Best low interest credit cards in Canada for 2024

Fact Checked: Tyler Wade

🗓️

Updated: July 17, 2024

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Sometimes you need or have to carry a balance on your credit card. From financing a big purchase without a line of credit, or you need the cash flow and aren’t in the position to pay off your debt right now. If so, borrowing at the lowest rate possible is the smart move and there are credit cards that offer interest rates at about half those of traditional credit cards.

Low interest rate credit cards typically charge from 10-15%, compared to 20%+ for typical cards. Some offer promotional or variable rates while others offer a fixed rate.

If you do tend to carry a balance, rewards cards don't add up — you’ll be spending close to 20% a year in interest to receive, maybe, 2% in rewards. Even if you carry the balance for two statement periods, it will cost you over 3.5% in compounded interest. This is why low interest cards are a better option.

We’ve compared all the low interest credit cards in Canada to find the one that’s easiest on your wallet.

  • Review methodology: How we chose the best low interest rate credit cards in Canada

    +

    Money.ca rates credit cards on a scale of 1 to 5 (with 5 being the best) and are based on the following criteria: annual percentage rate (APR), annual fee, balance transfer fee, foreign transaction fee, penalty fee and APR, rewards programs, sign-up bonuses, customer service, security, additional features, acceptance, and credit score requirements. For more, read Money.ca’s complete review methodology.

    Different categories of cards are rated using different weightings and each card is rated according to its primary category. Money.ca’s business relationships have no effect on ratings.

Best low interest credit card with no annual fee

MBNA True Line Mastercard

Apply now

4.0

0% intro rate

Welcome offer

Good

Suggested credit score

Get a 0% promotional annual interest rate (“AIR”)† for 12 months on balance transfers✪ completed within 90 days of account opening, with a 3% transfer fee.

Pros

  • Solid welcome offer: 12 months of 0% APR† on balance transfers✪ made within the first 90 days (3% transfer fee applies)

  • No annual fee or minimum income requirement

  • Low standard interest rate of 12.99% for all new purchases charged to the card

  • Some extra perks like fraud protection and a discount on car rentals

Cons

  • 3% balance transfer fee is comparatively high

  • Very high cash advance interest rate of 24.99%

  • No insurance benefits

  • Can’t transfer a balance owed to either MBNA or TD

Eligibility

Recommended Credit Score

Good

Pros

  • Solid welcome offer: 12 months of 0% APR† on balance transfers✪ made within the first 90 days (3% transfer fee applies)

  • No annual fee or minimum income requirement

  • Low standard interest rate of 12.99% for all new purchases charged to the card

  • Some extra perks like fraud protection and a discount on car rentals

Cons

  • 3% balance transfer fee is comparatively high

  • Very high cash advance interest rate of 24.99%

  • No insurance benefits

  • Can’t transfer a balance owed to either MBNA or TD

Eligibility

Recommended Credit Score

Good

Promotional annual interest rate† (a 3% transfer fee applies) for 12 months on any balance transfer✪ completed within 90 days of opening the account.

0%

This card is made from 100% recycled plastic

100%

Purchase APR

12.99%

Balance Transfer Rate

17.99%

Cash Advance APR

24.99%

Annual Fee

$0

Foreign Transaction Fee

2.50%

  • Overview of the best low interest credit card in Canada

    +

    The MBNA True Line® Mastercard® is Money.ca's pick for the best low interest rate credit card in Canada to keep in your wallet in case of emergencies. Because it charges a low annual interest rate of 12.99% plus no annual fee it functions great as a “just-in-case” card if you do have an unexpected financial challenge, like your car breaking down, a job loss, or need to book a flight out of town for a funeral. If you tend to carry a large balance or are actively planning a big purchase then it’s probably better to get the MBNA True Line® Gold Mastercard® credit card because the interest rate is lower which makes borrowing money cheaper, even including the cost of its annual fee.

    And if you’re carrying a balance on other credit cards, this card might be the better option as it offers 0%† on balance transfers in the first 12 months✪ (with a 3% transfer fee, minimum $7.50), so if you need that peace of mind while you pay off a balance, this card’s got you covered.

    This card is awesome for those who can’t stomach paying annual fees or who want to carry a credit card as a fallback for a crisis.

