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The best travel credit cards in Canada can be appealing, but what if you’re constantly carrying a balance on your credit card? It makes no sense to collect rewards when you’re paying 19.99% interest, so you’re better off with a credit card that has a much lower interest rate. In my list of the best low interest credit cards in Canada, I go over which cards have the lowest interest rate and what additional benefits they include.

The Best Low Interest Credit Cards in Canada

 Balance transfer rateRegular rateAnuual fee
American Express Essential credit card1.99% for 6 months12.99%None
BMO Preferred Rate Mastercard3.99% for 9 months / 1% fee12.99%$20 - FYF
MBNA True Line Mastercard0% for 10 months / 3% fee12.99%None
MBNA True Line Gold Mastercard0% for 6 months / 3% fee8.99%$39
Scotiabank Value Visa0.99% for 6 months12.99%$29

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.

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.

MBNA True Line Mastercard

  • No annual fee
  • 0% interest rate on balance transfers for the first 10 months (3% transfer fee)
  • 12.99% interest rate after the promotional period ends

With the MBNA True Line Mastercard, you’ll pay 0% interest on balance transfers for the first ten months. There is no other credit card out there that offers 0% interest without an annual fee, so if you have a debt repayment plan in place, you can eliminate your debt quickly. That being said, when the promotional period ends, your interest rate goes up to 12.99% which is 4% higher than the American Express Essential credit card. 

MBNA True Line Gold Mastercard

  • $39 annual fee
  • 0% interest rate on balance transfers for the first 6 months (3% transfer fee)
  • 8.99% interest rate after the promotional period ends

The MBNA True Line Gold Mastercard that is the premium version of the MBNA True Line Mastercard. Although the differences seem minimal, they can make a huge difference when it comes to paying off your debt. First off, this card has an annual fee of $39 and the 0% interest rate on balance transfer lasts only 6 months compared to the regular version that gives you 10 months. What really makes the MBNA True Line Gold Mastercard stand out is that you’ll pay just 8.99% interest after your promotional period ends so it’s ideal for those who know they won’t be able to pay their full balance within 10 months.

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.

Why get a low interest credit card?

Some people don’t realize that if you don’t pay the full balance on your credit card every month, you end up paying interest charges. Since credit card interest averages 19.99%+, you could end up paying a lot of extra money for that purchase you made. Most people try to pay their entire bill, but sometimes we run into cashflow or debt issues where making the full payment is impossible.

Although this scenario isn’t ideal, it happens. 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. The idea here is to have a system in place before your credit score drops. So how does a low interest credit card help? Well, for any new purchase, you’ll pay a lower interest rate (12.99% or less), but what you really should be paying attention to is the balance transfer option.

Balance transfers usually need to be done at the time of the application and it’s beneficial to you since you can take the balance from a credit card that charges high interest and transfer it to your low interest credit card. All of the cards below come with a great balance transfer rate between 0%-3.99 interest and it’ll last you for up to 10 months. If you focus on paying down your debt at this time, you’ll only pay minimal interest charges which helps your wallet in the long run.

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

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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