The best low interest credit cards in Canada for 2023
May 17, 2023
If you want to save money on interest charges and manage your credit card debt, a low interest credit card is the way to go. These cards come equipped with below-average interest rates. Check out our selection of the best low interest credit cards in Canada for 2023.
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Canada's best low interest credit cards at a glance
How to choose - frequently asked question
What is the best low interest credit card?
Do low interest credit cards offer rewards?
How does credit card interest work?
How can I reduce my credit card interest?
What are the disadvantages of low interest credit cards?
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Best low interest cards broken down
Natasha Macmillan, Business Unit Director - Everyday Banking
If you want to save money on interest charges and manage your credit card debt, a low interest credit card is the way to go. These cards come equipped with below-average interest rates, which can add up to big savings if you carry a balance from month to month. Plus, low interest credit cards are a great backup to have on hand for emergencies. So, if you need to make an urgent purchase and don't have the cash on hand, you won't rack up as much in interest charges.
Check out our list of the best low interest credit cards in Canada for 2023. These cards offer competitive rates and other great benefits, making them a smart choice for anyone looking to save on interest charges.
Best low interest credit card
The MBNA True Line Mastercard is a solid choice for consumers who want to save on interest charges. With this card, you'll enjoy a low, fixed interest rate on purchases (12.99%), balance transfers, and cash advances. This can be a great way to manage your credit card debt and save money on interest charges.
In addition to the low interest rate, the MBNA True Line Mastercard also offers a few other useful features. For example, the card has no annual fee, so you can use it without worrying about added costs.
- The low interest rate of 12.99% is fixed and won’t change regardless of your credit rating, income, or the bank’s prime lending rate
- No annual fee and no income requirements to qualify making it very accessible
- Promotional balance transfer of 0% is available for a full year helping pay down or eliminate credit card debt
- Does not include insurance or other benefits
- This offer is not available to residents of Quebec
Additional options for low interest credit cards
The CIBC Select Visa is a great choice for those looking for a credit card with competitive interest rates. The below-average APR of 13.99% across the board on purchases, balance transfers, and even cash advances can help you save money on interest charges and make it easier to manage your credit card debt.
The CIBC Select Visa also comes with a number of additional benefits. These include extended warranty and purchase protection, as well as access to CIBC's 24/7 customer service team.
- Below-average APR of 13.99% across the board on purchases, balance transfers, and cash advances
- Low $29 annual fee (which is rebated for the first year) and has a minimum household income requirement of just $15000, making it easily within reach of most Canadians
- Welcome offer - Transfer your credit card balance. Get 0% interest for up to 10 months with a 1% transfer fee and a first year annual fee rebate.
- Up to three free secondary cards
- One of the few low interest cards to offer additional travel coverage in the form of up to $100,000 in common carrier accident insurance
- Additional benefits include extended warranty, purchase protection, access to CIBC's 24/7 customer service team
- As a low interest credit card, the CIBC Select Visa doesn’t offer much in the form of perks
The BMO Preferred Rate Mastercard is another great credit card option for those looking for a credit card with a low interest rate and additional benefits. The card has a $29 annual fee, but it offers a competitive interest rate on purchases and balance transfers (13.99). Additionally, the card comes with extended warranty and purchase protection, which can provide peace of mind when making purchases.
One of the standout features of the BMO Preferred Rate Mastercard is its special welcome offer, which can provide additional value for new cardholders. The card also offers Zero Dollar Liability, which protects you from unauthorized purchases made with the credit card.
Overall, the BMO Preferred Rate Mastercard is a good option for those looking for a credit card with a low interest rate and additional benefits.
- Welcome offer - earn a 0.99% introductory interest rate on Balance Transfers for 9 months with a 2% transfer fee and we'll waive the $29 annual fee for the first year
- Includes Zero Dollar Liability protecting cardholders against unauthorized purchases
- Purchase interest rate of 13.99 is among the lowest in Canada and also applied to balance transfers as well
- The balance transfer promotional period is also longer than those offered by most other credit cards (nine months versus the typical six months), giving you more time to pay down any outstanding debt
- Includes free extended warranty which doubles the manufacturer’s warranty up to one year and purchase protection
- Has a higher promotional rate for balance transfers, but the offer lasts for a longer period of time
The National Bank Syncro Mastercard is another great choice for those looking for a low interest credit card . This card operates a little differently from the other low interest credit cards mentioned higher on this list.