    Key features

    Interest rate: 12.99% purchases; 17.99%✪ on balance transfers; 24.99% cash advance

    Additional perks: Apple Pay compatible; Additional 9 authorized users with no additional fee; Payment Plan feature

    Annual fee: $0

    Who's eligible

    Recommended credit score: Fair/Good

    Minimum income required: N/A

    Age: You must be the age of majority in your home province

    Residency: Canadian (This offer is not available for residents of Quebec)

    Read more: MBNA True Line Mastercard

    This offer is only available to residents of Canada other than the province of Quebec (Quebec residents eligible for separate offer).

    †, ✪, Terms and Conditions apply.

    Sponsored advertising. MBNA is a division of The Toronto-Dominion Bank (TD) and TD is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete information on this MBNA credit card, please click on the “Apply Now” button.

    The Toronto-Dominion Bank is the issuer of this credit card. MBNA is a division of The Toronto-Dominion Bank. ®MBNA and other-trademarks are the property of The Toronto-Dominion Bank.

    ®/TM Mastercard and World Elite are registered trademarks, and the circles design is a trademark of Mastercard International Incorporated. Used pursuant to license.

Lowest interest credit card with an annual fee

MBNA True Line Gold Mastercard

Apply now

4.0

Good

Suggested credit score

to receive the latest news, tips and offers by email

Pros

  • Low interest rate on purchases and balance transfers

  • 24/7 customer service

  • Proactive fraud protection

Cons

  • $39 annual fee

  • Penalty interest rate if minimum payments are missed

Eligibility

Recommended Credit Score

Good

Pros

  • Low interest rate on purchases and balance transfers

  • 24/7 customer service

  • Proactive fraud protection

Cons

  • $39 annual fee

  • Penalty interest rate if minimum payments are missed

Eligibility

Recommended Credit Score

Good

10.99% interest rate on purchases and 13.99% on balance transfers✪ and access cheques

10.99%

This card is made from 100% recycled plastic

100%

Use available credit on your credit card to transfer funds right to your chequing account.

Funds Transfer

Purchase APR

10.99%

Balance Transfer Rate

13.99%

Cash Advance APR

24.99%

Annual Fee

$39

Foreign Transaction Fee

2.50%

  • Overview of the lowest interest rate credit card in Canada

    +

    The MBNA True Line Gold Mastercard charges an extremely low annual interest rate of 10.99% on purchases for an annual fee of just $39. That annual interest rate is less than half that charged by traditional credit cards and so makes it the perfect card to use if you’re planning a big purchase that you don’t quite have the cash saved up for. The annual fee is more than justified if you carry a balance.

    Let’s say you buy a $5,000 couch and plan to pay it off in 12 months. You’ll pay total interest of $302 plus a $39 annual fee for a total debt cost of $341. But if you put that same couch on a credit card with no annual fee at 19.99% you’ll pay $557.80 in interest, or 61% more, including the annual fee.

    Be careful though — if you’re late on payments twice in a row within 12 months your interest rate will jump to 19.99%.

    This credit card is an awesome option for those who want to purchase a big ticket item and don’t quite have the cash saved up.

    Key features:

    Interest rate: 10.99% on purchases; 13.99%✪ on balance transfers; 24.99% on cash advance

    Additional perks: Buyer’s Assurance; Purchase Protection insurance; Additional nine authorized users with no additional fee; Discounts on Avis and Budget car rentals

    Annual fee: $39

    Who's eligible?

    Min. credit score required: Fair/Good

    Min. income required: N/A

    Age: You must be the age of majority in your home province.

    Residency: Canadian

    Read more: MBNA True Line Gold Mastercard

    ✪, Terms and Conditions apply.

    This offer is not available for residents of Quebec.

    Sponsored advertising. MBNA is a division of The Toronto-Dominion Bank (TD) and TD is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete information on this MBNA credit card, please click on the “Apply Now” button

    The Toronto-Dominion Bank is the issuer of this credit card. MBNA is a division of The Toronto-Dominion Bank. ®MBNA and other-trademarks are the property of The Toronto-Dominion Bank.

