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Canada’s Best Low Interest Rate Credit Cards in 2014

If you don’t pay off your credit card balance every month, get a low interest credit card instead and you could save yourself hundreds of dollars a year in interest charges and pay off your balance faster. Here’s our look at the Canadian credit cards that save you the most in interest charges and their annual fees.

2014 Low Interest Credit Card Rankings

Our rankings revealed a surprising trend. Canada’s Big 5 retail banks, all charged an annual fee for their lowest interest credit card, yet still did not match the lowest rate offered in the market. The lesson? Shop around before you take what your bank offers you.

 

Credit Card

Annual Interest Rate

Annual Fee

MBNA TrueLine Low Interest credit card

TrueLine Mastercard

9.99%

$0.00

BMO_Preferred_Rate_MasterCard Low Interest Credit Card

Preferred Rate Mastercard

11.90%

$20.00

 RBC Visa Classic Low Interest Credit Card

Visa Classic Low Rate

11.99%

$20.00

CIBC Select Visa Low Interest Credit Card

Select Visa Card

11.99%

$29.00

Scotiabank Value VISA Low Interest Credit Card

Value Visa

11.99%

$29.00

TD Emerald Low Interest Credit Card

Emerald Visa

Prime+ 1.5%-12.75%

$25.00

Based on the chart above the MBNA TrueLine Mastercard has the lowest fixed term interest rate of any credit card offered when compared to the big 5 Canadian banks. It also has no annual fee, which gives it a clear leg-up on the competition.

Save Big With A Low Interest Card

Interest is typically the largest cost of owning a credit card, for those who carry a balance. Below is a simple chart that shows how much you can save with a low interest credit card:

Low Interest Credit Card Savings

Who Should Get A Low Interest Credit Card?

If you carry a balance, even for a short period of time, a low interest credit card will save you more money than a rewards card. Let’s do the math. If you spend $4,000 on your credit card, and collect 2% in points (we’ll be generous) you will have earned the cash equivalent of $80 in rewards. If you then carry that balance for one year at a typical rewards card interest rate of 19.99%, it will have cost you $800 in interest. With a low rate card of 9.99% it will have cost you $400 in interest. Taking into account the $80 in rewards you would have earned, you would be $320 better off using the low rate card over the rewards card.

Bottom line is, despite the best of intentions of Canadians to pay-off their credit cards at the end of the month, nearly half of us carry a balance. In fact, Canadians carry close to $90 billion in credit card debt, averaging nearly $2,700 per account. By reducing our credit card interest rates by 5 percentage points, we would eliminate $4.5 billion in interest payments per year that go from our pockets to those of the banks. With some low rate cards offering no annual fee, it just make sense to carry an extra low rate card in your wallet for those purchases you may not be able to payoff at the end of the month.