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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 standard credit card interest rate is 19.99 to 20.99%, 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 save if you switched to a low annual interest rate credit card. As their name indicates, low-interest credit cards come with much lower interest rates, sometimes as low as 4.99%.
The best way to avoid paying costly interest charges is to pay off your credit card balance in full at the end of each statement period.
However, that is not always possible, and there might be times when you carry a balance. If this does happen, interest will start to accrue on the unpaid balance at a set annual rate that compounds daily.
Most credit cards charge a standard annual interest rate of around 19.99% on purchases, which can add up quickly.
Although some credit cards' welcome offers and perks can be enticing, mounting interest charges caused by carrying a balance will outweigh any advantages. Switching to a low-interest credit card may allow cardholders to tackle their debt faster and pay less interest. This decision can put cardholders in a healthier financial position in 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. The average savings have been calculated against a monthly spending of $2,000 using a standard interest rate credit.
Click the card name from the table below to learn more.
| First year savings | Annual fee | Interest rate (purchases) | |
|---|---|---|---|
| $200 | $399 | 9.99% | |
|
Runner up |
$81 | $39 | 10.99% |
|
Runner up |
$140 | $20 | 12.99% |
The Scotiabank Platinum American Express® Card is a valuable tool for anyone who makes most of their purchases on credit, wants to avoid the fees normally charged by credit card companies, but still wants to collect fun perks.
First, here’s why it works as a low-fee card. A very low interest rate of 9.99% applies to purchases, cash advances and balance transfers. Plus, the Scotiabank Platinum American Express® Card doesn't charge foreign exchange fees, making it a good choice for frequent travellers (it also comes with a suite of travel perks and insurance).
Now, the fun stuff. Most low-interest cards won’t let you earn rewards as you spend money on them. But with the Scotiabank Platinum Amex, you earn valuable Scotia Scene+ Points, which you can use on movie tickets, meals out, arcade games at the Rec Room, retail purchases, statement credits and even travel. You get twice the points when you make purchases at places that partner with the Scotia Scene+ program. On top of the savings you’ll see in interest, we estimate you can get up to $681 in rewards value in your first year.
Annual fee
$399
Interest rates
Benefits
For an annual fee of $39, the True Line® Gold Mastercard® offers cardholders an 10.99% annual interest rate on balance transfers and purchases, allowing you to quickly pay down any outstanding credit card balances. This card also includes complimentary shopping insurance.
Annual fee
$39
Interest rates
Benefits
Insurance coverage
The RBC® Visa‡ Classic Low Rate Option is a good choice for anyone looking to prioritize low interest rate charges on balances. An annual rate of 12.99% applies to purchases and cash advances. The $20 fee is also waived for the first year.
Even though you're probably more focused on saving money, the RBC Visa Classic Low Rate Option does offer some useful perks.
For example, enjoy free delivery for three months from DoorDash when you sign up for the app with the card.
You'll also be eligible to save three cents per litre on fuel and always earn 20% more Petro-Points at Petro-Canada.
Annual fee
$20
Interest rates
Benefits
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:
| 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
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.
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.
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.
If you have a credit score lower than 670, stick to a fixed rate, low interest credit card.
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