Can you keep a credit card with a consumer proposal?

Posted on 22 December 2021

Written by Trevor Pringle

A question that is frequently asked during consumer proposal consultations is ‘can you keep a credit card with a consumer proposal?’ Put simply, yes you can keep a credit card with a consumer proposal. Although a consumer proposal will have consequences on your credit report, it is possible to rebuild your credit with a consumer proposal by using a credit card. The most important point to note is that any impact on your credit report is temporary, and it can be fixed through good financial practice and time. Typically, a consumer proposal will stay on your credit report for between three and six years. In this article, we will explain how you can keep a credit card with a consumer proposal.

How do I get a credit card with a consumer proposal?

Credit cards are so important for everyday use. They are often required for ecommerce transactions online, and are accepted nearly everywhere these days. In fact, living without a credit card can be difficult. So, can you keep a credit card with a consumer proposal? Yes, you can! The key to getting a credit card with a consumer proposal is a secured credit card. A secured credit card is like an ordinary credit card, except it relies on cash deposits added by you, much like a debit card. It is an important tool for rebuilding your credit during a consumer proposal, as a secured credit card is reported to the credit bureau to help rebuild your score. With a consumer proposal, it is also possible to keep any credit cards with a nil balance, but you may want to have a fresh start. You may also want to consider having some credit counselling sessions to ensure you are well placed for managing your credit with a secured credit card.

What is a secured credit card?

A secured credit card is much like a normal credit card, except it is secured by an initial cash deposit from the cardholder. It is similar to a debit card, and uses funds from your accounts. The key difference between a debt card and a secured credit card, however, is that any transactions made with a secured credit card are communicated to the credit bureau. As payments are included on your credit report, you must make sure to pay on time, to manage your balance, and to pay in full if you can. This is extremely important in building trust with banks and lenders, and will be crucial in rebuilding your credit rating. It does take time to improve your credit score, but is possible by proving to lenders that you can borrow money responsibly. Check out our top tips for rebuilding your credit.

How do I get a secured credit card?

Typically, it is best practice to complete your credit counselling sessions as part of your consumer proposal before applying for a secured credit card. This will allow you to take on the knowledge and skills needed for good money management when you are able to enjoy life after a consumer proposal. A secured credit card will help you to begin rebuilding your credit through use for essential purchases. To get a secured credit with a consumer proposal, you can apply through lenders such as Home Trust or Capital One. There are a range of options of secured credit cards in Canada, each with different interest rates, fees, and rewards. At Spergel, your Licensed Insolvency Trustee will be able to advise you on applying for the best secured credit card for your financial needs. As with any credit card, it is essential, however, that you pay on time, and over the minimum amount required.

What about unsecured credit cards with a consumer proposal?

As consumer proposals take a number of years to complete, it may be difficult without having any unsecured credit cards or even a mortgage. It can be tempting, as a result, to apply for an unsecured credit card or even a mortgage, but it is crucial to wait for the right time in order to prevent further damage for your credit report. Applying early during your consumer proposal can do more harm than good. It is important here to be patient, and wait until your consumer proposal is complete. Once you have been discharged from your consumer proposal, work on rebuilding your credit score gradually by using a secured credit card instead. This will increase your chances of being accepted for an unsecured credit card. Patience can also mean more favourable interest rates, and more lenient limits on your credit.

Got more questions on ‘can you keep a credit card with a consumer proposal?’ If you are considering filing a consumer proposal, contact Spergel to begin rebuilding your financial future. With locations across Canada, our experienced Licensed Insolvency trustees will help you choose the best debt repayment plan for your circumstances. We will advise you on the best practices for rebuilding credit and applying for secured credit cards.


Trevor Pringle

Trevor B. Pringle is a Chartered Insolvency and Restructuring Professional with over 20 years’ experience as an LIT (Licensed Insolvency Trustee). He is also Spergel's resident expert on consumer proposals and small business debt. When Trevor isn't at the office providing debt relief to Canadians and corporations with his innovative problem-solving skills, Trevor enjoys regular trail runs in the Dundas Valley.

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