Best low interest balance transfer credit card in Canada

CIBC Select Visa* Card

Apply now

5.0

Good

Suggested credit score

Transfer your credit card balance - Get 0% interest for up to 10 months with a 1% transfer fee† and a two year annual fee rebate†

Pros

  • 0% Balance Transfer rate for a generous 10 months with a low (1%) Balance Transfer fee†

  • 13.99%† Purchase Annual Interest Rate

  • A two year annual fee rebate†

  • No annual fee for additional cards (up to 3)

Cons

  • There are other low interest cards available with no annual fee whatsoever

  • Few distinguishing benefits beyond its interest rates

Eligibility

Recommended Credit Score

Good

Required Annual Household Income

$15,000†

Pros

  • 0% Balance Transfer rate for a generous 10 months with a low (1%) Balance Transfer fee†

  • 13.99%† Purchase Annual Interest Rate

  • A two year annual fee rebate†

  • No annual fee for additional cards (up to 3)

Cons

  • There are other low interest cards available with no annual fee whatsoever

  • Few distinguishing benefits beyond its interest rates

Eligibility

Recommended Credit Score

Good

Required Annual Household Income

$15,000†

Pay 0% interest for up to 10 months with a 1% transfer fee.†

0%

Purchase APR

13.99%†

Balance Transfer Rate

13.99%†

Cash Advance APR

13.99%†

Annual Fee

$29

  • Overview of the best low interest card for balance transfers and cash advances

    +

    Similar to the MBNA True Line, the CIBC Select Visa* Card has ongoing low rates of: 13.99%† Purchase Annual Interest Rate, 13.99%† Balance Transfer Annual Interest Rate, and 13.99%† Cash Advance Annual Interest Rate, with an annual fee of $29. That rate goes even lower when you get 0% interest for up to 10 months with a 1% transfer fee†. This means you can pay off your balances and purchase urgent items without having to worry about paying loads of interest on both.

    •Transfer up to 50% of your assigned credit limit†

    •If you choose to carry a balance and you make your minimum payments on time, a balance transfer could save you money on interest

    •Take advantage of this 0% introductory interest rate on balance transfers for your first 10 months. You’ll only have to pay a 1% fee† when you transfer your balance from another card to the CIBC Select Visa Card

    The card’s promotional balance transfer offer, along with its annual fee rebate and common carrier insurance makes this a strong competitor in the low interest and balance transfer credit card market.

    Key features

    Regular interest rate: 13.99%† Purchase Annual Interest Rate, 13.99%† Cash Advance Annual Interest Rate, and 13.99%† Balance Transfer Annual Interest Rate

    Additional perks: Common Carrier Accident Insurance

    Annual fee: $29 (two years annual fee rebate. $0 for up to 3 additional cards.†)

    Read more: CIBC Select Visa card review.

    †Terms and Conditions Apply

    This balance transfer offer is only available at the time of your online application.† Simply tick the checkbox to select the balance transfer option when you’re filling out your application

    Once you take advantage of this offer, you will have a promotional rate balance on your account. As a result, you will lose your interest-free grace period on new purchases unless you pay your amount due, including any promotional rate balances, in full each month. While you will enjoy the promotional rate on the balances you transfer by using this offer, new purchases will be subject to the purchase interest rate.

Best low interest cash advance credit card in Canada

BMO Preferred Rate Mastercard®*

Apply now

3.6

0.99% rate

Welcome offer

Good

Suggested credit score

Get a 0.99% introductory interest rate on Balance Transfers for 9 months with a 2% transfer fee and BMO will waive the $29 annual fee in your first anniversary*.

Expires

Nov 30, 2024

Pros

  • Low-interest rate: Offers a competitive purchase interest rate

  • Introductory balance transfer offer for the first nine months

  • First-year annual fee waiver

  • BMO PaySmart™ Installment plans: Turn new credit card purchases into small, interest-free monthly payments with a small fee.

  • Additional cardholder: You can add an additional cardholder for free

  • Free extended warranty and purchase protection*

  • Zero Dollar Liability: protects you from unauthorized use of your credit card*

Cons

  • No rewards: Your focus is paying down debt, not collecting miles.

  • Foreign transaction fee: Charges a 2.5% fee on foreign transactions.

  • Balance transfer fee: While normal, it’s a bit painful to have to fork over a 2% fee on balance transfers.

