Why the Low Rate Guaranteed Mastercard?
Capital One has developed an excellent program designed to help Canadians rebuild their credit. Capital One puts the G in ‘Guaranteed Approval Mastercard’: Have you filed for bankruptcy within the last seven years? No problem, you are eligible. Defaulted on prior loans or credit card debt? You are eligible as well.
If you are reading this article, then you most likely understand the difficulties that come with a bad credit score – difficulties in buying cars and getting a mortgage, inability to shop online, etc. Kudos to Capital One for offering a path forward.
How it works?
Applicants will undergo a standard credit check and Capital One will determine which card, the Capital One Guaranteed Mastercard or the Capital One Gold Mastercard, is most appropriate for each particular set of circumstances. Both cards require a $59 annual fee.
Every month, Capital One will report to your successful payment of debt to the credit bureau, which will greatly aid in repairing your credit.
This credit bureau reporting is really the only reason the Standard Guaranteed Approval Mastercard is preferable to a prepaid card, such as Stack Mastercard, as it basically operates as one – with a $59 fee for the privilege! The standard card is a secured card, meaning users must deposit between $75-$300 into the account, which should be used to pay off the balance at the end of every month. The credit limit ranges from $300 to $7,000, which means that those with the most challenging credit histories will most likely end up with a $300 credit limit secured with $300 of their own funds.
Remaining funds are of course returned if you close the account and have paid off your balance.
This card is basically credit purgatory. It is your ladder out of credit hell, and whilst it stings to pay a fee to essentially use a debit card, it is a necessary step to get back to where you need to be.
Capital One Gold Mastercard
If you are lucky enough to qualify for the Gold Mastercard, no security funds will be required, and you will enjoy a host of additional benefits including:
Excellent everyday purchase benefits. You get price protection, or a refund of up to $100 per item ($500 per year), if purchased items go on sale within 60 days; extended purchase assurance, in which items are insured against theft or damage for 120 days after purchase; and a very good extended warranty plan, which doubles the manufacturer’s warranty up to two additional years at no cost.
Gold Travel Benefits – Card Holders Receive:
|Travel Accident Insurance||$250,000 coverage in the event of death or dismemberment due to a travel accident. Use the card and you are covered.|
|Car Rental Collision / Damage Waiver||Insurance on rental cars for damage or theft for maximum 31 days. Just use the card and you are covered. Make sure to decline the waiver for collision damage waiver from the rental company.|
|Baggage Delay||If your baggage is delayed, you will get reimbursed for essentials up to $100 a day for three days while you wait.|
Capital One Guaranteed Low-Rate Mastercard
Like the standard guaranteed card, this one is also secured, meaning funds are required by the customer to secure the balance at month’s end. However, you pay an extra $20 annual fee to reduce the purchase and balance transfer interest rates to 14.9%, down from 19.8%. While forking out the extra $20 for better rates might seem a responsible course of action, we would be concerned with anyone picking this card, because it insinuates that you might be planning to run up debt again.
In our opinion, a secured card should be looked at entirely as an instrument to repair credit. And you should not be using this card in any debt-accruing fashion. Automatic payment should be set up for the end of the month (by the way we cannot stress this enough. It is surprising that a considerable number of enrollees actually carry a balance from one month to the next not because they don’t have the available funds, but simply because they have not set up auto payment and forgot to pay off balance). The balance should be paid, and report of payment should go to the credit bureau. Period. Those purchase interest rates should not concern you because you should not, under any circumstances, be paying interest on this account.
These cards serve a very distinct purpose. If you are not in need of credit repair, you should be looking at other credit cards – students, check out the BMO SPC Mastercard review for instance. However, for those of us who need help establishing their credit again, there is no more important credit card than the Capital One Guaranteed Mastercard. Take a breath, apply now, and use the card exactly the way it is meant to be used.