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2021's Best Low Interest Credit Cards for Canadians

Carrying a monthly balance? Find the lowest interest rate credit cards and make your balance more manageable.

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Select your rewards preference

Select your annual fees

Check out this unique card: HSBC +Rewards™ Mastercard®

Nobody wants to pay interest on their unpaid credit card balances on top of all the purchases they've made. To get the most from your credit card, you should pay off your balance every month to avoid accruing interest. Still, mistakes can happen, or unexpected expenses can arise. Low interest credit cards can help you pay less interest should unforeseen circumstances occur. That peace of mind is nice, but like anything, there are always trade-offs. In the case of low interest cards, the compromise usually comes from a lack of rewards. That's where the HSBC +Rewards™ Mastercard® is unique.

With the HSBC +Rewards™ Mastercard®, you have the opportunity to '"have your cake and eat it too." It offers permanently low interest rates and flexible rewards for making everyday purchases on the card. Plus, earn an accelerated reward rate for every $1 spent on eligible dining and entertainment purchases.

Not only that, but the flexible points program also provides cardholders with travel and cash redemption options. Learn more about the HSBC +Rewards™ Mastercard® below or use RATESDOTCA's Credit Card Marketplace to compare low interest cards and see how they stack up.

First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$100
Annual rewards
$144
Annual fee
$25
Total first year value
$219
HSBC +Rewards™ Mastercard®

card image
Welcome bonus
$100
HSBC Rewards Points
Annual rewards
$144
HSBC Rewards Points
Annual fee
$25

A rare low interest card that earns you rewards redeemable on travel or statement credits
Optional travel insurance available for an additional low annual fee
Details at a glance Collapse details
First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$100
Annual rewards
$144
annualFee
$25
Total first year value
$219
Welcome bonus
$100
Annual rewards
$144
A rare low interest card that earns you rewards redeemable on travel or statement credits
Optional travel insurance available for an additional low annual fee
Details at a glance Collapse details

What are low interest credit cards?

If you tend to carry a credit card balance from month to month, having a low interest credit card will help you save money on interest charges. The average credit card interest rate is 19.99%, which is a high-interest rate for a recurring credit card balance. Having a high-interest credit card means you’re paying a lot of extra money on interest, money you could be saving if you switched to a low annual interest rate credit card. Like their name indicated, low interest credit cards come with much lower interest rates, sometimes as low as 4.99%.

Best of Finance Winner for 2021: Best Low Interest Credit Card

The best way to avoid paying costly interest charges is to pay off your credit card balance in full each statement period. However, that is not always possible, and sometimes, you may carry a balance month-over-month. In that case, interest would start to accrue on the unpaid balance at a set rate, compounded daily.

Most credit cards charge a standard annual interest rate of around 19.99% on purchases, which can add up quickly.

Although the welcome offers and perks of some credit cards can be enticing, the mounting interest charges can outweigh any advantages if you carry a balance. Switching to a low interest credit card may offer cardholders the opportunity to tackle their debt faster and pay less interest. This decision can put cardholders in a healthier financial position for the future.

We compared low interest credit cards in Canada using our Best of Finance methodology and ranked the cards that provided the most potential savings.

Click the card name from the table below to learn more.

  First year savings Annual fee Interest rate (purchases)
$181 $39 8.99%
$137 $25 11.9%
$275 $20 (First year waived) 12.99%
$137
$25
11.9%
$275
$20 (First year waived)
12.99%

Winner: True Line® Gold Mastercard® credit card

The True Line® Gold Mastercard® offers cardholders an 8.99% standard annual interest rate on balance transfers and purchases for an annual fee of $39.

According to our Best of Finance methodology, this low interest credit card would save the average Canadian around $181 in interest in the first year.

First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$0
Annual savings
$220
Annual fee
$39
Total first year value
$181
True Line® Gold Mastercard® credit card

card image
Welcome bonus
$0
Annual savings
$220
Annual fee
$39

Winner – Best Low Interest Credit Card
Low annual fee card includes complimentary shopping insurance
Details at a glance Collapse details
First Year Value is the estimated dollar amount of benefits you will accumulate based on your monthly spending and rewards preference
Welcome bonus
$0
Annual savings
$220
annualFee
$39
Total first year value
$181
Welcome bonus
$0
Annual savings
$0
Winner – Best Low Interest Credit Card
Low annual fee card includes complimentary shopping insurance
Details at a glance Collapse details

Runners-up: Best Low Interest Credit Card

HSBC +Rewards™ Mastercard®

The HSBC +Rewards™ Mastercard® provides cardholders with a rare combination of features — a low interest rate and rewards. For just $25 a year, cardholders can access an 11.9% interest rate on balance transfers, cash advances and purchases. Plus, earn two points for every $1 spent on eligible dining and entertainment purchases and one point for every $1 on all other purchases.

