Canada’s best low interest credit cards 2022

The best low-interest credit cards in Canada 2022

^{These are credit cards offered by Ratehub partners. You can find information about additional product options below.*}

Fixed rate cards

Most credit cards offer a fixed interest rate, meaning that there is a single, unchanging percentage charged against your purchases. (Balance transfers or cash advances frequently have a different, but also fixed, rate.) 

MBNA True Line Gold Mastercard*

This card’s 8.99% interest rate is less than half of a typical card’s rate, making it a strong contender for the best low-interest-rate credit card in Canada. And while it isn’t a no-fee card, its reasonable $39 annual fee is worth it, considering this card helps you save in the long run.

• Annual fee: $39 
• Interest rate: 8.99% on purchases and balance transfers
• Additional benefits: Savings with Avis and Budget Rent A Car; protection against fraudulent charges; purchase protection and extended warranty
• Note: This offer is not available for residents of Quebec.

Get more details about the MBNA True Line Gold Mastercard*

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 is worth $1 and can be redeemed for gift cards, merchandise, travel, financial products and even donations to 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 and baggage protection; $1,000 in mobile insurance coverage for cell phones, smartphones or tablets

HSBC +Rewards Mastercard*

With an 11.9% annual interest rate for purchases, cash advances and balance transfers, the HSBC +Rewards Mastercard doesn’t have the lowest rate on this list, but don’t write it off yet. This card does allow you to earn rewards on credit card purchases. When you use it for dining or entertainment, you’ll receive 2 HSBC points per $1. Other everyday purchases earn 1 point per $1. HSBC points can be redeemed for travel, merchandise or gift cards, as well as financial rewards like credit on your Mastercard, mortgage or savings account. In the travel category, 1 point is worth $0.005. 

• Annual fee: $25

• Interest rates: purchases 11.99%, cash advances 11.99%, balance transfers 11.99%

• Welcome offer: Earn up to 35,000 points ($175 value). First, earn 30,000 points when you spend $2,000 within 6 months of having the card. Then earn an additional 5,000 points when you apply for the card online. Must apply before October 31, 2022.
• Interest rate: 11.9%
• Rewards: 2 HSBC rewards points per $1 on dining and entertainment; 1 point per $1 on everything else
• Additional benefits: Purchase protection

Get more details about the HSBC+ Rewards Mastercard*

MBNA True Line Mastercard*

Typically, the trade-off 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 Avis and Budget Rent A Car; protection against fraudulent charges
• Welcome offer: Get a 0% promotional annual interest rate (“AIR”) for 12 months on balance transfers within the first 90 days of opening the account.
• Note: This offer is not available for residents of Quebec.

Get more details about the MBNA 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 for purchases and balance transfers and a 15.99% interest rate for cash advances. 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 0.99% for the first 9 months (plus a 2% 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
• Welcome offer: Earn a 0.99% introductory interest rate on balance transfers with a 2% transfer fee for the first 9 months.
• Interest rate: 12.99% on purchases and balance transfers and 15.99% on 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 their 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. currently at 4.70%

This might sound 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, you 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.

RBC Rate Advantage Card

With the Rate Advantage Card, RBC incentivizes you to be financially responsible 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 this article’s publication date, 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 would fall at the lower end. This product doesn’t offer much in the way of extras, aside from the ability to link to Petro-Canada for fuel savings, 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 an interest rate of prime plus 4% on purchases and prime plus 8% on cash advances and balance transfers. The one caveat is that 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 2.45% as of this article’s updated publication date, which means your interest rate would sit at 8.90% for purchases and 12.90% for cash advances and balance transfers.

• Annual fee: $35
• Interest rate: Prime plus 4% to 8% (minimum 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.

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. (For more information on buy now pay later plans, read this.)

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 best 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 Syncro, 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. 

Is a low-interest credit card right for you?

It’s tempting to choose credit cards that offer rewards or cash back, but these cards are really only worth using if you have the ability to pay off your credit card in full every month. Otherwise, you’ll rack up interest charges that far outpace the value of your rewards. Say we take the same example above: $1,000 in debt on a credit card with a 19.99% APR gets you around 0.0548% (19.99%/365), or just over $0.54, in interest charges every single day.

If you go with a low-interest credit card, you’ll save big on the debt you’re trying to pay off. Some cards go as low as 8.99%. For example, a $1,000 debt will cost you around $0.24 per day (8.99%/365). The low APR will more than make up for not earning rewards. With less of your payments going to interest, you can actually pay down your debt. After that, your money is yours to spend on that dreamed-of vacation or another goal. 

MORE ABOUT CREDIT CARDS:

• Best credit cards in Canada
• Best rewards credit cards
• Best travel credit cards
• Best cash back credit cards
• Best no fee credit cards
• Best balance transfer credit cards
• Best student credit cards

Our methodology

For the best low-interest credit cards 2022 ranking, we selected low-interest-rate credit cards based on their annual percentage 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.