If you are looking to get rid of some debt, carry some balance over or finance a brand new purchase, a low interest credit card is a fantastic option for you. We’ve pitted all of the best low interest credit cards available in the Canadian market today and come up with our list of the top picks for you. When you think of it in general terms, low interest rate credit cards is an almost oxymoronic term. These two terms are usually found far away from each other in the finance world. Luckily for you, there are some awesome credit cards in Canada that fit this description. In this post, we will take a look at the best low interest credit cards in Canada.

Before we delve deeper into the discussion about the best low interest credit cards in Canada, let’s spend a moment to understand how credit card interest works. Credit card interest is expressed as an annual number, with interest calculated daily on outstanding balances. For purchases, you have a grace period after your statement is released before interest starts accruing (usually 21 days), but varies from issuer to issuer. However, miss that deadline and the interest is calculated from the date of the purchase.For cash advances and balance transfers, interest starts accruing right away. And interest is calculated daily, though the rates you see are expressed as annual rates. To determine what you’ll pay, take the rate, and divide by 365 (or 366 if it’s a leap year). Multiply that number by the number of days the balance has been outstanding and you’ll see how much interest you’ll have to pay.

Low-interest rate credit cards are a useful tool if you tend to carry a balance on your credit card, or if you are in the midst of paying off high-interest debt.

Whatever your reason for considering a low-interest credit card, there are a variety of options available to you in Canada. Some credit cards offer low-interest rates for a promotional period only (for example, six months), while others offer low-interest rates but with an annual fee for the privilege.

Meanwhile, others offer low-interest rates, but the rates are variable and tied to Canada’s prime rate.

Here are the best low-interest credit cards in Canada:

Low Interest Credit Cards available in the Canadian market 2020:

Scotiabank Value VISA Card

If you tend to carry a balance every month, the Scotiabank Value® VISA* Card is your best bet. The Scotiabank Value VISA Card is one of the very best fixed-rate credit cards circulating in Canada. The annual fee of this card is $29. However, the money you save through interest offsets that charge in case you plan to carry a balance with this low interest rate credit card.

At 12.99% for purchases and cash advances, this card also has one of the lowest interest rates on the market. For example, if you carried a balance of $3,000 on this credit card, you would pay $32.03 per month in interest charges.

If you carried that balance on a credit card charging 19.99% interest, you would pay $49.29 per month. After just two months you’ve saved enough money in interest to pay for the annual fee.

The additional perk of this low interest rate credit card is that if you transfer some balance on it, you’ll only be required to pay an interest rate of 0.99% for the first six months. The remaining balance will be charged at a 12.99% interest rate beyond that.

Cardholders also get to save as much as 25% off on the base rates at select AVIS and Budget locations spread across Canada and the USA.

The Details:

Annual Fee: $29
Minimum Income Eligibility: $12,000
Credit Score Required: Fair to Good
Welcome Offer: An incredible introductory interest rate of 0.99% on the first six months of balance transfers.
Additional Perks: Get major discounts (up to 25%) while renting cars from the Canadian and American outlets of AVIS.
Other Card Info: Purchase APR: 12.99% | Cash Advance APR: 12.99% | Balance Transfers APR: 12.99%

MBNA True Line Mastercard credit card

If you are carrying a balance on another credit card and you’re looking for a balance transfer credit card with a low-interest rate, the MBNA True Line Mastercard credit card is an excellent choice.

This low interest rate credit card comes with a very competitive annual interest rate (AIR) of 12.99% on all purchases.

Plus, if you’re carrying a balance on another credit card with higher interest, this card comes with an exceptional balance transfer offer: get a 0% promotional annual interest rate for 10 months on balance transfers completed within 90 days of account opening, with a fee of 3% (minimum fee of $7.50 CAD).

The interest rate on transferred balances reverts to 12.99% after that. On top of that, this card has no annual fee.

One thing to note: the cash advance interest rate on this credit card is 24.99% — so watch out if you take cash advances on your credit card regularly.

The Details

Annual Fee: $0
Minimum Income Eligibility: N/A
Credit Score Required: Fair to Good
Welcome Offer: 0% for 10 months on balance transfers completed within 90 days of account opening, with a 3% transfer fee (minimum fee of $7.50 CAD).
Additional Perks: Low annual interest rate
Interest on Purchases: 12.99% | Interest on Cash Advances: 24.99% | Interest on Balance Transfers & Access Cheques: 12.99%

MBNA True Line Gold Mastercard credit card

Tied for second, the MBNA True Line Gold Mastercard credit card is the upgraded relative of the MBNA True Line Mastercard credit card, but it may be more appealing for a few different reasons. Here are the specs:

Low-interest rate:This card has a $39 annual fee, but with that comes a low annual interest rate on purchases of 8.99%. That’s one of the lowest rates on the market.
Excellent balance transfer promo: If you are transferring a balance, you can get a 0% promotional annual interest rate for the first six months on balance transfers completed within 90 days of account opening. A 3% fee applies (minimum fee of $7.50).
Since interest charges can easily be hundreds of dollars per month on a regular credit card, this promotional rate could be a huge help if you’re paying off debt.

