Canada’s best low-interest credit cards 2022

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If you carry a credit balance, or if you expect to take on debt that will take some time to pay off, you might want to consider a low-interest credit card. Whereas most regular credit cards charge around 20% in interest, these cards offer rates that can be half that or less. Some even come with attractive balance transfer promotions that will allow you to pay down debt at a greatly reduced rate for a limited time. If you’re looking to see who has the best rates, perks and promotions, read on for our list of the best low-interest credit cards in Canada.

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The best low-interest credit cards in Canada 2022

Card	Interest rate (APR)	Annual fee
MBNA True Line Gold Mastercard (get more details)*	8.99%	$39
Flexi Visa	10.90%	$0
HSBC +Rewards Mastercard (get more details)*	11.9%	$25
MBNA True Line (get more details)*	12.99%	$0
American Express Essential Credit Card	12.99%	$0
BMO Preferred Rate (get more details)*	12.99%	$20 (waived first year)
National Bank Syncro Card (get more details)*	Prime plus 4% (currently 8.90%)	$35

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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*

At a glance: The MBNA True Line Gold Mastercard has a regular purchase interest rate of 8.99%—that’s less than half the rate on a typical credit card. Plus, the $39 annual fee is super manageable. 

• Annual fee: $39
• Welcome offer: None
• Interest rate: 8.99% on purchases, 24.99% on cash advances and 8.99% on balance transfers
• Additional benefits: Savings with Budget Rent A Car and Avis Rent A Car; protection against fraudulent charges; purchase protection and extended warranty.

Pros:

• Get up to nine authorized users for free.
• When you rent a car from Budget or Avis, you’ll save a minimum of 10% off the base rates.

Cons:

• This card doesn’t offer much in the way of perks or benefits, and does not offer rewards or cash back.
• This offer is not available to Quebec residents.

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Flexi Visa

At a glance: The Flexi Visa from Desjardins credit union offers a low 10.90% interest rate, plus perks like limited travel insurance, up to $1,000 in new mobile device insurance, and the ability to pay for larger purchases in monthly instalments.

• Annual fee: $0
• Welcome offer: None
• Interest rate: 10.90% on purchases, 10.90% on cash advances
• Additional benefits: Get a second credit limit on your card through Accord D financing; three days of travel insurance; new mobile device insurance; up to a 15% discount at Hertz car rental and up to a 10% discount at Thrifty and Dollar stores; purchase protection and extended warranty.

Pros:

• Receive three days of travel coverage that includes emergency medical, trip cancellation and lost or damaged baggage.
• When you buy a new mobile device with this card, get up to $1,000 to cover loss, theft, damage or mechanical failure.
• Access Accord D financing, which will get you a quick approval for up to $50,0000 in financing.

Cons:

• Comes with travel insurance that only covers trips of up to three days. If you go for longer, you’ll need to buy extra insurance. 
• The interest rate is not the lowest on this list.

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HSBC +Rewards Mastercard*

At a glance: The HSBC +Rewards Mastercard offers a low 11.90% interest rate, plus the ability to earn HSBC points that you can redeem for travel, merchandise and gift cards—or you can apply them to your HSBC mortgage, credit card or savings account. If you’re looking for a low-interest credit card that also allows you to collect rewards points, this is a good option.

• Annual fee: $25
• 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: 11.90% on purchases, 11.90% on cash advances and 11.90% on balance transfers
• Additional benefits: Purchase protection

Pros:

• The welcome offer has a value of up to $200. 
• Earn HSBC Rewards when you use this card. You’ll get 2 points per $1 spent on eligible dining or entertainment purchases and 1 point per $1 on everything else.

Cons:

• Doesn’t include any travel insurance or other perks.  
• The 11.90% interest rate is not the lowest around.

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MBNA True Line Mastercard*

At a glance: This low-interest card from MBNA gets you many of the same perks as the MBNA True Line Gold Mastercard—also on this list—with slightly higher interest rates. If you’re looking for a low-interest credit card without an annual fee, this could be a contender—particularly if you want to benefit from a lengthy no-interest balance transfer. 

• Annual fee: $0
• 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.
• Interest rate: 12.99% on purchases, 24.99% on cash advances and 12.99% on balance transfers
• Additional benefits: Savings with Avis and Budget rentals

Pros:

• The promotional balance transfer rate of 0% is in effect for a full year, which will give you plenty of time to pay down outstanding debt. 
• Add up to nine authorized users to the account for free.

Cons:

• Does not included insurance or other benefits.
• Offer not available to residents of Quebec.

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American Express Essential Credit Card

At a glance: The only American Express card on this list, the no-annual-fee Essential credit card offers a low 12.99% interest rate, along with Amex-related perks like Front-of-the-Line experiences, dining and entertainment, and special offers. 

• Annual fee: $0
• Welcome offer: None
• Interest rate: 12.99% on purchases, 12.99% on cash advances
• Additional benefits: Access to Amex Front-of-the-Line presale and reserved tickets, offers, and dining, retail and entertainment experiences; up to $100,000 in death and dismemberment travel insurance; access to Amex’s Plan It Installment Program.

Pros:

• American Express cards entitle cardholders to presale tickets, exclusive events and curated dining and entertainment experiences. 
• You’ll have access to Plan It, which allows you to pay off larger purchases in installments for a fixed monthly fee.

Cons:

• The included travel insurance is limited to up to $100,000 of accidental death and dismemberment coverage.
• Doesn’t include many perks or extras.

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BMO Preferred Rate Mastercard*

At a glance: With a very reasonable $20 annual fee and a 12.99% interest rate, the BMO Preferred Rate Mastercard will appeal to those who want to stick with a big bank—particularly current BMO customers. The welcome offer sweetens the pot with a 0.99% promotional interest rate on balance transfers for nine months and a first-year fee waiver. 

• 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, 15.99% on cash advances and 15.99% on balance transfers 
• Additional benefits: Extended warranty and purchase protection

Pros:

• The promotional offer gives you a 0.99% balance-transfer interest rate for nine months and waves the annual fee for your first year.
• With a BMO Performance chequing account, you’ll never have to pay the annual fee.
• Add another cardholder for free.

Cons:

• Does not include insurance, rewards or other extras.  
• The balance transfer promotion runs for nine months, which is not the longest offer among cards on this list.

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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.

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 need a card that also comes with a great balance transfer promotion, you may want to consider one of the fixed rate cards covered above.

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National Bank Syncro Mastercard*

At a glance: The Synchro card by National Bank offers a variable interest rate of 4% + the bank’s prime rate (or a minimum of 8.90%) on purchases and 8% + the prime rate (or a minimum of 12.90%) on cash advances and balance transfers. 

• Annual fee: $35
• Welcome offer: None
• Interest rate: 4% + prime (or a minimum of 8.90%) on purchases, 8% + prime (or a minimum of 12.90%) on cash advances, 8% + prime (or a minimum of 12.90%) on balance transfers
• Additional benefits: Access to Mastercard Priceless Cities program; purchase protection and extended warranty

Pros:

• The minimum interest rates of 8.90% for purchases and 12.90% for balance transfers and cash advances are very competitive.

Cons:

• While the appeal of variable rate cards comes from the potential to snag the best rates on the credit card market, the minimum rates offered by this card undercut the lowest rates of other cards on this list by only 0.09%.

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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 on 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.)

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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 number of 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 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. 

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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

The post Canada’s best low-interest credit cards 2022 appeared first on MoneySense.

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