protection covering a span of 120 days post-purchase is a safeguard for cardholders. An extension of up to 2 years beyond the original manufacturer’s warranty amplifies the value of purchases. The Capital One Guaranteed Mastercard doesn’t merely assist with credit-building, but also bolsters confidence in purchases.

Travel and emergency-related features elevate the card’s utility. A coverage of up to $250,000 for travel accidents fosters security during journeys. In situations of luggage delays, the card extends up to $100 for emergency purchases, ensuring convenience during unforeseen circumstances. Additionally, rental coverage is incorporated, encompassing the entire cost of car rentals when charged to the card.

However, it is important to note that this card may require a security deposit, and thus shares similar characteristics as the best secured credit cards in Canada. Having to provide security funds means that you need to deposit an amount of cash that acts as collateral in case you are unable to repay your debt in a timely manner. However, the deposit amount ranges between between $75 and $300, so getting approved for this card is going to be easy for the majority of people.

The Capital One Guaranteed Mastercard stands as a robust choice for Canadians striving to secure a credit card despite low credit scores. Its commitment to credit rehabilitation, along with a range of protective features and benefits, cements its status as a supportive financial tool for those seeking to fortify their credit standing and enhance their financial outlook.