This credit card is an excellent choice for people who are unsure about their ability to pay off the entire balance during the first six months of the promotional period. If you have a remaining balance at the end of the period, it will be subject to an annual interest rate of 8.99% on balance transfers, which is still a low rate.

Take note: be careful with cash advances with this credit card because the interest rate on those is a whopping 24.99%.

The Details

Annual Fee: $39
Minimum Income Eligibility: N/A
Credit Score Required: Fair to Good
Welcome Offer: 0% promotional annual interest rate for 6 months on balance transfers* completed within 90 days of account opening, with a 3% transfer fee (minimum fee of $7.50 CAD).
Additional Perks: Low annual interest rate
Interest on Purchases: 8.99% | Interest on Cash Advances: 24.99% | Interest on Balance Transfers & Access Cheques: 8.99%

BMO Preferred Rate Mastercard

If you’re trying to find a card with a competitive rate of interest on regular purchases, alongside a small annual fee and a promotional balance transfer rate, the BMO Preferred Rate Mastercard may be a good option.

Cardholders can expect excellent interest rates: 12.99% on regular purchases and cash advances, which is significantly less than most traditional credit cards. Plus, right now, there’s a promotional rate of interest of 3.99% after all transfers throughout the first nine months (a 1% fee applies).

The BMO Preferred Rate Mastercard also comes with the quality protections you expect from a mastercard including extended warranty coverage, which doubles the manufacturer’s warranty period for up to at least one year also as purchase protection, which insures your purchases against theft or damage for 90 days.

The Details:

Annual Fee: $20 (Waived for first year)*
Minimum Income Eligibility: $15,000 per annum
Credit Score Required: Fair to Good
Welcome Offer: 3.99% interest after all transfers for the primary 9 months (1% transfer fee applies)
Additional Perks: Extended warranty and buy protection
Other Card Details: Purchase APR: 12.99% | advance APR: 12.99%

TD Emerald Flex Rate Visa Card

This is an awesome low-interest rate credit card in Canada. Rather than just offering a flat fee rate of interest, the TD Emerald Flex Rate Visa Card’s purchase rate of interest is variable. It’s tied to the TD Prime Rate and varies counting on your credit assessment. Here’s how it works: customers with an honest credit score could qualify for a sale rate of interest as low as TD Prime + 4.50%. TD’s Prime Rate is 2.450% (as of March 27, 2020), it means:

The lowest possible rate of interest is 6.95%.

Less credit-worthy applicants could qualify for an interest rate of 15.20% (TD Prime + 12.75%).

It’s important to remember that the rate of interest is tied to the prime rate, which is variable. meaning if TD Bank raises its prime rate, your rate of interest on your outstanding debt will also shoot up. But as long as prime interest rates are low in Canada, it also can mean that you simply find yourself saving a large amount of money during the long-run. If you’ve got a fantastic credit rating, this credit card is a great option for getting the lowest rate of interest. It also has an extremely affordable annual fee of just $25.

The Details

Annual Fee: $25
Income Eligibility: None
Credit Score Requirement: Good to Excellent
Additional Perks: Variable rate of interest
Interest on Purchases: TD Prime + 4.50% to 12.75% | Interest on Cash Advances: TD Prime + 4.50% to 12.75%

What to look for before getting a low interest credit card?

Annual fees

In all the scenarios that we have listed above, enquiring about the annual fee of your low interest credit card is of paramount importance. A better annual fee may offset any savings in interest once you transfer a balance or buy something really expensive through your credit card.

Balance transfer promos

If you’re considering transferring a balance onto a low-interest credit card, you ought to also take special care to gauge the promotional rate of interest and therefore the term. If the term is just too short, you’ll find yourself paying higher interest rates on any remaining debt. Be honest with yourself about what proportion debt you’ll pay off during that point, and go for the low interest credit card with the promotional term that’s in sync with your paying capabilities.

Hidden fees

Sometimes balance transfer credit cards charge a “balance transfer fee” once you transfer your balance. Such fees can often range between 1.00% – 3.00% of the balance. Make sure that you enquire about this when evaluating your options, because it’s going to change the type of low interest credit card that fits your needs in the most accurate way. You’ll usually find this information within the fine print on the credit card’s website.

Just remember that low-interest credit cards are great options for paying off outstanding debt or carrying debt in an emergency, but they ought to be temporary measures.

If you prioritize paying off your balance monthly and staying in the habit of maintaining a zero balance, a cash back credit card or travel rewards credit card could also be a far better choice when it comes to maximizing your spending options.

Why Choose a low Interest Credit Card?

If you employ these credit cards prudently whenever you’ve got a balance that you simply can’t quite pay off, or you just have to purchase something urgently while you don’t have the cash, you’ll be more happy financially.

Plus, if you’re in debt, transferring your balance to a card with lower interest is an efficient debt reduction strategy.

As you might have noticed in our exhaustive list above, low-interest credit cards aren’t a “one size fits all” tool. There are three scenarios during which a low-interest mastercard will add up for your finances:

First is, if you’re carrying significant credit card debt. If you’ve got an outsized amount of high-interest debt, transferring it to a balance transfer credit card will help you in paying it off faster than if you continued paying 19.99% interest (or more!) on the whole balance monthly .