According to our Best of Finance methodology, the average Canadian could save $137 in interest charges in the first year.

Annual fee:

$25

Limited time offer/bonus:

  • There is no welcome bonus currently.

Offer expiry date: N/A

Rewards:

  • Earn two points for every $1 spent on eligible dining and entertainment purchases.
  • Earn one point for every $1 spent on all other purchases.

Interest rates: 

  • Interest rate (purchases): 11.9%
  • Interest rate (cash advances): 11.9%
  • Interest rate (balance transfer): 11.9%

BMO Preferred Rate Mastercard*

The BMO Preferred Rate Mastercard* offers cardholders a standard annual interest rate of 12.99% on balance transfers and purchases — BMO’s lowest rate. Plus, for a limited time, get a 3.99% introductory interest rate on balance transfers for nine months with a 1% transfer fee.

According to our Best of Finance methodology, the average Canadian would save around $275 in interest charges in the first year.

Annual fee:

$20

Limited time offer/bonus:

  • Get a 3.99% introductory interest rate on balance transfers for nine months. A 1% balance transfer fee does apply. Plus, pay no annual fee for the first year.

Offer expiry date: October 31, 2021

Interest rates: 

  • Interest rate (purchases): 12.99%
  • Interest rate (cash advances): 12.99%
  • Interest rate (balance transfer): 12.99%

How will a low interest credit card help me save money?

With a low interest credit card, you can pay off your credit card balance faster. This is because more of your monthly payment is being put towards your balance instead of the interest.

Standard credit cards come with an interest rate ranging from 19.99%-22.99%, while low interest cards can be as low as 4.99% to 15.99%.

Let’s see an example of how much interest you can save by switching to a low interest credit card.

Let’s say:

  • You owe a $1500 balance on your credit card
  • Every month, you choose to pay $150 towards your credit card statement
Example of how a low interest credit card can help you save money
Typical credit card Low interest credit card
Annual interest rate 19.99% 8.99%
Monthly interest rate 1.67% 0.74%
Months until your balance is paid in full 12 11
Total interest paid $154.49 $65.13

Is a low interest credit card right for you? Here’s what you need to know

What are the most common features of low interest credit cards?

Most low interest credit cards come with a no annual fee, and typically no rewards. This is because they are specifically designed to make it easier for you to pay your recurring credit balance. Most low interest credit cards do not offer perks though because the low interest rate itself is considered the perk.

When is the best time to use a low interest credit card?

The best time to use a low interest credit card is when you have a high recurring credit balance to pay off. While comparing low interest credit cards, look for a great promotional interest rate to take advantage of.

What is the difference between fixed rate and variable rate credit cards?

When you’re comparing low interest credit cards, you’ll notice that there are two types, fixed rate credit cards and variable rate credit cards.

A fixed rate low interest credit card has the same interest rate throughout the year, while the variable rate low interest credit card has a fluctuating interest rate. This variation depends on two important factors, one being the bank’s current prime rate and the second being your credit score. If you have a low credit score (below 600), you may not be able to take advantage of some of the interest rate discounts that come with the variable rate, low interest credit card.

  • Fixed rate credit cards - The benefit of fixed rate credit cards is that you’ll know what interest rate you’ll be charged every billing cycle. The rate of interest won’t be affected by the bank’s prime rate or your creditworthiness. Fixed rate credit cards usually come with limited-time balance transfer promotions you can use pay off your existing credit card debt.
  • Variable rate credit cards - The advantage of holding a variable rate credit card is that you can get a very low rate (even lower than a fixed rate card in some cases), but this usually only comes with excellent credit. The disadvantage is that you might be stuck with a higher rate if your credit score isn’t great or if the bank’s prime rate increases.

If you have a credit score lower than 670, stick to a fixed rate, low interest credit card.

Over the time period it take to pay down the $1500, in $150 payments every month you will have been charged $154 in interest under a traditional credit card vs the $65 under the low interest credit card. When you choose the low interest credit card, you pay less in interest. In this example, you save $89.36 in total interest, which would help you to pay off your balance a month faster compared to using the standard rate credit card.

Disclaimer: This is a simplified example for illustrative purposes to help you understand how interest charges on credit cards may add up.

Rates, product information, and reward estimates are subject to change at any time and do not constitute financial advice. This post was not sponsored. The views and opinions expressed in this review are purely those of RATESDOTCA. Information in this article is accurate as of the date of this posting, May 18, 2021. Read our full disclaimer.

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