Credit Card Interest Rates in Canada — What You're Actually Paying

The average Canadian credit card charges 19.99% annually. Here's how interest works, which cards charge less, and how to pay zero interest.

Standard Credit Card Interest Rates in Canada

The vast majority of Canadian credit cards from major banks charge exactly 19.99% APR on purchase balances. This is not a regulatory cap — it's simply the rate that Canada's Big Six banks (RBC, TD, Scotiabank, BMO, CIBC, National Bank) have converged on as the industry standard.

Cash advance rates are typically higher — 22.99%–25.99% — and begin accruing immediately with no grace period. Balance transfer promotional rates can be 0%–3.99%, jumping to 22.99% after the promotional period.

Credit Card Interest Rates by Type

Rate Type	Typical Rate	Grace Period?
Purchase (standard)	19.99%	Yes — ~21 days
Low-interest cards	8.99%–12.99%	Yes
Cash advance	22.99%–25.99%	No
Balance transfer (promo)	0%–3.99%	N/A
Balance transfer (standard)	22.99%	No
Penalty/default rate	Up to 26.99%	No

How Credit Card Interest Is Calculated in Canada

Canadian credit cards calculate interest using the Average Daily Balance method. Your balance is tracked each day of the billing cycle, averaged, and multiplied by your daily periodic rate (APR ÷ 365). This means even partial month balances accrue interest daily.

Example: A $1,000 balance at 19.99% costs approximately $16.58 per month in interest. Over a year, that's $199 in interest — just to carry $1,000 in debt.

The Grace Period — How to Pay Zero Interest

Canadian credit cards offer a grace period of at least 21 days from your statement date. If you pay your full statement balance by the due date every month, you pay zero interest — even if you carry a large balance during the month. This is how millions of Canadians use credit cards as free payment tools while earning rewards.

The grace period only applies to purchases. Cash advances and balance transfers do not have a grace period — interest starts the day of the transaction.

Best Low-Interest Credit Cards in Canada

Card	Purchase Rate	Annual Fee
MBNA True Line Mastercard	12.99%	$0
MBNA True Line Gold Mastercard	8.99%	$39
Scotiabank Value Visa	12.99%	$29
CIBC Select Visa	13.99%	$29
National Bank MC Synergie	12.99%	$0

When a Low-Interest Card Makes Sense

If you regularly carry a balance — even occasionally — a low-interest card can save significant money. The math: on a $3,000 balance, the difference between 19.99% and 8.99% is approximately $330/year in interest savings. That's enough to justify a modest annual fee on a low-interest card.

Low-interest cards rarely offer rewards programs, so they're not suitable for people who pay in full every month and want to maximize rewards.

How to Avoid Credit Card Interest Entirely

• Set up automatic payment for your full statement balance each month.
• Never take cash advances — they're expensive and offer no grace period.
• Avoid balance transfers unless you have a solid payoff plan before the promo period ends.
• Use KOHO prepaid Visa — no interest possible since you spend only your own money.
• If you miss a full payment, pay as much as possible to minimize the balance accruing at 19.99%.