The second scenario is where the debt on one of your credit cards will add up is when you make an enormous purchase with your card and realize that the big amount must be paid off in a few months. In this case, a low-interest credit card with a clear and simple balance transfer promotion might be your best possible option. You’ll have time to pay off the acquisition without paying any interest charges whatsoever.

Finally, if you would like a good credit card for emergencies, choose one with a low standard rate of interest. In this scenario, a low interest credit card which gives a low rate of interest constantly, is a much better option than one which mainly gives promotional low rates.

A good low interest credit card is your defense against emergency purchases, and therefore the ongoing low-interest rates mean you won’t be dinged on interest too badly if you’ve got to hold the balance over several months.

Having a low-interest rate credit card in your wallet will save you oodles of dough if you’re paying off debt or carrying a balance each month. It’ll put more money back into your wallet, even when you pay a modest annual fee (generally more than most cash back credit cards).

Just keep in mind that some of these credit cards offer a promotional low-interest rate for a set time period. But if you make it your mission to pay off your credit card debt fast, this shouldn’t be a deal-breaker.

Low Interest Credit Cards: Things to Watch Out

If you do carry a balance, it makes no sense to chase rewards. While you might initially find the rewards to be lucrative but the 2% that you will get in rewards, will be overwhelmingly offset by the 20% you will pay in interest. Even if you carry the balance for two statement periods, it will cost you over 3.5% in compounded interest. The math doesn’t work. Your best option, if you know you occasionally don’t pay down your entire credit card bill, is to get yourself a no fee, low interest credit card. Just keep it in your wallet for those rainy days, unexpected expenses or needs, it costs you nothing, but will save you tons.

For undisclosed reasons, most Canadian banks don’t offer fixed rates in the area of 5.99% to 9.99% without charging any annual fee. RBC, BMO, CIBC and Scotia offer low interest rate credit cards with rates as low as 11.99%, but they come with $20-$29 annual fees. RBC and TD offer low variable rate credit cards of prime plus 4.99% to 8.99% or 1.25% to 12.75%. You don’t know if you’re going to get a rate of 7.69% or 15.45% before you apply. The problem is, even if you’re unhappy with the rate you get, if you were approved, you still have to pay the annual fee!

With many of the new personal loans on the marketplace, while they advertise rates as low as 5.9%, they average more in the 12% range. You will also be required to submit the 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.

Just remember, don’t make any new purchases on your balance transfer card – use it for balance transfers exclusively. You’ll be paying 22% interest on new purchases, and when you try to pay the higher interest balance down, only a portion of your repayment will go towards your new purchase. The other portion is transferred towards your existing balance and unfortunately, you don’t get to choose. Consequently, until your lower interest balance is paid off completely, your new higher interest balance will stick.

So why use a credit line or personal loan to pay off credit card debt, when you can access 0% rates? 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. No other products offer interest rates as low.

Low Interest credit cards: FAQs

What is a low interest credit card?

A low interest credit card’s definition is literal and exactly what it sounds like. It is a regular credit card with a lower interest rate (varies between 5-10 % compared to the 19.99% for normal credit cards). Low interest credit cards also come with lower interest rates on cash advances and balance transfers. Low interest credit cards also come with low/no annual fees, making them accessible to people regardless of their income.

Why should I get a low interest credit card?

Typical credit cards have an interest rate ranging from 19.99%-22.99%, while low interest cards can carry interest rates as low as Prime+4.99% to 11.99%. If you tend to carry a balance on your credit card month over month, a low interest credit card can save you money on interest costs.

How do low interest credit cards work?

With a lower interest rate than typical credit cards, low interest rate credit cards are designed to save you money on interest payments when you carry a balance. A lot of low interest credit cards also come with purchase security and extended warranty insurance benefits.

Is there any way to get a lower interest rate?

You may find a lower promotional interest rate as a special offer, but those tend to be for a limited time only. A lot of low interest credit cards focus on low rates as the main benefit of the card. If you carry balances on a regular basis, low rate credit cards will be ideal for you.

Should I get a low interest credit card?

If you can’t always pay off the full balance on your credit card or if you have credit card debt, a low interest credit card can save you a lot of money in unnecessary interest charges. Don’t get fooled by enticing credit card rewards because if you can’t pay off your monthly balances, those rewards will cost you. Credit card interest compounds and accumulates quickly, so the more you’re charged the longer it’ll take you to pay off the debt. By transferring your balance to a low interest credit card, or just using one right from the start, you can save both in interest costs and potentially in the full length of time it might take you to pay off your credit card debt.

When is the best time to use a low interest credit card?

We know that low interest credit cards are helpful when you are carrying a balance on your credit card, but they are also great for making everyday purchases or for emergency expenses. When you use a low interest credit card, you will have to pay less interest in comparison to a regular credit card. While getting cash advances is not recommended, low interest credit cards also charge lower fees compared to regular credit cards. Many people also use their low interest credit cards to perform balance transfers, when they transfer some or all of their balances from one card to a new low interest credit card. This allows them to only make a single monthly payment at a considerably lower rate.