Apr 16, 2026
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The Bank of Canada delivered nine rate cuts between June 2024 and October 2025, slashing its overnight rate from 5% down to 2.25% — the most aggressive easing cycle of any major advanced economy central bank in that period (1). For Canadians with variable-rate mortgages and home equity lines of credit (HELOCs), the relief landed quickly. But for the roughly 54% of Canadians currently carrying a credit card balance, the wait has been fruitless (2). Most credit card rates remain near 20% — exactly where they were before the first rate cut.
With the next Bank of Canada rate decision scheduled for April 29, 2026, it's worth understanding why variable loan rates have dropped but credit card interest rates remain the same. The short answer is that the mechanism that lowers variable borrowing costs simply does not apply to most credit cards. Now what you can do, instead, is critical.
Why credit card rates don't move with Bank of Canada cuts
When the Bank of Canada lowers its overnight rate, commercial banks reduce their prime rates by the same amount. Products tied to prime — variable-rate mortgages, HELOCs and some personal lines of credit — get cheaper almost immediately. Credit cards work differently. Most are issued at a fixed rate set contractually by the card issuer, and that rate doesn’t change when the prime rate moves (3).
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Some variable-rate credit cards do reference prime, but the standard Canadian credit card charges a fixed annual purchase rate in the range of 19.99% to 24.99%, regardless of where the Bank of Canada sets its policy rate. Canada's major banks have posted these rates consistently through the full cutting cycle.
Even the Bank of Canada explicitly differentiates, stating its policy rate influences prime, which in turn affects variable mortgages and lines of credit — not fixed-rate consumer products (4). So, no cut, however deep, will automatically reduce what you owe each month on a rewards card at 20.99%.
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How much Canadians are losing by waiting
The numbers are significant. Consider a hypothetical Canadian carrying $43,000 across several credit cards at an average rate of 22.4%. Making only minimum payments — roughly 2% of the outstanding balance each month — over 14 months, that borrower would pay approximately $11,140 in interest while reducing the principal by less than $800.
That's not a fringe scenario. Canada's total outstanding credit card balances reached $124 billion in the fourth quarter of 2024, according to TransUnion (5), representing 31 consecutive months of year-over-year balance growth. The average credit card balance per borrower hit $4,681 in Q4 2024, up 6% year-over-year. At the national average purchase rate, that balance generates roughly $78 in interest charges every month — and minimum payments barely dent it.
At the same time, the Bank of Canada has indicated it expects to remain on hold for some time at 2.25%, with Bay Street analysts and financial markets projecting no further cuts through 2026 (6). Waiting for the overnight rate to rescue a credit card balance is not a strategy — it is a gap in understanding how these two rates relate.
What actually works to lower your credit card interest
There are three meaningful levers available to Canadians carrying card balances right now.
Balance transfer cards
Some issuers in Canada currently offer 0% promotional rates on balance transfers for up to 12 months, with a one-time transfer fee typically ranging from 1% to 3%. On a $5,000 balance transferred at a 3% fee, the upfront cost is $150 — compared to roughly $1,000 in interest you'd pay over the same period at a standard 19.99% purchase rate.
Cardholders should note that these offers generally require a credit score of 660 or higher, and any remaining balance at the end of the promotional period reverts to the card's standard rate.
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Stop paying high interest. Switch to a 0% balance transfer card to pay off your balance faster. Compare hundreds of credit cards to find your best card today.
Debt consolidation loans
Unsecured personal loans and credit union loans at rates meaningfully below 20% can roll multiple card balances into a single fixed monthly payment. This approach requires qualifying for the loan but eliminates the time pressure of a promotional window — and it can save you thousands of dollars.
Get one predictable payment that fits your monthly budget by combining your credit cards and debt into one loan. Find a consolidation loan with a lower rate and keep more of your hard-earned money. Fill out one application and compare rates from dozens of lenders.
Licensed insolvency trustee (LIT) consultation
For balances above $10,000 that are growing faster than they can be repaid, a consumer proposal negotiated through a licensed insolvency trustee (LIT) can reduce the principal owed. Many LITs offer free initial consultations, and the Office of the Superintendent of Bankruptcy Canada maintains a public registry of licensed practitioners.
Your options right now
The Bank of Canada rate decision on April 29, 2026, will not change what you pay on your credit card. What does have an impact is actively deciding about what to do about your current balance.
First, calculate your monthly interest cost. Multiply your credit card balance by the annual rate, then divide by 12. If that figure is $80 or more, the minimum payment strategy is keeping you stuck in debt. Consider this the tipping point — when you should consider a balance transfer to a no or low-interest card, a consolidation loan or schedule a professional consultation with an LIT.
To be clear: None of these steps require waiting for a rate cut.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Bank of Canada (1, 4); NerdWallet (2); BDO (3); TransUnion Canada (5); The Globe and Mail (6)
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Romana King is the Senior Editor at Money.ca. She writes for various publications, and her book -- House Poor No More: 9 Steps That Grow the Value of Your Home and Net Worth -- continues to be an Amazon bestseller. Since its publication in November 2021, this book has won five awards, including the New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award in 2022.
