If you know you’ll likely be carrying some debt on your credit card from month to month—or are simply trying to pay off a balance—then a low-interest credit card might be a good choice for you. After all, why lock yourself into the typical 19.99% credit card interest rate when you have the option to pay about half that? Here are some solid low interest cards to consider:
The best low interest credit cards in Canada 2020
- MBNA True Line Gold Mastercard — 8.99% APR
- Desjardins Modulo Visa — 10.99% APR
- MBNA True Line Mastercard – 12.99% APR
- American Express Essential Credit Card — 12.99% APR
- RBC Rate Advantage Card — Prime plus 4.99% to 8.99%
- National Bank Synchro Mastercard — Prime plus 4% to 8%
- How your credit card interest works — A breakdown of the basics
- More on the best credit cards — View a complete list of top cards by category
- Our methodology — For greater insight into our rankings
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.)
For a reasonable $39 annual fee, you can get a purchase interest rate in the single digits, which is much less than the typical 19.99% rate, helping you save in the long run. If you’re a new cardholder, you can take advantage of the card’s balance transfer offer; there’s a 3% transfer fee (meaning, you’d pay $30 to transfer $1,000 in debt) but the balance remains interest-free for a full six months, which can help you to pay off your debts more quickly.
- Annual fee: $39
- Interest rate: 8.99% interest rate
- Balance transfer offer: 0% interest rate on balance transfers for 6 months (3% transfer fee applies) after which time the balance is charged at the regular 8.99%
- Additional benefits: Savings with Avis and Budget Rent A Car; protection against fraudulent charges; purchase protection and extended warranty
NOTE: The APR and balance transfer offers are different for residents of Quebec.
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
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. And, if you’re a new member, you can transfer your balance from a higher interest card and enjoy a full 12 months of 0% interest—more than enough time to make a dent in your balance.
- Annual fee: $0
- Interest rate: 12.99% on purchases and balance transfers
- Balance transfer offer: Get a 0% introductory interest rate on balance transfers for 12 months (a 3% balance transfer fee applies)
- Additional benefits: Savings at Budget and Avis Rent A Car; protection against fraudulent charges.
NOTE: APR and balance transfer offer are different for residents of Quebec.
American Express Essential Credit Card
The only Amex on this list, the Essential also offers a 12.99% interest rate on purchases and balance transfers with no annual fee. New members can transfer balances and enjoy 1.99% for six months, after which time the regular 12.99% applies. 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
- Balance transfer offer: Pay 1.99% interest in the first 6 months on balance transfers
- Additional benefits: $100,000 in travel accident insurance; purchase protection and extended warranty
Variable Rate Cards
As the name suggests, these cards have a changing interest rate. Typically, the rate is tied to an index (usually the prime rate), which can fluctuate, combined with an additional fixed percentage on top. For example, a card might offer an interest rate of prime plus 5%, meaning that your charge will be the (changing) prime rate plus 5%. Also, your credit score will play a role in determining the rate you get. This might sound impossibly complicated but there’s a simple reason to consider a variable rate card: they tend to offer additional perks.
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 3.94%, so your interest rate would fall somewhere in the range of 8.93% to 12.93%. 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
Another contender in the variable rate category is the Synchro card from National Bank, offering prime plus 4% on purchases and prime plus 8% on cash advances and balance transfers. National Bank’s prime rate is at 3.95% as of this article’s publication date, which means your interest rate will sit at 7.95% for purchases and 11.95% for cash advances and balance transfers.
For new customers, this card sweetens the deal with a limited time cash back offer that can earn you up to $120 in the first year.
- Annual fee: $35
- Interest rate: Prime + 4.00% – 8.00%
- Rewards: Get $10 cash back for each month you charge at least $200 in purchases, up to a maximum of $120
- Additional benefits: Purchase protection and extended warranty; fraud protection
Overview: Canada’s best low interest credit cards
|Credit Card||Interest Rate (APR)||Annual Fee|
|MBNA True Line Gold Mastercard||8.99%||$39|
|Desjardins Modulo Visa||10.99%||$50|
|MBNA True Line Mastercard||12.99%||$0|
|American Express Essential||12.99%||$0|
|RBC Rate Advantage Card||Prime + 4.99% (min 8.99%)||$0|
|National Bank Synchro Mastercard||Prime + 4% (min 8%)||$35|
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 an 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 rates 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.
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
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.