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. A consumer proposal will have consequences on your credit report, but it is possible to rebuild your credit after a consumer proposal with a credit card. The most important thing to note is that any credit report impact is temporary, and can be fixed in time. Typically, a consumer proposal will stay on your credit report between three and six years.
How do I get a credit card with a consumer proposal?
The key to getting a credit card with a consumer proposal is a secured credit card. Credit cards are important for every day use – they are ideal for use with ecommerce transactions online, and are accepted nearly everywhere these days. In order to rebuild your credit during a consumer proposal, creating an application for a secured credit card or a small loan is your best bet. With a consumer proposal, it is actually possible to keep any credit cards with a nil balance, but you may want to have a fresh start.
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 debit card, and uses funds from your accounts. Any transactions made with a secured credit card are communicated to the credit bureau, and are useful in rebuilding your credit rating. See our top tips for rebuilding your credit. If you are in need of a credit card after filing, you can apply for a secured credit card through companies such as Home Trust or Capital One.
How do I get a secured credit card?
Typically, it is best practise 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 to assist with your money management when you are able to enjoy life after a consumer proposal. A secured credit card will then help you to begin rebuilding your credit through use for essential purchases. It is essential, however, that you pay on time, and over the minimum amount required. It will take time to repay your credit, but having a credit card with a consumer proposal is the first step.
What about unsecured credit cards with a consumer proposal?
As consumer proposals take a number of years, it may be difficult without having any unsecured credit cards or even a mortgage. Applying for an unsecured credit card should not be encouraged during your consumer proposal, and it 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. This will increase your chances of being accepted for an unsecured credit card. Patience could also mean more favourable interest rates, and more lenient limits.
If you are considering filing a consumer proposal, contact Spergel to begin rebuilding your financial future. With locations across Canada, our experienced trustees will help you choose the best debt repayment plan for your circumstances. We can also advise on the best practices for you to take in terms of rebuilding credit and applying for secured credit cards.