Hi, All,

I've posted this information at the bottom of another thread, but thought it might be useful under its own title. While in consumer proposal or bankruptcy, many of us still need to use a VISA or MasterCard. "Secured" credit cards are often mentioned on this forum. These are cards that one secures with a deposit to the card issuer. They are normal in every other way, are considered "credit", and appear on your credit report.

A second alternative is the "pre-paid" card. With this card, you actually pre-pay money into the card itself just like making a normal "payment", except that you can never go below zero - hence, it's not really "credit", but more like a debit account. It does not appear on your credit report, and no credit checks are done. However, a prepaid card is still a "real" VISA or MasterCard, and will work the same way when making purchases.

I myself use a Bank of Montreal (BMO) Prepaid MasterCard, and it works well in every way - travel bookings, online, everything. There are other prepaid cards out there too, but this is the one I've used.

Just Google "BMO Prepaid MasterCard" and you'll get the link. It is accepted by all merchants, doesn't look weird in any way, and is a real honest-to-goodness MasterCard.

You can apply for it on-line. It takes about two weeks to get. They withdraw the $10 fee once you've activated the card and loaded some money into it. You can check your balance online or on the phone. You can print out a monthly statement online as well. The card even gives you Air Miles. I have a Bank of Montreal chequing account, and I can make "payments" into this card via my online or telephone banking, just like any other card. Or, you can just go into a BMO branch and make a payment at the counter. There is no minimum you have to keep in the card, I don't think. Mine often only has $5 left in it, until I load it up again.

I am a merchant myself, and I can assure you there is nothing unusual about these cards from the merchant standpoint. You can use them anywhere you normally use a MasterCard.

The Financial Consumer Agency of Canada recently published a guide to Canadian Pre-Paid cards, which is available online as a PDF. The guide contains lots of info and useful comparisons of the cards available (the Bank of Montreal one appears to be far better than the rest). You can find this guide by Googling "FCAC Canada Pre-paid Mastercard Visa comparison".

Best wishes,
~Wendy

Wendy ,
 Thanks  for this I also wondered then if its just like a regular card but pre paid does it actually have your name on the card???

Lynda

Thanks Wendy,
 this is all new to me I am considereing a consumer proposal but terrified and embarassed moslty that I am in so much debt. the bright side is I do have a full time job and think I can make payments if they would be someone affordable for me and not leave me penny less  each week.
  I think my next move is to see a trustee cause I am tired of the credit card companies calling me daily, I "HATE that feeling and need to get a grip on this so i can live  without fear and feel good about repaying some of it .

do you know if a line of credit can also be repayed this way ??

Lynda

I filed my proposal last July (one year in! three years left!). I'm really happy this board is up. I was really confused when going through the process last year, it's great to see there's a resource available.

I have a secured card with Capital One. Not a huge limit, and I had to put up security funds to get it.

Yesterday in the mail I received a new credit card from MBNA; it's my old account number, with a much lower limit (still not low enough in my opinion). It was one of the cards I surrendered to my trustee, but it didn't have a balance on it. Out of curiosity, I called MBNA and they said I could keep the card; when the renewal was issued they would have closed the account if it was considered high risk (?!?).

I've emailed my trustee's office and asked if I can keep it, simply because I'd rather have a card I don't need to pay an annual fee for, and I've had the account for 6 years.

So my questions to everyone:

1) Have you had similar experiences? Do companies you didn't owe money to renew your original account and send a new card when your old one expired?

2) Legally, am I allowed to keep this card?

Hello again,

I asked my trustees office and their response was "We normally suggest that you don't obtain a credit card while in a proposal.  However, it is up to MBNA to decide who they wish to offer credit to and up to you to decide whether you choose to use it."

I decided to follow up with MBNA for more information, and that's when it got interesting. Basically, departments at these credit card companies do not speak to each other. The customer service reps who activate accounts don't have all the information. I managed to get the account activated, but I was then sent to the credit department who asked me a bunch of questions, and then closed the account. Which makes sense. I'm amused because this is the second time a bank sent me a new card while on the proposal. I cancelled the first card right away (it was the bank I owed money to in the proposal!)

Anyway, I'm happy with the card I have, but it's amazing that these companies don't have a better process for updating people's accounts. I also had a mishap with another card I handed in, which didn't have a balance. I forgot the pet insurance company had the credit card number on file and they charged my card after I filed the proposal (which I'm protected from).

Anyway, thanks for the info!

Hi dianewb,

I book hotels with my Bank of Montreal Prepaid Mastercard. No one has ever questioned it.

As for getting a secured credit card while paying a proposal, I contacted People's Trust (they offer a secured Mastercard) myself to ask about this, and the representative emailed back to say that they do provide cards to people who are still paying off proposals - you just have to wait a few months after starting your proposal so that it shows on your credit report that your previous debts are covered under the proposal.

I have recently applied for a HomeTrust secured VISA card to begin rebuilding my credit rating. I will post here again to let you know if the application goes through, but the HomeTrust VISA is recommended for people in proposals.

The individual you talked to at your bank may have limited information, and your particular bank may be conservative. Don't give up - you can get a Bank of Montreal Prepaid Mastercard, or a secured credit card, and book hotels with it.   

Best wishes,
~Wendy

Hi Diane,

Wow - you bring up a good point. We really ARE vulnerable when we are at a financial disadvantage, particularly if we feel ashamed and/or alarmed, which is very common. You are right that one has to be extra-cautious.

Although I already use a pre-paid Mastercard, I have been advised that I need at least two secured cards to begin to repair my credit rating (I am also going to try to pay off my proposal early). The reason I am in a hurry is that, although I was able to keep my house when I made my proposal, my mortgage co. has since left Canada and so I will need to re-qualify with a new company when renewal time comes.

As far as non-bank secured credit cards, I found three choices: Capital One, People's Trust, and Home Trust.

They may all be just fine, but I shy away from Capital One because the company has a rather poor reputation with its customer service, plus, although it has Canadian operations, it is itself not Canadian, which can make solving problems even harder. The other thing I found out about them is that they can demand up to three times your credit limit as a deposit (but then charge lower service charges).

People's Trust is a Canadian trust company that offers a secured Mastercard. They are likely all right, and you only have to make an intial deposit of $500. I may get my next card from them.

I chose Home Trust VISA for my first card because they are recommended by so many real estate brokers and insolvency experts for credit repair. There is even a page about them here on the Bankruptcy Canada website. Everything seems on the up and up. Your deposit is protected by Canadian Deposit Insurance (as it would be with a bank), and accrues 0.5% interest. However, the lowest deposit is $1000.

The Financial Consumer Agency of Canada has a publication about secured credit cards available on the web - just Google "FCAC secured credit cards" and you will find it.

Best wishes,
~Wendy

Hi!

If you ever want to try a prepaid again, try the Bank of Montreal Prepaid Mastercard. The numbers and your name are raised. It costs $10 to set up, is good for three years, and that's it. No re-loading charges.

Best wishes,
~Wendy