Rewards credit cards are all the rage these days, but your success or failure with them hinges on one crucial aspect: your ability to pay off your balance every month. If you don’t pay off your balance, you’ll incur interest fees that can quickly wipe out any rewards benefits.
Rewards credit cards are a good choice for those in the habit of paying their credit card balance in full every month, but they aren’t a good choice if there’s a chance you’ll carry your balance into the next month. Fortunately, there is another category of credit card that is more suited to this situation — low interest credit cards. The best low interest credit cards typically have much lower interest rates than typical credit cards and offer many of the same benefits for a low annual fee.
Personally, I used a low interest credit card for several years after I graduated from university. I was living on a new graduate salary and had thousands of dollars in student loan debt. My budget left me with no wiggle room for unexpected expenses, so I used a low interest credit card for emergencies. The strategy worked well, and any charges I couldn’t pay off immediately were subject to a lower interest rate than a typical credit card.
Ratehub.ca’s best low interest credit cards in Canada
|Credit Card||Interest Rate (APR)||Annual Fee|
|American Express Essential Credit Card (VIEW DETAILS)||8.99%||$0|
|BMO Preferred Rate MasterCard (VIEW DETAILS)||11.90%||$20|
|MBNA True Line Mastercard (VIEW DETAILS)||12.99%||$0|
|Scotiabank Value Visa (VIEW DETAILS)||12.99%||$29|
|Home Trust Secured Annual Fee Visa Card (VIEW DETAILS)||14.9%||$59|
The American Express Essential Credit Card is a great place to start if you’re looking for a credit card with a low interest rate. With this credit card, you’ll pay just 8.99% on any purchases that aren’t paid off after the 21 days grace period.
You’ll also have the opportunity to take advantage of a special balance transfer rate of 1.99% for six months (8.99% after that). These two offers make this a great credit card for anyone getting serious about paying off their credit card debt in 2018.
To apply for this credit card, you must be a permanent resident of Canada and have a minimum income of $15,000 per year. When you shop with this credit card, you’ll enjoy an extended warranty, purchase assurance, and zero liability coverage. Finally, when you charge your travel expenses to the American Express Essential credit card you’ll also be covered by travel accident insurance.
The MBNA True Line Gold Mastercard is the second of only two credit cards on this list to offer a single-digit interest rate on purchases. With a rock-bottom rate of 8.99% (which pales in comparison to the usual 19%-22% rate of most rewards cards), the True Line Gold is ideal for anyone who’s looking to minimize interest charges on their carried over balances.
In addition to its low purchase interest rate, the card also features a 0% introductory rate on balance transfers for the first six months for eligible new applicants who sign up by December 31 (an additional fee of 1% of the transferred amount or a minimum of $7.50 also applies). That’s an enticing bonus for cardholders looking to consolidate and more easily manage their outstanding debts on a single card.
The BMO Preferred Rate MasterCard offers a competitive interest rate of 11.90% on all purchases, balance transfers and cash advances for just $20 per year. To apply for this credit card, you need to be a resident of Canada and have an annual income of $15,000 per year.
When you make purchases on the BMO Preferred Rate MasterCard, your purchases will be protected by an extended warranty, and you’ll also enjoy zero liability protection from fraudulent charges.
In the Venn diagram of credit card features most sought after by those looking to minimize their debt, the MBNA True Line Mastercard offers some considerable overlap. The card has no annual fee, a below-average purchase interest rate of 12.99% and boasts a competitive six-month introductory rate of 0% on balance transfers (plus a 1% fee on transferred amount of at least $7.50) for eligible card holders. That means you won’t have to weigh in the cost of annual fees against how much you’re saving on interest charges.
Not to mention, the card’s purchase interest rate comes into effect after a 21-grace period. While the card doesn’t pack a punch in terms of rewards, it does offer round-the-clock fraud protection and 24/7 access to customer service – not just during working hours or on the weekdays, which is the case with many other cards. Along with its below-average interest rate, this card delivers an ideal combination as one of the best low interest and balance transfer credit cards out there for anyone looking to hone in on and pay off their debt.
The Scotiabank Value Visa is an excellent choice for Canadians looking for a low-interest credit card that extends that low interest rate to cash advances and balance transfers. With this credit card you’ll pay 12.99% interest on all purchases and cash advances, and for the first six months you’ll pay just 0.99% on balance transfers, and 12.99% after that. These low interest rates will cost you $29 per year.
To apply for this credit card you’ll need an income of at least $12,000 per year, and you must be a resident of Canada. If you use this credit card to book a car rental through AVIS, you’ll enjoy a discount up to 25%.
While the credit cards above are great options for Canadians with good credit, if you have bad credit or you haven’t established credit yet, you may not qualify for them. In this case, a secured credit card is a good way to build up your credit. Most credit cards are unsecured, which means you don’t have to offer collateral for the loan. With a secured credit card, you’ll pay a cash deposit equal to the value of your credit limit.
With the Home Trust Secured Annual Fee Visa Card, you’ll pay a deposit equal to the credit limit of the credit card, which can be as little as $500 or as much as $10,000. The annual fee for this credit card is $59, and the purchase interest rate is 14.9%. You can use this credit card online or in person as you would any other credit card, and you can qualify for this credit card even if you are in consumer proposal or have been discharged from bankruptcy.
- The Best Credit Cards in Canada for 2018
- 3 Reasons Why You Should Consider a Low Interest Credit Card
- Low Interest or Balance Transfer: Choose the Best Credit Card to Help Pay Off Your Debt