If you pay your balance in full every month, the interest rate on your credit card is the least important number on it. If you do not, it is the only number that matters, and it will cost you more than every reward on this site combined.
The Grace Period, and What Ends It
Buy something today and you are not charged interest today. Canadian issuers give you a grace period of at least 21 days between the statement date and the payment due date. Pay the full statement balance by the due date and the purchases on that statement cost you nothing in interest.
Pay anything less than the full balance, even a dollar less, and two things happen at once. Interest is charged on the unpaid amount, and the grace period disappears for new purchases, so anything you buy next starts accruing interest from the day you buy it rather than from the next statement. Getting the grace period back means paying the balance in full and usually waiting a cycle.
Cash Advances Never Have a Grace Period
A cash advance accrues interest from the moment you take it, and most cards charge a higher rate for it than for purchases. This catches people out because a cash advance is not only money out of a bank machine: balance transfers, cash like transactions such as buying foreign currency, wire transfers and some bill payments made at a teller are all coded as cash advances by most issuers. The fee is usually a few dollars on top.
What the Rates Actually Are
Across the 98 personal cards we track, the purchase rate is 21.99% on most of them. That is not a coincidence and it is not a market: it is the number nearly every Canadian issuer has settled on. The spread only opens up at the bottom.
- National Bank Syncro Mastercard, 8.9%, $35 a year. The lowest published purchase rate in our database.
- Scotiabank Platinum American Express, 9.99%, but it costs $399 a year, so the rate is not the reason to hold it.
- MBNA True Line Gold Mastercard, 10.99%, $39 a year.
- MBNA True Line Mastercard, 12.99%, and it costs nothing to hold.
- American Express Essential, 12.99%, $25 a year.
The gap between 21.99% and 12.99% is nine points. On a $5,000 balance that is $450 a year, which is more than the annual fee of any card on that list and more than almost any rewards card returns.
The Arithmetic, so You Can Check It
Interest is calculated daily, not monthly. The issuer takes the annual rate, divides it by 365 to get a daily rate, and applies that to your balance each day. At 21.99% the daily rate is about 0.06%. Carry $3,000 for a month and you pay roughly $54. Carry it for a year, paying only the minimum, and the total is far worse than 21.99% of $3,000, because the minimum payment is mostly interest at the start and the principal barely moves.
That last part is the trap in the minimum payment, and it is worth seeing rather than reading about. Our credit card payoff calculator shows what the minimum costs against any fixed payment you choose, and what one extra fifty dollars a month does to the date you are free of it.
What to Do About It
- If you carry a balance, the rewards rate on your card is irrelevant. Move to the lowest rate you can get, and ignore every point and every percentage of cash back until the balance is gone.
- If you clear the balance every month, the interest rate is irrelevant to you, and you should choose on rewards, fees and benefits instead.
- Nobody is in both groups. Deciding which one you are in is the single most useful thing you can do before choosing a card.
You can filter the whole database by rate on the comparison page, or see every card we track by issuer in the directory.
The Benchmark Weekly
One email a week. Elevated welcome offers while they are still open, new cards and accounts as they arrive, and any fee, rate or earn rate that moved, with the old figure and the new one. A quiet week gets no email.