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$0

Required Annual Household Income

$0

Pros

  • Low-interest rate: Offers a competitive purchase interest rate

  • Introductory balance transfer offer for the first nine months

  • First-year annual fee waiver

  • BMO PaySmart™ Installment plans: Turn new credit card purchases into small, interest-free monthly payments with a small fee.

  • Additional cardholder: You can add an additional cardholder for free

  • Free extended warranty and purchase protection*

  • Zero Dollar Liability: protects you from unauthorized use of your credit card*

Cons

  • No rewards: Your focus is paying down debt, not collecting miles.

  • Foreign transaction fee: Charges a 2.5% fee on foreign transactions.

  • Balance transfer fee: While normal, it’s a bit painful to have to fork over a 2% fee on balance transfers.

Eligibility

Recommended Credit Score

Good

Required Annual Personal Income

$0

Required Annual Household Income

$0

0.99% introductory interest rate on balance transfers for 9 months with a 2% transfer fee and BMO will waive the annual fee on your first anniversary.*

0.99%

Purchase APR

13.99%

Balance Transfer Rate

15.99%

Cash Advance APR

15.99%

Annual Fee

$29

  • Overview of the BMO Preferred Rate MasterCard®*

    +

    The BMO Preferred Rate Mastercard®* offers a competitive interest rate for purchases at 13.99%. Putting a bigger purchase (like a kitchen appliance, computer, or TV) on the card may be a smart idea because of the low interest rate and because the card extends manufacturer warranties up to an additional year for new items, and protects items against accidental damage and theft.

    If you are strapped for cash and would otherwise seek out a payday loan for your expenses – it’s much cheaper to get a cash advance from this card.

    Key features:

    Interest rate: 13.99% on purchases, 15.99% on cash advances and 15.99% on balance transfers (after the first nine months)

    Additional perks: Buyer’s Assurance; Purchase Protection

    Annual fee: $29 with first year waived*

    Read more: BMO Preferred Rate Mastercard

    *Terms and conditions apply

Best Scotiabank low interest credit card

Scotiabank Value Visa

Apply now

4.0

0% intro rate

Welcome offer

Fair

Suggested credit score

0% introductory interest rate on balance transfers for the first 10 months (12.99% after that; annual fee $29), plus no annual fee for the first year.Âą

Expires

Oct 31, 2024

Pros

  • Lengthy introductory APR on balance transfers

  • A great low rate everyday

  • Available to applicants with average credit

Cons

  • No rewards program

  • Insurance coverage is an optional extra

  • Carries an annual fee

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$12,000

Pros

  • Lengthy introductory APR on balance transfers

  • A great low rate everyday

  • Available to applicants with average credit

Cons

  • No rewards program

  • Insurance coverage is an optional extra

  • Carries an annual fee

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$12,000

Purchase APR

12.99%

Balance Transfer Rate

12.99%

Cash Advance APR

12.99%

Annual Fee

$29

Foreign Transaction Fee

2.50%

  • Overview of the low interest credit card from Scotiabank

    +

    Though most of Canada’s low interest credit cards are Mastercards, there are nonetheless a few good options for those who prefer Visa. For an annual fee of $29, the Scotiabank Value® Visa* Card offers a competitive interest rate of 12.99% on purchases, balance transfers (12.99%), and cash advances (12.99%). These universally low rates are rare, and can potentially save you a lot of money across a variety of transaction types.

    The low fixed rates are also supplemented with low promotions: to boost savings for new applicants, Scotia allows cardholders to transfer a balance after being approved. Get a 0% introductory interest rate on Cash Advances, including Balance Transfers, for the first 6 months (12.99% after that; annual fee $29).Âą Plus no annual fee in the first year.Âą

    Finally, cardholders who rent vehicles at any participating AVIS location in Canada and the U.S. will receive up to 25% off on the price of their rental when they pay with their card.

    Read more: Scotiabank Value Visa review

Conditions Apply. Visit here for the Scotiabank Value® Visa* Card to learn more. *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

Honourable mentions for low interest credit cards in Canada

There are many credit cards with low interest in Canada, but not all of them can be considered best in class. Money.ca has chosen the top credit cards for low interest above, but below we give you more options. 

For instance, maybe you bank with TD or RBC and are loyal to them but want to know your options. Some people might disregard Amex, known for their premium credit cards, despite still having a good option (with insurance, too). 

