What Is a Good Credit Card Interest Rate in Canada?

What counts as a good credit card interest rate depends on the type of card and on how you use it. Low-rate cards, standard cards, rewards cards and store cards are priced differently, and for someone who pays in full every month the rate hardly matters at all. This page compares rates by card type, explains when the rate matters, and covers asking for a lower one. It is one of our credit card basics guides.

Rates by card type

The Financial Consumer Agency of Canada (FCAC) gives a typical example of one card’s rates: “you may pay 19% interest on regular purchases and 22% on cash advances or cash-like transactions. Rates for specialized and retail credit cards may be higher.” Published rates for a few cards in our data:

A “good” rate, then, is one at or near the low-rate cards’ level if you carry a balance. Cards approved with little or poor credit, and store cards, tend to sit at the top of the range. A card’s cash advance rate is usually higher than its purchase rate and has no grace period. Our low-interest card picks compare the low-rate cards in full, including student credit cards and secured credit cards in their own lists.

When the rate matters and when it doesn’t

FCAC: “A credit card’s interest rate may be an important factor if you regularly carry a balance.” It matters little if you “pay your balance in full every month don’t take out cash advances don’t make cash-like transactions.” In that case a rewards card’s extra benefits, such as purchase protection or an extended warranty, can be worth more than a low rate. How interest is calculated, and how the grace period lets you avoid it, is explained in how credit card interest works.

The fee-versus-rate trade-off

“Some low-rate cards charge an annual fee. Even if there is a fee, a low-rate card may be a better option,” FCAC says. Its example: paying off a $4,000 balance over a year on a 21% card with no annual fee costs $472 in interest, against $199 on a 9% card with a $50 fee, so the low-rate card costs $273 less even after the fee. The example assumes no new spending while the balance is paid down.

Asking for a lower rate

An issuer can lower the rate on an existing card, and some will when asked. What usually helps:

• a long history with the issuer and a record of on-time payments;
• a good credit score; credit score ranges explains the bands;
• a competing offer, such as a lower-rate card or a balance transfer offer from another issuer.

If the issuer declines, the alternatives are switching to the issuer’s low-rate card, moving the balance with a transfer (weighed in the balance transfer calculator), or borrowing at a lower rate on a line of credit; line of credit vs credit card compares the two.

Interest-free options

• Paying in full every month, which keeps the interest-free grace period on purchases.
• A promotional balance transfer, which FCAC notes usually lasts “6 to 12 months” before the standard rate applies.
• Buy now, pay later plans and retailer financing, interest-free only if every instalment is paid on time. FCAC cautions about retail cards: “Since the interest rate for retail cards is usually high, even the items you bought at a discount may end up costing you more than the regular price.”

For a plan to clear a balance already carried at a high rate, see how to get out of credit card debt and credit card minimum payments.