As opposed to having a fixed interest rate, this card has a variable APR that is determined based on the following calculation: prime rate + 4% (minimum of 10.45%) for purchases, and prime rate + 8% (or a minimum of 14.95%) for balance transfers and cash advance. Based on National Bank’s current prime rate of 6.45%, the card’s interest rate is now set at 10.45% for purchases and 14.95% for balance transfers and cash advance – though your credit score may play a role in what rate you get.
- Includes extended warranty and purchase protection which can provide added peace of mind when making purchases
- Provides access to the Priceless Cities program that allows cardholders to take advantage of curated dining and travel experiences
- Interest rate is based on your credit score, making this a great option for those who are looking to rebuild their credit
- Low annual fee
- Does not have much to offer in terms in credit card perks
The HSBC +Rewards Mastercard can't be left out of this list and can be considered amongst one of the best low interest credit card with rewards - which is exceptionally rare. The card offers a low standard interest rate of 11.9%, putting it among some of the lowest-interest cards in the marketplace.
The card offers the ability to earn 2 HSBC+ Rewards points per dollar on all dining and entertainment purchases, and 1 point per dollar on everything else. Points can then be redeemed for travel, gift cards, merchandise, or financial rewards.
One of the standout features of the HSBC+ Rewards Mastercard is its extensive range of additional benefits. The card offers extended warranty and purchase protection, as well as travel medical insurance and emergency medical insurance. It also offers access to HSBC's 24/7 customer service team and a concierge service for assistance with booking travel and other services.
Overall, the HSBC+ Rewards Mastercard is worth considering for those looking for a low interest credit card and the ability to earn rewards on all of their spending while having access to a range of additional perks and services.
- Welcome offer - up to $200 in total value* for the first year! Must apply by Aug 31, 2023. Conditions apply.
- Low annual fee of $25 (rebated for the first year)
- Offers excellent insurance coverage including extended warranty, purchase protection and an optional travel and medical insurance program which costs $69 per year for emergency travel medical insurance, trip cancellation, trip interruption, and baggage delay or lost
- One of few low interest credit cards with a rewards program
- Other low interest credit cards that skip on the rewards offer lower interest rates and greater interest saving potential
- Not available to residents of Quebec
Credit card interest – glossary of terms
- APR stands for “Annual Percentage Rate” and it’s what banks use to calculate the amount of interest you owe on a credit card. Interest is shown in annual terms as a yardstick measurement – similar to how kilometres per hour is used to calculate a car’s speed – and the actual interest someone owes will vary depending on how long they owe a balance. For instance, if your card has a 19.99% APR but you carry a balance for just one month, your effective interest rate would be closer to 1.67% (19.99% ÷ 12 months).
Most cards will have different APRs for different types of transactions (i.e. purchases, balance transfers, and cash advances).
- Purchase interest rate: When you think of credit card interest, this is the rate you probably have in mind.
It’s the rate you’ll be charged on regular everyday purchases you charge to your credit card (think groceries, clothes, and everything in between). The purchase interest rate will be charged when – an only if – you carry a balance, so it’s a non-factor so long as you pay off your credit card bill in full and on time every month by the due date shown on your statement. That’s thanks to a 21-day interest-free grace period between monthly billing cycles. If you don’t pay off your balance in full, however, this grace period is lost and interest will be applied to your purchases as you make them.
- Balance transfer interest rate: This is the rate you’d owe on a balance you move from one credit card to another. Unlike the purchase interest rate covered above, this rate doesn’t come with the benefit of an interest-free grace period and you’ll start accumulating interest on your transferred balance immediately.
The balance transfer rate on a credit card is usually the same as its purchase interest rate (i.e. 19.99% APR on rewards credit cards), but sometimes it’s higher.
- Balance transfer offer / introductory rate: We can’t talk about balance transfers without covering balance transfer offers.
Many credit cards come with special offers that dramatically reduce the balance transfer interest rate for a limited time. These offers can have APRs as low as 1.99% or 0% and last anywhere from six to ten months. These offers can help you pay off old credit card balances for much less and transition your move from one credit card to another. Once a balance transfer offer ends, the card will revert back to its regular balance transfer rate.
- Cash Advance Interest Rate: This is the rate you’d owe if you use your credit card at an ATM to withdraw paper bills. This rate has no grace period and interest will be charged daily from the moment you take out the cash until you pay back what you owe completely.