RBC low rate credit card

RBC Visa Classic Low Rate Option

Apply now

3.4

Fair

Suggested credit score

to receive the latest news, tips and offers by email

Pros

  • Low interest rate

  • No minimum income requirement

  • Basic purchase protection and extended warranty

  • Linked benefits with Petro-Points program

  • Holistic evaluation for varied credit histories

Cons

  • $20 annual fee

  • Other cards offer similar rates with no annual fee

  • Optional benefits may be found cheaper elsewhere

  • Not among the best low-interest cards due to competition

  • Balance transfer promotions lacking compared to competitors

Eligibility

Recommended Credit Score

Fair

Pros

  • Low interest rate

  • No minimum income requirement

  • Basic purchase protection and extended warranty

  • Linked benefits with Petro-Points program

  • Holistic evaluation for varied credit histories

Cons

  • $20 annual fee

  • Other cards offer similar rates with no annual fee

  • Optional benefits may be found cheaper elsewhere

  • Not among the best low-interest cards due to competition

  • Balance transfer promotions lacking compared to competitors

Eligibility

Recommended Credit Score

Fair

Purchase APR

12.99%

Balance Transfer Rate

12.99%

Cash Advance APR

12.99%

Annual Fee

$20

  • Overview of the RBC low interest card

    +

    While it's not a cash back low interest credit card, RBC does reward you with offers from great brands. For instance, when you link your card to Petro Canada, you can instantly save $0.03 per litre on fuel and 20% more Petro-Points.

    Link your card to Rexall and earn 50 Be Well points for every $1 you spent (25,000 Be Well points = $10, so for every $500, you get $10 cash back at Rexall)

    They'll also throw in $0 delivery fees from Door Dash for 3 months.

    At an annual fee of $0 and an APR of 12.99%, it earns its spot as an honourable mention.

    Read more: RBC Visa Classic Low Rate Option credit card review

American Express Canada low interest credit card

American Express Essential™ Credit Card

Apply now

4.5

Fair

Suggested credit score

to receive the latest news, tips and offers by email

Pros

  • Low APR for purchases and cash advances

  • Low annual fee and free additional cards

  • Buyer’s purchase protections for extended warranty

  • Easy eligibility for Canadian residents

  • World-class service from American Express

  • Access to exclusive events with American Express® Experiences

Cons

  • Potential high fees for late-payments and foreign transactions

  • Interest rates may increase if payments are missed

  • Limited installment program fees may apply

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$0

Required Annual Household Income

$0

Pros

  • Low APR for purchases and cash advances

  • Low annual fee and free additional cards

  • Buyer’s purchase protections for extended warranty

  • Easy eligibility for Canadian residents

  • World-class service from American Express

  • Access to exclusive events with American Express® Experiences

Cons

  • Potential high fees for late-payments and foreign transactions

  • Interest rates may increase if payments are missed

  • Limited installment program fees may apply

Eligibility

Recommended Credit Score

Fair

Required Annual Personal Income

$0

Required Annual Household Income

$0

Purchase APR

12.99%

Balance Transfer Rate

12.99%

Cash Advance APR

12.99%

Annual Fee

$25

  • Overview of the Amex low interest credit card in Canada

    +

    At 12.99% interest rate and an annual fee of $25 (with no additional fees for additional cards), it's a good option for a low interest rate card in Canada.

    They also throw in $100,000 of travel accident insurance, buyer's assurance, purchase protection plan, and access to exclusive or presale tickets.

    However, it only gets an honourable mention due to its low (but ever increasing) acceptance rate.

    Also, be aware that if you miss two minimum payments within 12 months, your interest rate jumps to 24.99%. If you miss 3 minimum payments it'll go as high as 26.99%.

