There are quite a few good low-interest credit cards out there, but some stand out above the rest for their very low rates and monthly reports to the largest credit card bureaus in Canada. I constantly keep up with the latest discounts and promotional rates and make my recommendations below based on years of experience.
I recommend the CIBC Select Visa as the #1 low-interest credit card in Canada due to its very low-interest rates on purchases and cash advances, plus a very low annual fee. Additionally, it offers a 10-month grace period where you won't pay any interest at all, cash back on gas purchases, and 25% discounts on eligible car rentals.
What Is A Low-Interest Credit Card?
Low-interest credit cards are a type of credit card that offers extremely low-interest rates on purchases and cash advances. These cards usually come with a promotional interest grace period where you pay little-to-no interest for the first couple of months, up to a year, when you transfer your balance from other credit cards.Â
These cards are very limited in terms of rewards and benefits – their main strength is their low non-promotional interest rates. You can expect rates as low as 8.99% on purchases and 12.99% on cash advances; that’s around half the average for Canadian credit cards. They also have relatively low annual fees going up to $50. Anything above that is considered a high annual for these types of cards. Keep in mind you will need a good credit score to apply for these – anything above 660 and you should get approved almost instantly.
Without further ado, here are the best low-interest credit cards Canada has to offer:
The Best Low-Interest Credit Cards In Canada
- CIBC Select Visa Card: Best for low fees and cash back rewards
- MBNA True Line Mastercard credit card: Best for 0% introductory interest rate for the first 12 months
- MBNA True Line Gold Mastercard: Best for low-interest rate on purchases
- Scotiabank Value Visa Card: Best for medical and job insurance
- Capital One Guaranteed Approval Secured Mastercard: Best for low credit scores and guaranteed approval
How Do Low-Interest Credit Cards Work?
Low-interest credit cards’ main feature is their low rates. This type of card offers low annual interest rates – usually between 6-14% – and most come with a promotional rate or an interest-free grace period. Promotional periods tend to last anywhere between 6-10 months, and afterward, the interest rate is fixed.
This type of credit card is closely tied to balance transfer credit cards and is a great option if you’re looking to pause your interest payments and allocate that money to paying off your credit card debt.
Pros & Cons Of A Low-Interest Card
Pros: Why A Low-Interest Credit Card May Be Worth It
- Lower interest rates on purchases and cash advances
- Promotional interest rates and interest-free grace periods
- Save up on the interest fees and pay off your debt faster
- Some low-interest credit cards offer cash back and other perks
- Low base interest rates on all debt
Cons: Why A Low-Interest Credit Card May Not Be Worth It
- Perks are not as good as dedicated rewards credit cards
How To Choose A Low-Interest Credit Card In Canada
Promotional Interest Rates
Most low-interest credit cards come with some kind of promotional interest rate or grace period. It usually lasts between 6-10 months, and it’s a great way to start putting money towards paying your credit card debt. Look for a credit card that offers low promotional interest and grace periods of 6 months or more. Keep in mind that you will still need to pay your monthly balance during the grace period – just not the interest.
Low Base Interest Rates
After the promotional period ends, most low-interest credit cards start charging interest, which is still significantly lower than those of regular credit cards. Before you apply for a low-interest credit card make sure you can pay off the full debt during the grace period, or, if you can’t, make sure the base interest rates after the grace period ends are reasonable. A good benchmark for low-interest credit cards is between 6-14%.
Keep in mind there are three interest rates depending on if you’re purchasing, requesting a cash advance, or transferring your balance.
Annual Fee
Most low-interest credit cards are very limited when it comes to rewards, as most people who are looking for this type of card are usually trying to reduce their spending, to pay off their debt. Consequently, earning enough cash back or taking advantage of other benefits to justify an annual fee can be difficult. it’s usually a better idea to go for a low-to-no-fee credit card with low interest and a dedicated rewards credit card. In Canada, an annual fee higher than $40 for a low-interest credit card is considered high.
Keep in mind some credit cards may charge a higher annual fee in exchange for an even lower interest rate; in those cases, it might be beneficial to pay an annual fee.
How To Apply For A Low-Interest Credit Card In Canada
Age
In Canada, the minimum age to request a credit card is the age of the majority. Teens under that age can’t get approved for credit cards but can be added as authorized users to one of their parent’s credit cards. For reference, the age of the majority in Alberta, Manitoba, Ontario, Quebec, Prince Edward Island, and Saskatchewan is 18 years old. In all other provinces, the age of the majority is 19.
Residency Status
Canadian credit cards are available to residents and non-permanent residents. However, most premium credit cards require you to be a Canadian resident. For other card types like prepaid and secured credit cards, you don’t even need a credit history. At the end of the day, residency requirements will depend on the specific credit card issuer and the type of card.
Low-Interest Credit Card FAQs
Are Low-Interest Credit Cards Worth It?
Interest cards might be worth it for you:
- If you carry a balance frequently and can benefit from a lower interest rate.
- If you’re looking to pay down your credit card debt in the next 6-10 months but the interest wouldn’t allow you to.
- If you want to make a large purchase that would take you a significant amount of time to pay.
- If you want to reduce your utilization ratio and increase your credit score by paying off your outstanding debt.
Interest cards might not be worth it for you:
- If you are looking for a credit card that offers rewards like high cash back rates or exclusive travel benefits
What Is The Best Free Low-Interest Credit Card In Canada?
The best free Interest card in Canada is the Scotiabank Select Value Visa Card. It offers a promotional interest rate of 0% for the first 6 months and a base 12.99% interest afterward.
Does Having Multiple Credit Cards Affect Your Credit Score?
Yes, having multiple credit cards can affect your credit score. Usually having more than one credit card can help you build your credit score indirectly, by reducing your utilization percentage across all your cards. As long as you make your payments on time, having multiple credit cards can be beneficial.
What Is A Good Credit Score In Canada?
According to the two biggest credit card bureaus In Canada – Equifax, and TransUnion – a good credit score falls between 660 to 724. Anything above that is considered an excellent credit score. You would need a good credit score to get some of the best cards in Canada, like the Amex Cobalt. On the other hand, you'll need an excellent credit score to get a premium card like the Amex Platinum.
What Are Good Interest Rates On Credit Cards?
In Canada, the average interest rate for credit card purchases is 19.99% and for cash advances 22.99%. Anything below 14% is considered a good interest rate.
