Credit Card Battle: BMO Preferred Rate MasterCard vs. American Express Essential

Jordann Brown
by Jordann Brown April 19, 2017 / No Comments

While personal finance experts universally recommend avoiding a credit card balance, sometimes there’s no other choice. Whether an emergency hits, a series of car repairs drains your emergency fund, or a work expense is slow to be reimbursed, most Canadians have carried a balance on their credit card from month to month at one point or another. In fact, according to the TransUnion Insights Report, Canadians carried an average credit card debt of $3,954 in the third quarter of 2016.

When this situation strikes, the interest charged on most credit cards can add up fast. But there are low interest options if you find you must carry a balance. In fact, low interest credit cards provide a viable alternative if you carry a lot of debt.

Here’s a quick comparison of two of the best low interest credit cards in Canada: The BMO Preferred Rate MasterCard the American Express Essential Credit Card.

BMO Preferred Rate MasterCard American Express Essential Credit Card
Annual fee $20 $0
Interest rate 11.9% 1.99%2
Cash advance interest rate 11.9% 8.99%
Missed payment interest rate1 16.9% 23.99%
Annual income requirement $15,000/year $15,000/year
Special features Extended warranty and purchase protection, zero liability protection Travel accident insurance, zero liability, purchase assurance, extended warranty


1
Interest rate increases if you do not make your minimum payment by the payment due date and have not paid it by the date BMO prepares your next statement two times in any 12-month period.
2On balance transfers for the first six months, 8.99% after that.

BMO Preferred Rate MasterCard

BMO Preferred Rate MasterCard


  • Annual fee: $20
  • Low interest rate of 11.9% on purchases, cash advances, and balance transfers
  • Zero dollar liability, plus free purchase protection and extended warranty

The BMO Preferred Rate MasterCard has a $20 annual fee and charges an interest rate of 11.9% on all purchases and cash advances. This credit card offers extended warranty and zero liability coverage for fraudulent purchases. However, if you miss more than two payments in a 12-month period, your interest rate will increase to 16.9%.

If you were to carry a $1,000 balance on the BMO Preferred Rate Mastercard for six months, you’d pay $59.50 in interest charges, plus the $20 annual fee for a total cost of $79.50.

If you were to carry $1,000 on this credit card for one year you’d pay $119.00 in interest charges, plus the $20 annual fee for a total cost of $139.00.

American Express Essential Credit Card

American Express Essential Credit Card


  • No annual fee
  • Low interest rate of 8.99% on purchases, cash advances, and balance transfers
  • For new cardholders: special 1.99% introductory interest rate on balance transfers for the first 6 months (available only at time of online application)
  • Access to American Express Invites

The American Express Essential Credit Card does not have an annual fee and has a lower interest rate. If you choose the balance transfer option, your interest rate will be 1.99% for the first six months, and then 8.99% after that. This credit card also offers travel accident insurance, zero liability, purchase assurance and extended warranty.

If you were to carry a $1,000 balance on the American Express Essential Credit Card, you’d pay $9.95 in interest charges. If you were to carry a $1,000 balance for a whole year, you’d pay $9.95 for the first six months and $44.95 for the next six months, for total interest charges of $54.90.

Both of these credit cards increase the interest rate you are charged if you miss your monthly payments, so even if you don’t have the money to pay off the balance, it’s important to pay the minimum monthly payment to take advantage of these low interest rates.

Flickr: Eli Christman

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