Canada’s best low interest credit cards 2020

Modulo Visa

The Modulo Visa—from the Desjardins Group, a Canadian co-operative of credit unions—has a lot more than low interest going for it. The purchase interest rate of 10.99% is very competitive, but, unlike most low-interest cards, the Modulo includes rare perks and rewards. First, in a sort of twist on the cash back idea, the Modulo offers 1% of your purchases back in Bonusdollars Rewards, each worth 1 dollar each that can be redeemed for gift cards, merchandise, travel, financial products and even donations to a charity. The card also carries travel and mobile device insurance, which makes the already modest annual fee of $50 even more reasonable.

• Annual fee: $50
• Interest rate: 10.99% on purchases
• Rewards: Get 1% of your purchases in Bonusdollars, redeemable for trips, gifts and more
• Additional benefits: Travel insurance for short trips, including up to 3 days of emergency health care coverage; cancellation insurance; baggage protection; $1,000 in mobile insurance coverage for cell phones, smartphones or tablets

MBNA True Line Mastercard*

Typically, the tradeoff with a low interest card is that it comes with an annual fee, but somehow the no fee MBNA True Line Mastercard manages to offer a 12.99% interest rate on purchases and balance transfers. 

• Annual fee: $0
• Interest rate: 12.99% on purchases and balance transfers
• Additional benefits: Savings at Budget and Avis Rent A Car; protection against fraudulent charges.

NOTE: this offer is not available for residents of Quebec

Get more details about the True Line Mastercard*

American Express Essential Credit Card

The only Amex on this list, the Essential offers a 12.99% interest rate on purchases and cash advances with no annual fee. Cardholders get priority access with American Express Invites, which includes Front of the Line offers for concerts, events and even restaurant reservations.

• Annual fee: $0
• Interest rate: 12.99% on purchases and cash advances
• Additional benefits: $100,000 in travel accident insurance; purchase protection and extended warranty

BMO Preferred Rate Mastercard*

The Preferred Rate Mastercard from BMO offers a 12.99% interest rate across the board, meaning that purchases, balance transfers and cash advances are all charged at the same low rate. The annual fee is only $20, putting it in easy reach of most, and new applicants will receive a waiver for the first year. The card’s balance transfer offer of 3.99% for the first 10 months (plus a 1% transfer fee) isn’t the best deal available, but it’s a nice-to-have. As a BMO Mastercard, this card will work well for those who want to keep all their accounts with a single institution and stick with a big bank.

• Annual fee: $20
• Interest rate: 12.99% on purchases and cash advances
• Balance transfer offer: 3.99% interest for the first 10 months
• Additional benefits: 15% discount on Cirque du Soleil shows; purchase protection and extended warranty
  

Get more details about the BMO Preferred Rate Mastercard*

Variable Rate Cards

As the name suggests, these cards don’t have fixed interest rates—and the rate you are charged on unpaid balances can change based on a few factors. Typically, the rate is tied to an index (usually the prime rate), which fluctuates, with an additional fixed percentage on top. For example, a card might charge the bank’s prime rate plus 5%. Also, it’s important to note that your credit score will play a role in determining how low of a rate you can get.

This all might sound impossibly complicated, but there’s a simple reason to consider a variable rate card: If you have an excellent credit score, you could land some of the lowest rates available in the credit card market. However, if you don’t have a great credit score, want to keep things simple, or you’re looking for a card that also comes with a great balance transfer promotion, you may want to consider one of the fixed rate cards covered above.

TD Emerald Flex Rate Visa

The interest rate you pay with the TD Emerald Flex Rate Visa will depend on the bank’s prime rate and your current credit score. Currently, TD has a prime rate of 2.45% so, depending on your credit score, the rate you’re offered for this card could be as low as 6.95% or as high as 15.20%. This same rate, calculated at the time of your application, will apply to all purchases, balance transfers and cash advances. The Flex Rate Visa comes with a modest annual fee of $25, but unfortunately does not offer a balance transfer promotion.

