The best low interest credit cards in Canada for 2025

Why get a low interest credit card?

Sometimes, emergency expenses crop up or paycheques don’t come through in time. If you need to carry a balance, a low interest credit card will help minimize the interest that accumulates on your balance. This helps prevent your debt from ballooning and makes it easier to pay down what you owe. 

If you cannot consistently pay off your credit card in full, the interest you accumulate on a rewards credit card would devalue any rewards you earn. A rewards credit card is only worth it if you pay off your statement in full each and every month. While most low interest credit cards don’t offer rewards, the fact that they charge a lower interest rate will put you in a better financial position when carrying a balance.

How much can you can save with a low interest card?

When a credit card has a low APR, it may not immediately show you how much you could save. After all, credit card bills deal with real dollars, not just percentages. 

To illustrate this, let's consider a real-world scenario using two different credit cards: a typical rewards credit card and the MBNA True Line Gold Mastercard, which we’ve ranked as one of the best low interest credit cards 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 scenario makes it crystal clear just how much a low interest credit card can benefit your finances. With the MBNA True Line Gold, you would pay much less in interest and pay off your balance one month faster.  

Even if we 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 after considering its $39 annual fee. This clearly demonstrates that you shouldn't dismiss a credit card simply because it has an upfront annual fee; the right card could help you save in the long run.

That said, most low interest credit cards typically have lower annual fees to other types of credit cards.

How is credit card interest calculated?

As mentioned above, APR stands for Annual Percentage Rate and is used by banks to 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. However, even though interest is expressed annually, it’s actually calculated daily and charged monthly. Let's break it down to clear up any confusion.

How low interest helps you save

Let’s say your credit card has an interest rate (APR) of 15.99%. That means you're charged about 0.0438% in interest each day (15.99% ÷ 365 days).

If you carry a $3,000 balance, here’s how interest adds up:

• Day 1: You’d pay about $1.31 in interest (0.0438% × $3,000), making your balance $3,001.31.
  
• Day 2: Interest is now charged on the slightly higher balance, so you’d pay about $1.38 in interest, and your balance becomes $3,002.69.
  

Interest keeps adding up daily, so a lower APR means you pay less over time if you carry a balance. Use our credit card interest calculator to easily see how much interest you'll owe based on how long you take to pay off your balance.

The good news is that if you pay off your card’s balance in full every month, you won’t owe any interest at all. 

Note: 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.

What is the difference between a fixed and variable interest rate credit card?

Low interest credit cards come in two varieties: fixed rate credit cards and variable rate credit cards.

The difference between them is quite simple. A fixed rate remains the same, while a variable rate can change based on two key factors: 1) the 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 advantages.

Fixed rate credit cards provide more straightforward terms. Once you’re approved for the credit card, you know exactly what interest rate you’ll get and it won’t fluctuate. Fixed rate credit cards are also far more likely to come paired with limited-time balance transfer promotions, allowing you to consolidate debts on previous credit cards and pay them off at a lower interest rate.

Variable rate credit cards, on the other hand, have the potential to offer a rock-bottom interest rate (even lower than fixed rate cards) if you have excellent credit. However, the downside is that you might end up with a higher rate if your credit score is not great, or if the bank’s prime rate changes.

What is the minimum payment and when do you pay interest on a credit card? 

Like any credit card, you must make at least the minimum payment on a low interest credit card on time every month. Minimum payments are typically $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. Failure to do so can result in temporarily losing the primary advantage of low interest cards – their low rates.

We cannot stress enough how important it is to always make your minimum payments on time. If you’re facing new financial difficulties and cannot afford to make your monthly minimum payments, you may want to consider not applying for a new card. Instead, reach out to your bank to inquire about deferring payments on your current credit card.

A deferral allows you to postpone minimum payments for at least one month and may also potentially include a temporary reduction in your interest rate. However, it is important to note that interest will still accrue and rates will return to normal after the deferral period ends. In simple terms, a payment deferral is a short-term solution to address credit card debt while on the other hand using a low interest card is a long term strategy that can help you continuously save on unnecessary interest charges.

Also read:

• The best credit cards in Canada
• The best balance transfer credit cards in Canada
• The best no fee credit cards in Canada
• How to pay off your credit card and reduce interest charges