The Motley Fool

What Are the Easiest Credit Cards to Get?

by Steven Porrello

Source: Getty Images

Getting denied for a credit card stings. Not only do you not get the card, but it can hurt your credit score. Rack up enough credit card denials, and you could see your score drop by more than a few points.

Fortunately, if you’re sick of getting denied, or you know your credit score is low, you do have options. Canada has several easy-approval credit cards that can almost guarantee your application will go through. Though some have more requirements than others, the decline rate on these cards is much lower than other “elite” cards.

Which cards are easy to get? Let’s take a look at the five most common.

1. Secured credit cards

A secured credit card is any card that requires you to pay an initial deposit before you start using it. Similar to the way a mortgage is backed by a home, a secured card is backed by an initial deposit. That means if you default on your card, your credit card provider will use a portion of the deposit to pay what you owe.

The initial deposit is usually equal to your card’s credit limits, though, occasionally, it can be higher. Because of the initial deposit, credit card providers are more willing to issue these cards to Canadians, no matter what their credit scores look like.

You may feel remorseful about putting down a deposit, but it doesn’t have to be permanent. If you demonstrate to your card provider that you can pay back what you borrow, they may give the deposit back and issue you an unsecured card. Likewise, you can close your account at any time and get your deposit back.

Before you apply for a secured card, be sure to pay attention to the card’s fee structure as well as its grace period. If the card doesn’t have a grace period, that could become an expensive problem. Without a grace period, you’ll pay interest immediately when you charge a purchase to the card. Most secured cards have a grace period. Just be sure to double-check first.

2. Student credit cards

Just as they sound, a student credit card is designed, well, for college students. These cards typically lower their income thresholds and look past short credit histories during the application process. In fact, unlike most cards, you can usually get a student credit card with no credit history at all.

Although the required income threshold is low, you still need to make some income to get a student card. After all, no card provider wants you to owe money and damage your score while you’re young. If you’re not earning income, you’ll probably need a cosigner (a parent or guardian) to help you get your application approved.

Student cards don’t require an initial deposit, but the credit limits are usually low. You may earn rewards, or get a hefty bonus offer, but you won’t be able to do everything with your card, such as initiate a balance transfer or a cash advance.

Because of the low requirements, student cards are fairly easy to get — if you’re a student above the age of 18 with little or no credit history, that is. As you pay back what you borrow, and as you use the credit card for long periods of time, your provider will eventually offer you better opportunities for cards with higher credit limits and better rewards.

3. Store credit cards

If you have a borderline “fair” credit score, or your credit history is short, there a card that might be fairly easy for you to get: the store credit card.

Store credit cards are cards that retailers and department stores issue themselves. You may see a Loblaw-branded credit card or a card minted by your favourite clothing or grocery store. These cards may offer higher rewards for purchases made within the store as well as certain discounts offered to cardholders.

Store cards have more limitations than traditional cards, which makes them easier to get. For instance, many store cards have higher APRs. Additionally, the credit limits on store cards tend to be low. This could hurt your credit score, especially if the limit is so low that you end up borrowing more than 50% of your limits on a regular basis.

Retailers may also restrict where you can use the card. Some store cards can only be used for purchases made within the retail store (called “closed loop cards”), while others can be used on purchases universally (“open loop”). On top of that, your rewards may be restricted to purchases made within the retailer’s stores, too.

But don’t get us wrong — if you use your store card responsibly, you could rebuild your credit score as well as score some hefty rewards from your favourite retail stores.

4. Authorized-user cards

An authorized user is simply anyone who a cardholder “authorizes” to use a credit card. As an authorized user, you don’t own the credit card. You’re not responsible for paying the bill, and your credit isn’t checked during the application process. But you’ll typically have a credit card in your name, and you can use it like you would a traditional card.

Of course, there’s a catch: as an authorized user, your credit card activities won’t be reported to crediting bureaus. That means, it won’t help your credit score one bit. You can use the card all you like, but unless you’re the cardholder, you won’t see a boost in your score.

5. Credit cards for bad credit

Finally, credit card issuers may offer a line of cards designed specifically for Canadians with poor credit scores. Some of the cards we’ve discussed here fall into this category, such as secured cards. But not all cards designed for bad credit require an initial deposit. Some are unsecured, meaning you don’t need to put up a deposit, and their low credit limits make them suitable for Canadians with low credit scores.

One word of warning: anytime you see “instant approval” or “guaranteed approval” on an unsecured credit card designed for bad credit, be wary. Often, a credit card company will offer these cards to Canadians with bad credit only to charge them an enormous amount in fees later.

Is an easy-approval credit card right for you?

If you’re just starting to build or rebuild credit, then an easy-approval credit card might be right for you. The high chances of your getting approved means you don’t have to worry about a denial damaging your credit score. As long as you pay back what you borrow, you improve your chances of getting approved for a more lucrative card, such as a rewards card or cash-back card.

If you’re okay with putting down an initial deposit, a secured credit card is a great place to start. Your card issuer will report good crediting activity to crediting bureaus, helping you improve your score. And the initial deposit ensures you won’t end up borrowing more than you can afford.


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