    Read more: Amex Essential review

Best low interest credit cards in Canada

Low interest rate credit cards in Canada Details Apply now
MBNA True Line Mastercard Interest rate: 12.99%
Annual fee: $0
Apply now
MBNA True Line Gold Mastercard Interest rate: 10.99%
Annual fee: $39
Apply now
BMO Preferred rate mastercard Interest rate: $29 (Waived the first year)*
Annual fee: 13.99%
Apply now
CIBC Select Visa Interest rate: 13.99%† (13.99%† Cash Advance Annual Interest Rate and 13.99%† Balance Transfer Annual Interest Rate)
Annual fee: $29 (two years annual rebate)† Check full offer details below†
Learn More
Scotiabank Value Visa Interest rate: 12.99%
Annual fee: $29
Apply now

†Terms and Conditions Apply

Conditions Apply. Visit here for the Scotiabank Value® Visa* Card to learn more. *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

How we compared and chose the cards

We compared and chose each credit card based on a holistic assessment of the value of each card. Obviously, the card had to have a low interest rate. But that wasn’t the only thing we considered. We also took into account interest rates on cash advances, balance transfers, the annual fee as well as any perks to get a bigger picture of the total potential costs and benefits. For example, a slightly higher annual fee may be worth it if the card also offers discounts or insurance.

How to choose the best low-interest card

When comparing one low interest credit card to the next, make sure to consider your individual spending habits and what’s most relevant to your lifestyle. If your primary goal is to pay off debt faster or keep a card in case of an emergency, then perhaps looking simply for the lowest interest rate possible is right for you. But let’s say you often depend on cash advances — then you’re going to want to look for a card that not only has a low rate for purchases but also for when you need to grab bills out of the ATM. Similarly, if you plan on making some big-ticket purchases then you might want a card that offers additional benefits like extended warranties and purchase assurances. By examining your priorities you’ll be able to find the right low interest card for you.

Read reviews

One of the best things you can do before signing up for a credit card is read reviews to know what you’re getting into. Here at Money.ca we’ve done the hard work of looking up and comparing all the best credit cards on the Canadian market to help you choose the one that is right for you.

Check eligibility

Not everyone is eligible for every credit card or credit card offer. It really depends on your financial history or what other banking products you have. Read the fine print to make sure you meet the income and credit score requirements before signing up for a card. And make sure the card has the specific benefit you’re looking for. If you’re getting a card for a specific reason, such as balance transfers, then make sure to double-check that that card actually offers balance transfers.

Interest rate on purchases, cash advances and balance transfers

While some cards offer the same rate across the board most have different interest rates for purchases, cash advances and balance transfers. Knowing what you’ll mostly be using the credit card for will help you choose which card is right for you. You wouldn’t want to expect 9% and then get hit with sticker shock when they charge you 25% for a cash advance!

Annual fee

Paying an annual fee for a low-interest credit card can feel counterintuitive, but if the rate is low enough and the perks are good enough it can be more than worth it. Often, cards with annual fees will offer lower interest rates than those without, so if you’re going to carry a balance the fee might still let you come out ahead financially. Additionally, if the card offers other benefits that will save you money, like travel insurance or discounts on car rentals, it might more than pay for itself.

Rewards and perks

Clearly, the main advantage of a low interest rate credit card is, well — its low interest rate. But that doesn’t mean that’s the only thing it delivers. Some cards will also give you rewards points that you can redeem for travel, merchandise, and more. Other credit cards provide insurance and extended warranties. Make sure to read up on all the benefits of a low interest credit card, and choose the one that offers the perks most suitable for your lifestyle.

What to watch for with low interest credit cards

Something to watch for is for cards that claim to be low interest but are, in reality, variable rates of prime plus. The problem is that A. the prime rate can change several times a year, and B. the “plus” can also vary depending on your eligibility. You don’t know if you’re going to get a rate of 7.69% or 15.45% before you apply. Even if you’re unhappy with the rate you get, if you were approved, you may still have to pay the annual fee.

Another thing to watch for are the new personal loans available on the marketplace. These are not the same as a low interest credit card. They may advertise rates as low as 5.9% but in reality they average in the 12% range. Furthermore, they require you to send in proof of income and identity verification. Perhaps it’s better than going into the branch to apply for a line of credit, but it’s certainly not easier than applying for a credit card online.

Why use a credit line or a personal loan to pay off credit card debt, when you can access ultra low rates with a credit card? It just doesn’t make sense. We continue to recommend balance transfers as the optimal strategy to pay off high interest credit cards, store cards or fixed payment loans you may have. Few, if any, other products offer interest rates as low.

How does credit card interest work?

Your credit card’s annual percentage rate, or APR, is communicated as an annual charge but is calculated daily and charged monthly. If you want to know how much interest you will accrue each day you can multiply your balance by the APR and divide it by 365.