Sometimes the cash advance rate on a credit card will be the same as its purchase and balance transfer rates, but in many cases, it’s much higher. For example, the MBNA TrueLine Mastercard has an annual purchase interest rate of just 12.99% but a cash advance rate of 24.99%.
Read more: Credit card cash advances – Everything you need to know
How much you can save with a low interest card
Seeing that a credit card has a low APR might not make it immediately clear just how much you could stand to save. After all, when it comes to credit card bills, you don’t deal with percentages but real dollars.
With that in mind, we’ve run through a real-world scenario using two different credit cards: The first is a typical rewards credit card and the other is the MBNA True Line Gold Mastercard, which we’ve ranked as the best low interest credit card in Canada.
Here’s the scenario:
- You owe a $3,000 balance on your credit card
- Every month, you diligently pay $200 towards your credit card balance to clear your debt
This makes it abundantly clear just how much a low interest credit card can help your bottom line. You’d save $286 in interest and pay off your balance two months faster with the MBNA True Line Gold compared to a typical rewards credit card.
Even if we were to assume the rewards credit card in this example has no annual fee, you would still save a whole lot more on interest with the MBNA True Line Gold even when accounting for the fact it has an annual fee of $39. This makes it obvious why you shouldn’t dismiss a credit card just because there’s an upfront annual fee; the cost of admission can be well worth it and help you save in the bigger picture.
How is credit card interest calculated?
As we’ve covered earlier, the term APR stands for Annual Percentage Rate and it’s effectively how banks calculate the interest you owe on a credit card if you carry a balance.
You might read the word “annual” in Annual Percentage Rate and think that interest is owed once a year, but in reality, while interest is expressed annually it’s actually calculated daily and charged monthly. Confused? Let’s explain.
- If Credit Card X has an APR of 15.99%, you’d owe interest daily at a rate of 0.0438% (15.99% ÷ 365)
- To find a credit card’s daily interest rate, simply divide its APR by the number of days in the year.
Sticking with the sample example, let’s say you owe a $3,000 balance on Credit Card X:
- Your daily interest rate would be 0.0438% (15.99% APR ÷ 365 days in the year)
- You would owe $1.3142 in interest after one day (0.0438% x $3,000); and
- Your total balance would increase to $3,001.3142 after one day ($1.3142 in daily interest + your original $3,000 balance).
- The next day, your new balance of $3,001.3142 would also be charged 0.0438% – increasing your balance on day two to $3,002.69.
There are two key takeaways regarding how credit card interest works: First, it’s calculated daily, and second, interest compounds and you’ll be charged interest on top of interest (though, that’s not always the case and can vary by card issuer). So, while a few dollars extra in interest from one day to the next might not seem like much, over time, it can quickly balloon. Especially if you keep making new purchases on your credit card.
Remember though, if you pay off your card’s balance in full every month, you won’t owe any interest at all.
*This is a simplified example assuming no changes in day-to-day credit card activity. Many banks also charge interest based on your average daily balance over a monthly billing period.
Fixed vs variable rate credit cards
Low interest credit cards come in two varieties: fixed rate credit cards and variable rate credit cards.
The difference between them is pretty simple – a fixed rate stays the same while a variable rate can change based on two key factors: 1. A bank’s current prime rate and 2. your credit score. When it comes to low interest cards, most banks offer either fixed rate or variable rate options but not both.
Each card type has its own unique advantages.
The benefit of fixed rate credit cards is that they’re far more straightforward. Once you’re approved for the credit card, you’ll know exactly what interest rate you’ll get – down to the percent – and it won’t fluctuate regardless of shifts in the bank’s prime rate or your creditworthiness. Fixed rate credit cards are also far more likely to come paired with limited-time balance transfer promotions you can use to consolidate debts on previous credit cards and pay off at a fraction of the rate.
The advantage of a variable rate credit card is they could potentially land you a rock-bottom interest rate (even lower than what fixed rate cards offer), but as long as you have excellent credit. The downside is you might get stuck with a higher rate if your credit score isn’t great.
On the topic of rewards
If you can’t regularly pay off your credit card in full, there’s really no point in chasing points or cash back on a rewards credit card. That’s because most rewards credit cards have an Annual Percentage Rate of 19.99%, and the interest you’d rack up would devalue any rewards you earn.
Simply put: A rewards credit card is only worth it if you pay off your statement in full each and every month.
While virtually all low interest credit cards don’t offer rewards, the fact they charge a fraction of the interest of rewards cards will help you come out ahead financially when you do carry a balance.
