If you need any help comparison shopping, read our frequently asked questions below:
What is a low interest credit card?
A low interest credit card is exactly what it sounds like: a regular credit card but with a lower interest rate (typically 5-10% versus 19.99%+). The card also offers a lower interest rate on balance transfers and cash advances, which may be important to you, if those are transactions you think you’ll make on occasion. Low interest credit cards also typically have low or no annual fees, making it an accessible card regardless of your income.
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. With a low interest credit card, you will pay less interest than you would with a regular credit card and you’ll have the security of using the card if you need to. While we don’t recommend getting cash advances, low interest credit cards do charge a lower fee compared to other 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 have only one monthly payment at a much lower interest rate.
What is the best low interest credit card?
You would think that choosing the best low interest credit card would be straightforward since all you’d be looking at is the interest rate and the lowest would equate to the best, but that’s not quite the case because of annual fees. Although low rate credit cards have lower annual fees than rewards credit cards, you still have to do some calculations and understand your financial situation. Some of the best low interest credit cards have an annual fee; therefore you need to determine whether your savings on interest payments will outweigh the annual fee. If not, then choosing a low interest card without an annual fee might be the best option for you. Ideally though, the best low interest credit card would be one with no annual fee and the lowest interest rate!
Best Low Interest Credit Cards in Canada 2017
American Express Essential Credit Card
The American Express Essential Credit Card packs a double punch: No annual fee and an 8.99% interest rate on purchases, cash advances, and balance transfers, currently the lowest fixed rate offered by a credit card in Canada. For new cardholders, it also offers a competitive 1.99% interest rate on balance transfers within the first six months. Some low interest credit cards don’t offer rewards, but this card gets you access to American Express Invites, which includes ticket pre-sales and reserved seats for concerts (including shows in the U.S.), movie screenings, and culinary events, and other special offers. If you miss two monthly minimum payments within one year, the interest rate jumps to 23.99%. If you miss two consecutive minimum payments, or three minimum payments within one year, it goes up to 26.99%.
BMO Preferred Rate MasterCard
The BMO Preferred Rate MasterCard is one of the most straightforward no-frills cards out there, with an across-the-board interest rate of 11.9% on purchases, cash advances, and balance transfers. This card has a $20 annual fee, but if you tend to card a balance on your card from month to month, the lower rate is worth compared to a no fee card with a higher interest rate. Like all low interest credit cards, the interest rate gets jacked up if you miss a certain number of monthly minimum payments. With this card, if you miss two payments within a year, your interest rate will go up to 16.9%.
Scotiabank Value Visa
The Scotiabank Value Visa makes it easy to both consolidate existing debt at a lower interest rate, and to minimize future interest charges. With an annual fee of $29, this card charges a 11.9% interest rate on purchases, cash advances, and balance transfers. It also offers a special introductory interest rate of 1.99% on balance transfers for the first six months. Another small but useful perk for cardholders is a 20% discount on Avis car rentals. Once again, don’t miss your monthly payments: Your interest rate will increase to 24.99% on purchases and 26.99% on cash advances if you miss two or more monthly minimum payments within a 12-month period.
Home Trust Secured Annual Fee Visa
Secured credit cards are designed for people with no credit or poor credit, and require you to put down a security deposit that acts as your card’s limit. With the Home Trust Secured Visa, you can put down a deposit between $500 and $10,000 and use it like you would any other credit card. This card has no annual fee, but it’s not a low interest card – it carries the typical rewards credit card interest rate of 19.99%. Secured credit cards are meant to be used to build a positive credit history, so it’s in your best interest to pay off your balance in full each month – especially if carrying debt from month to month got you deep into debt in the first place. Once you build a solid credit history and prove you can use a secured credit card responsibly, you can graduate to an unsecured credit card like one of the low interest cards mentioned above.
Other Types of Credit Cards