If you have a $2,000 balance on a low rate credit card charging you 12.99% APR, for example, you would calculate $2,000 times 0.1299 APR divided by 365 days equals $0.71 per day in interest charges. To calculate the monthly cost you would simply multiply the daily interest charge by the number of days in a month. For example $0.71 times 30 days is $21.35 monthly interest. Even if your balance stays constant, your monthly interest may fluctuate slightly because the number of days in each month range from 28 to 31.

With a brand new credit card, or one without any charges because you’ve paid off the balance in full, you typically get a grace period of 21 days before interest starts to accrue on purchases. If you’re carrying a balance on your credit card, however, new purchases will begin accruing interest the day you make them.

It’s not unusual for credit cards to charge a different APR for cash advances or balance transfers. Furthermore, both of these charges tend to have no grace period, so your balance will begin accruing interest right away.

How low interest credit cards save you money

It’s easy for personal finance experts to say that you should never carry a balance on your credit card, but hey, real life happens. We can’t prepare for everything. You may be just starting out in the workforce and too young to have saved a significant emergency fund. Or perhaps it was depleted by a recent disaster. Something unexpected, like a glass of wine spilling on your computer, a car that breaks down or even the siren call of a week at an all-inclusive vacation in the Dominican Republic that forces your hand.

It’s also possible you made spending mistakes in the past and are now carrying a large balance on high-interest credit cards.

No matter the reason, a low interest credit card can save you money when borrowing and help you get out of debt faster since more of your payment will be going toward the principal instead of the interest.

Let’s say you owe $4,000 on a credit card currently charging you 19.99%. You’re diligently paying $300 per month towards your balance. Here’s the difference it would make to transfer that balance to a low-interest card with an interest rate of 12.99%:

-
Regular credit card 
Low interest rate credit card
Interest rate 
19.99% 
12.99%
Months to debt free 
16 
15
Total interest paid 
$557.21 
$340.39

Bottom line

Low interest rate credit cards are awesome for financing a big purchase, debt consolidation or to keep on hand for emergencies. Paying the annual fee is most likely worth it if you carry a balance from month-to-month. But if you’re planning to use the card frequently for something other than new purchases then make sure to review the applicable rates for cash advances and balance transfers as they may differ. To choose the best credit card, don’t forget to take into account the perks and rewards. Either way, a low interest credit card is one of the cheapest ways to borrow money without putting down collateral. And if you carry a balance it’s going to put a lot more money in your pocket than any reward or cash-back card.

BMO is not responsible for maintaining the content on this site. Please click on the Apply now link for the most up to date information.

  • How to lower your credit card interest rate

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    To lower your credit card interest rate in Canada, negotiate with your issuer, especially if you have a good credit history or loyalty. Consider balance transfer cards with lower rates, improve your credit score for better offers, shop around for cards with lower interest, and explore secured credit cards.

  • Can I ask my credit card provider to lower my interest rate?

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    Yes, you can ask your credit card issuer to lower your interest rate in Canada. It's a common practice and can be effective, especially if you have a good payment history, a strong credit score, or have been a loyal customer. When contacting them, be polite and prepared with your reasons for requesting a lower rate. Mentioning competitive offers from other credit card companies can also strengthen your case. However, remember that the issuer is not obligated to lower your rate, and the final decision will depend on their policies and your individual financial circumstances.

  • How to ask for a lower interest rate on your credit card

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    To request a lower interest rate on your credit card, first research your current rate and credit score. Call the issuer, politely ask for a rate reduction, and mention any better offers you've found. Be prepared to negotiate and possibly escalate to a supervisor if initially unsuccessful.

  • How to get a low interest credit card

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    To acquire a low-interest credit card, first assess your credit score, as higher scores typically secure better rates. Research and compare cards known for low interest, scrutinizing their terms and conditions. Choose the most suitable option and apply, ensuring not to apply for multiple cards simultaneously to protect your credit score.

Bridget Casey is the award-winning entrepreneur behind Money After Graduation, a Canadian financial literacy website aimed at 20 and 30-somethings. She holds a BSc. from the University of Alberta, and an MBA in Finance from the University of Calgary. She has been featured as a millennial financial expert by Yahoo! Finance, TIME Magazine, Business Insider, CBC and BNN. Bridget was recognized as one of Alberta's Top Young Innovators in 2016.

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