Interest rates and minimum payments
Like with any credit card, you’re required to make at least the minimum payment on a low interest credit card on time every month. Minimum payments are usually $10 or 3% of your balance owing (whichever is higher) and must be paid every 30 days by the date shown on your credit card statement. If you don’t, you could temporarily lose the single biggest advantage offered by low interest cards – their low rates.
For instance, if you miss two minimum payments on your credit card within a one-year time frame, your annual interest rate could skyrocket by anywhere from 5 to 11 percentage points. Worse yet, you could get stuck with this higher rate for anywhere from 6 to 12 months, during which you must make minimum payments each and every month. Along with a hike in your interest rate, your credit score will get dinged and you could get hit with an additional late fee.
We can’t stress enough, you should always make your minimum payments on time. If you’re facing new financial pressures due to COVID-19 and can’t make at least your monthly minimum payments, you may want to consider not pursuing a new card and instead check with your bank if you could defer payments on your current credit card.
A deferral lets you postpone minimum payments for at least one month and may also potentially include a temporary reduction in your interest rate. Note though, interest will still accrue and rates will increase to normal after the deferral period is over. To put it simply – a payment deferral is a short-term solution to address credit card debt while using a low interest card is a long term strategy that can help you continuously save on unnecessary interest charges.
How to avoid credit card interest
The best strategy is to pay off your credit card balance in full and on time by the due date shown on your monthly statement. When you don’t pay off your balance in full, it’s the equivalent of borrowing money, and only then will you owe interest.
How to reduce credit card interest
If you’re looking to save on credit card interest but paying off your balance in full every month isn’t exactly an option, consider adopting some of these strategies:
- The first step is obvious: Avoid making purchases on credit cards that carry a conventional 19.99% annual interest rate and use a low interest credit card as your primary piece of plastic.
- Use your credit card selectively. While paying with credit may be convenient, if you regularly carry a balance, consider sticking to debit or cash for the majority of your purchases and only using credit when it’s absolutely necessary. That way, you can avoid building up a bigger balance and owing even more interest.
- Always pay more than the minimum payment. Usually, at least $10 or 3% of your balance owing – paying just the minimum every statement period may seem like the easy option but it’ll hurt your bottom line over time. Paying just a few dozen dollars extra per month on top of the minimum payment can save you hundreds in interest over the long term and help you chip away at your balance months faster.
- Automate your credit card payments – it’s one of the best ways to ensure you avoid accidentally missing a credit card payment and can help establish a low effort and consistent debt repayment strategy. Better yet, consider scheduling these payments on the day you’re paid so a portion of your paycheck goes straight towards your balance before you have a chance to spend it elsewhere while still leaving enough for important fixed costs like rent.
- Use proven strategies (debt avalanche or debt snowball): If you owe multiple debts aside from just your credit card, consider one of these two popular debt repayment strategies. The idea behind the Debt Avalanche method is to spend most of your money paying off the debt with the highest interest rate and just meeting the minimum payments on everything else. The Debt Snowball method advocates for paying off your smallest debt first (regardless of the interest rate), and with each small win, keeping you motivated to tackle your next debt.
- Take advantage of balance transfer offers. If you owe a large balance on your existing credit card, you can move your debt over to a low interest card that comes with a “balance transfer offer” and pay it off much faster. For example, the MBNA TrueLine Mastercard has a balance transfer offer of 0% for 10 months – so you can transfer your old balances onto this card and pay nothing in interest for nearly a year.
- Negotiate with your bank: While many people don't realize they can do this, it's always worth a shot to contact your bank directly and attempt to negotiate for a lower interest rate. Ultimately, banks always want to keep you as a customer (even if you don't pay your bill in full every month) and the idea of you taking your balance to another bank's balance transfer card, for example, isn't something they want. Mention how long you have been a customer of theirs, indicate your desire to pay off what you owe and remain with their institution, and inquire politely as to what options would be available to make that happen. If the person speaking to you is unable to authorize your request for lower interest, ask to speak to a manager or someone higher up. You may ultimately be denied, but you've got nothing to lose and everything to gain by asking.
Depending on the card, you may have to pay an additional upfront transfer fee (usually 3% of your balance or less) but this small flat fee will pale in comparison to the interest you’d owe if you kept your balance on the old card. One final note: Remember that balance transfer offers don’t last forever, and after the promotional period ends, the balance transfer rate will revert back to its original interest rate.