Based on an analysis of 170 credit cards sold to Canadian consumers, this article ranks the top 10 credit cards with the lowest interest rates for purchases, cash advances and balance transfers.
Unless otherwise noted, dollar amounts are in Canadian currency.
Credit Cards with Lowest Interest Rates for Purchases
Consumers should carefully read the different interest rates that apply based on the type of expenses incurred. For example, Capital One SmartLine Platinum MasterCard has a relatively low 5.99% interest rates for consumer purchases. However, the SmartLine rate for that same card is 19.8% for any expense that Capital One considers as a cash advance.
- Capital One SmartLine Platinum MasterCard … 5.99% (no annual fee)
- National Bank of Canada MasterCard Syncro … 8.9% ($35 annual fee)
- Citi Low Rate Gold MasterCard … 9.9% ($39 annual fee)
- Desjardins VISA - Modulo GOLD … 9.9% ($50 annual fee)
- Desjardins VISA - Platinum … 9.9% ($169 annual fee)
- MBNA Program Premium MasterCard Credit Card … 9.99% (no annual fee)
- Capital One Platinum MasterCard … 9.99%* (no annual fee)
- Scotiabank Value VISA Card … 11.49% ($29 annual fee)
- CIBC Select VISA Card … 11.5% ($29 annual fee)
- RBC VISA Classic Low Rate Option … 11.9% ($20 annual fee).
*Guaranteed for 3 Years
For purchases, only MBNA and National Bank of Canada offer introductory interest rates of less than 9% under a select few of their MasterCard credit cards. After six months, rates for purchases incurred on those cards jump to 16.99% or higher.
Credit Cards with Least Expensive Rates for Cash Advances
Typically, credit cards charge their highest rates on cash advances with debt starting on the date consumers use their cards to withdraw funds. Rates are so high that credit card companies typically offer introductory low rates that last from four to six months. After the initial honeymoon period, rates spike to much higher levels as shown below.
- MBNA Eco-Logique MasterCard … 1.9% for 6 months, then 19.99%
- MBNA Pharmaprix MasterCard … 1.99% for 6 months, then 19.99%
- MBNA Shoppers MasterCard … 1.99% for 6 months, then 19.99%
- MBNA Platinum Plus MasterCard … 1.99% for 6 months, then 19.99% plus 1% fee
- MBNA Canadian Wildlife Federation MasterCard … 3.9% for 6 months, then 18.99%
- MBNA Royal Canadian Geographical Society MasterCard … 3.9% for 6 months, then 18.99%
- MBNA Ducks Unlimited MasterCard … 3.9% for 6 months, then 19.99%
- MBNA Gold MasterCard … 3.9% for 4 months, then 19.99%
- MBNA CAA Quebec MasterCard … 3.99% for 6 months, then 16.99%
- BMO Mosaik MasterCard for Business … 8.9%.
The low-rate credit card plans above are free from annual fees. If the consumer holds a cash advance balance for more than six months, the BMO Mosaik MasterCard for Business becomes a better deal than the credit cards with introductory terms.
Credit Cards with Cheapest Rates for Balance Transfers
The distinction between credit cards with a set interest rate charge and those with temporary introductory terms is even more important for balance transfers.
For example, the following credit cards charge a fixed interest rate with no annual fee.
- Capital One SmartLine Platinum MasterCard … 5.99%
- MBNA Program Premium MasterCard Credit Card … 9.99%.
The credit cards below have attractive initial rates, that could save consumers some money over the very short term. However, nearly all of these rates spike to nearly 20% or more. And while MBNA Platinum Plus MasterCard has an extended 10 month honeymoon period, that same card has an extra back-end fee of 1% in addition to its 19.99% interest rate charge.
- MBNA Eco-Logique MasterCard … 1.9% for 6 months, then 19.99%
- MBNA Platinum Plus MasterCard … 1.9% for 10 months, then 19.99% plus 1% fee
- MBNA Pharmaprix MasterCard … 1.99% for 6 months, then 19.99%
- MBNA Shoppers MasterCard … 1.99% for 6 months, then 19.99%
- Club Sobeys MasterCard … 2.9% for 6 months, then 19.99%
- MBNA Canadian Wildlife Federation MasterCard … 3.9% for 6 months, then 18.99%
- MBNA Royal Canadian Geographical Society MasterCard … 3.9% for 6 months, then 18.99%
- MBNA Ducks Unlimited MasterCard … 3.9% for 6 months, then 19.99%
- MBNA Gold MasterCard … 3.9% for 4 months, then 19.99%
- MBNA CAA Quebec MasterCard … 3.99% for 6 months, then 16.99%.
The above credit cards are also free from regular annual fees.
The problem with balance transfers is that credit cards impose processing fees for moving the debt from another financial institution to the consumer’s new credit card balance. Those fees range from 2% to 6% of the balance transferred.
To illustrate, a consumer transfers a $10,000 balance under the Capital One SmartLine to the Club Sobeys MasterCard may reduce interest charges from 5.99% to 2.9% for six months. A 5% transfer charge would amount to a $500 payment up front or an additional $500 on the outstanding debt under the new card. If the Club Sobeys balance remains unpaid after six months, the cardholder ends up paying well over 20% a year in interest charges once the transfer fee is included.
Sources
This article provides independent calculations and insights based on credit card data from Canada’s Bargain Hunting Community website, Red Flag Deals.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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