• Annual fee: $25
• Interest rate: Prime plus 4.50% to 12.75%
• Additional benefits: Discount at Avis Rent A Car and Budget Rent A Car; purchase security and extended warranty

RBC Rate Advantage Card

With the Rate Advantage Card, RBC incentivizes your financial responsibility by offering a variable rate (on top of the prime rate) that changes according to your credit score. The better your rating, the lower your interest—a program that could really pay off. As of the date of publication of this article, the Royal Bank’s prime rate is 2.45%, so your interest rate would fall somewhere in the range of 7.44% to 11.44%. The better your credit score, the higher the likelihood your interest rate will fall in the lower ranges. Aside from the ability to link to Petro-Canada for fuel savings, this product doesn’t offer much in the way of extras, but it also commands no annual fee.  

• Annual fee: $0
• Interest rate: Prime plus 4.99% to 8.99%
• Additional benefits: Link to Petro-Canada to save $0.03 per litre on gas; purchase protection and extended warranty

National Bank Syncro Mastercard*

Another contender in the variable rate category is the Syncro card from National Bank, offering prime plus 4% on purchases and prime plus 8% on cash advances and balance transfers. The one caveat is the interest rate won’t go lower than 8.90% on purchases and 12.90% on balance transfers or cash advances.

National Bank’s prime rate is at 2.45% as of this article’s updated publication date, which means your interest rate will sit at 8.90% for purchases and 12.90% for cash advances and balance transfers.

• Annual fee: $35
• Interest rate: Prime plus 4.00% to 8.00% (min 8.90%)
• Additional benefits: Purchase protection and extended warranty; fraud protection

Get more details about the National Bank Syncro*

Honourable Mention: CIBC Pace It

While not a low interest credit card, CIBC’s Pace It earns a place on our list as a program designed to help consumers pay off larger debts, in installments, at a lower interest rate. Here’s how it works: Consumers pay a one-time fee of 1.5% of the purchase amount and choose an installment plan. The options are 6 months at 5.99% interest, 12 months at 6.99% interest, or 24 months at 7.99% interest. The idea is to allow consumers to make larger purchases without blowing their budget with high interest rates.

In response to the COVID-19 crisis, until June 30, 2020, Pace It is offering a promotion that reduces the minimum purchase amount from $250 to $100, and offers a rebate of the 1.5% fee on eligible purchases.

It’s important to note that Pace It applies only to certain purchases, so the low interest rate won’t be across the board. However, if you need to make a large purchase and like the idea of paying in installments, now would be the perfect time to investigate. CIBC Pace It is not available in Quebec.

How your credit card interest works

If you look at the terms and conditions associated with your credit card, you’ll see your APR—the “annual percentage rate” charged by the issuer. Although the cards on this list offer lower rates, most credit cards charge an APR of around 19.99%. As the name suggests, your APR is communicated in annual terms, but it’s actually calculated daily, and charged monthly. While the calculations are fiddly, the concept itself isn’t too complicated: You can figure out your daily rate by dividing your APR by 365 (the days in a year) and use that to determine how much interest you’re being charged on any outstanding debt.

For example, let’s say you have $1,000 in debt on a credit card with a 19.99% APR. Your daily rate will be around 0.0548% (19.99%/365), so in one day that $1,000 will accumulate just over $0.54 in interest charges. Your interest compounds daily, which means that the next day, assuming you don’t make any additional purchases, you’d be charged interest on a total of $1,000.54, and so on—which is why it’s better to pay down your debt as quickly as possible. If you don’t pay off your balance in full by the date noted on your statement, you’ll owe interest, starting on the day that you made your purchase.

The example above is simplified. If you continue to make purchases on your card over the course of the month, the bank will usually take the average balance to calculate the daily interest. Of course, if you pay off your credit card in full every month, you won’t owe any interest at all on your purchases. 

For variable rate cards, like the RBC Rate Advantage Card and the National Bank Synchro, the same idea applies, except that your interest rate changes alongside the prime rate.

In all cases, also note that the interest you are charged on purchases might differ from the interest charged on cash advances or balance transfers. 

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Our methodology

For the best low-interest credit cards 2020 ranking, we selected low interest rate credit cards based on their annual purchase interest rate (APR). Our methodology also took into consideration other factors, including balance transfer offers, purchase protection, insurance perks and annual fees.

‡MoneySense.ca and Ratehub.ca are both owned by parent company Ratehub Inc. We may be partnered with some financial institutions, but this does not influence the “Canada’s Best Credit Card” rankings. You can read more about this in our Editorial Code of Conduct.