The Best Low Interest Credit Cards in Canada

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If you typically carry a balance on your credit card, it’s in your best interest to switch to one of the best low interest credit cards in Canada. Sure, it might be tempting to stick with your cash back or travel credit card, but why would you do that when you’re paying 19.99%+ interest. To simply put it, the rewards you earn are worth the interest you’re paying. Fortunately, getting out of debt is easy if you use one of the best low interest credit cards in Canada.

The Best Low Interest Credit Cards in Canada

CardInterest rate
MBNA True Line Gold Mastercard8.99%
HSBC +Rewards™ Mastercard®11.90%
BMO Preferred Rate Mastercard®*12.99%
Scotiabank Value Visa12.99%
American Express Essential Card12.99%

Why is a low interest credit card?

As the name implies, low interest cards charge you low interest. These cards typically have rates between 8.99% – 12.99%, which is significantly lower than the average of 19.99% – 21.99% that most credit cards charge. For those who always pay their entire balance on time, the interest rate won’t matter. However, if you typically carry a balance, you’re better off carrying a low interest credit card.

Some people don’t realize that when you make just the minimum payment on your credit card, you’re paying huge interest charges. To get out of this debt cycle, you need one of the best low interest credit cards in Canada which will help you with your debt repayment plan.

Additionally, if you keep carrying a balance on your credit card, your credit score could drop. That’s not something you want as it could affect your ability to borrow in the future. In an ideal situation, you’ll use one of the following best low interest credit cards in Canada to help you get back on your feet.

MBNA True Line Gold Mastercard

  • $39 annual fee
  • 8.99% interest rate for purchases and balance transfers
  • Purchase assurance
  • Extended warranty
  • Save with Avis Rent A Car and Budget Rent A Car

The MBNA True Line Gold Mastercard has lowest daily interest rate of 8.99%. That’s less than half of what most credit cards charge. You won’t get any additional benefits besides purchase assurance and extended warranty, but the low interest rate should be more than enough until you clear your debt. It’s worth noting that MBNA often has promotions where you can do a balance transfer at an even lower interest rate. That’s where you port your existing balance on another credit card to your MBNA True Line Gold Mastercard. Although there’s a 1% fee to do so, the interest you save in the long run can be worth it.

HSBC +Rewards™ Mastercard®

  • 1st Year annual fee waiver for Primary Cardholder*($25 value) – Must apply by October 3, 2021
  • 20,000 Points (up to $100 in value) when you spend $2,000 within 6 months of account opening*
  • Earn 2 Points for every $1 spent on eligible dining or entertainment purchases
  • Earn 1 HSBC point for every $1 spent on all other purchases
  • Price protection
  • Purchase assurance
  • Extended warranty
  • 11.90% interest on all purchases, cash advances and balance transfers
  • Optional travel insurance ($69 per year)

For Quebec residents

  • Apply for an HSBC +RewardsTM Mastercard® by October 3, 2021 and get 25,000 Points (up to $125 in value) if you keep your account open and active for 6 months*

The HSBC +Rewards™ Mastercard® has an interest rate of 11.90%, but you also earn HSBC Rewards points on all your purchases. That’s why this card is one of the best low interest credit cards in Canada. The earn rate is 2 HSBC points for every $1 spent on eligible dining and entertainment purchases; and 1 HSBC points per $1 spent on all other purchases. HSBC Rewards is a highly undervalued rewards program, so it’s amazing that you can actually earn points with a low interest card. You also get price protection which is incredibly rare these days.

BMO Preferred Rate Mastercard®*

  • $20 annual fee – first year free
  • 3.99% introductory interest rate on balance transfers for 9 months with a 1% transfer fee
  • 12.99% interest rate for purchases and cash advances
  • Purchase protection
  • Extended warranty

Not only is the BMO Preferred Rate Mastercard®* one of the best low interest credit cards in Canada, it’s one of the best BMO credit cards in Canada. This is BMO’s top low interest credit card so it’s ideal for people who want to reduce their debt. Although the balance transfer interest rate of 3.99% is higher than some of the other cards on this list, the BMO card does give you that rate for 9 months and the transfer fee is just 1%. Once that introductory rate ends, you’ll pay 12.99% interest which is still reasonable.  With this card, you also get purchase protection which covers your purchases from loss, theft and damage for 90 days, as well as extended warranty.

Scotiabank Value Visa

  • $29 annual fee
  • 0.99% interest rate on balance transfers for the first 6 months
  • 12.99% interest rate after the promotional period ends
  • Up to 25% off at participating Avis car rental locations
  • Free supplementary card

Rounding out the list of the best low interest credit cards in Canada is the Scotiabank Value Visa. As you can see, compared to the American Express Essential credit card and the MBNA True Line Mastercard, the Scotiabank Value Visa has a slightly higher interest rate and comes with an annual fee. Obviously, the other two cards are better choices, but some who bank with Scotibank likely prefer a Scotiabank credit card so it’s understandable why they’d choose this card over the others.

American Express Essential credit card

  • No annual fee
  • 1.99% interest rate on balance transfers for the first 6 months
  • 12.99% interest rate on purchases and cash advances
  • Access to American Express Invites
  • Buyer’s assurance
  • Purchase protection
  • Travel accident insurance

The American Express Essential credit card consistently comes out on top of just about every best low interest credit cards list since it has no annual fee and you get a 1.99% interest rate on balance transfers for the first 6 months. These low rates make it incredibly easy to pay down your debt and even when the promotional period ends, you’ll be paying just 12.99% on purchases and cash advances which is still incredibly low. Since this is an American Express card, you’ll also get access to American Express Invites which gives you access to dining and entertainment experiences. You also get buyer’s assurance, purchase protection and some basic travel insurance.

How to choose a low interest credit card

As you can see, there’s a lot of choices when it comes to low interest credit cards, but it comes down to three simple things that will help you determine which of the best low interest credit cards in Canada you should choose.

  • Annual fee – Although a low interest rate is great, you need to figure out if the annual fee you’re paying offsets what you’re saving. You might be surprised to find that paying that fee may well be worth it since you’ll be saving more in interest.
  • Credit card balance transfer promotions – If your intention is to take advantage of the balance transfer option, then any promos available is arguably the most important factor to consider. Every promo has different terms, so you need to look at the interest rate offered and how long you’ll get it for. A short term with a low interest rate is fine if you can pay it off quickly, but if it’ll take you time, a longer term with a higher rate may be a better option.
  • Additional fees – Besides the annual fee, you need to see if any of the best low interest credit cards in Canada charge a balance transfer fee. This fee applies to the amount you’re transferring and can quickly add up. Sometimes it makes more sense to go with the no fee option.

A low interest credit card will help you save money, but don’t think of it as a long term solution. Pay off your debt right away and make sure you don’t pick up any additional debt.

Final thoughts

Overall the difference between all five cards is pretty minor so you really can’t go wrong with any of them. Once you’ve cleared your debt and have your spending under control, you can maximize your return by applying for one of the best travel credit cards or one of the best cash back credit cards.

The Best Low Interest Credit Cards in Canada

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

1 Comment

  1. Zinny on May 25, 2020 at 12:38 AM

    Thanks for sharing! This is a great list of credit card options to work with.

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