How Credit Card Interest Work In Canada?

Q: What is the typical credit card interest rate in Canada?

Most Canadian credit cards charge between 0% and 29.99% annually . According to the latest data, the average rate is 17.87% on new offers and 14.84% on existing accounts . Premium rewards cards usually sit between 19.99% and 22.99% , while no-fee “low-rate” cards (like the MBNA True Line ® ) can drop to 8.99% to 12.99% . Cash advances and balance transfers typically attract a higher rate — often 22.99% to 24.99% — with interest accruing from day one.

Q: How does the grace period work?

Most Canadian cards offer a grace period of 15 to 30 days . If you pay your full statement balance by the due date, you pay $0 in interest on purchases. The grace period applies only when you start the cycle at zero — once you carry a balance, new purchases start accruing interest from the transaction date. Always check your specific cardholder agreement, because some no-fee cards offer just a 17-day grace period vs. 21 days on premium cards.

Q: How is interest calculated when I carry a balance?

Interest is prorated daily on the average daily balance. Example: a $250 purchase at 22.99% APR with a 20-day grace period costs about $2.17 in interest if left unpaid for 20 days. Two key rules to remember: Cash advances accrue interest from the day of withdrawal — no grace period Even partial payments don’t restore the grace period until the full balance is cleared at least one full cycle Carrying a balance even for a single month can cost you 10x your reward earnings.

Q: How do I reduce credit card interest charges?

Three actions matter most: Pay your full statement balance every month — the only true 0% strategy Move debt to a 0% balance-transfer card (like the MBNA True Line ® ) for 12 months and pay aggressively Call your issuer and request a lower rate — if you’ve been a steady payer for over a year, banks will sometimes drop your APR by 2–5 points Also, work on your credit score: paying bills on time and keeping credit utilization under 30% will eventually qualify you for low-interest cards.

Published February 28, 20216 min read

Editorial integrity

How Credit Card Interest Work In Canada?

Credit cards are incredibly convenient when it comes to making purchases and accessing money.

However, it is important to know the role that interest plays when it comes to your credit card. Most people don’t understand the different interest rates charged on their credit cards and end up with a lot of debt. Here’s an overview of how credit card interest works in Canada.

What is interest on credit cards?

Credit card interest is the amount of money the account holder pays to settle the outstanding balance on a credit card account. These interest rates can range from 0% to 29.99% on an annualized basis.

On many credit card accounts, these interest rates can vary depending on several factors, including the prime interest rate, the type of purchases and transactions made and the type of account.

Types of credit card interest rates

Your credit card probably has several different types of credit card interest rates. Here is an overview of the most common types of interest rates for credit cards.

1). Interest rate on purchases

The most common interest rate is the purchase interest rate. This interest rate applies to almost all types of purchases.

Generally, you have a « grace period » during which you can repay your purchase without having to pay interest. This grace period can range from 15 to 30 days. Check your credit card agreement for details.

2). Interest rate on cash advances

With most credit cards, you will be able to get cash back at a point of sale or withdraw cash from an ATM. Every time you withdraw money from your credit card, you pay a special interest rate on the cash advance. This interest rate tends to be higher than the interest rate on purchases.

You should therefore be careful when making cash advances on your card.

3). Interest on cash-like transactions

There may also be a special interest rate on cash-like transactions on your credit card. For example, if you make a bank transfer with your credit, you will be charged a special interest rate.

This interest rate will tend to be higher than the interest rate on purchases.

4). Introductory interest rate

When you open a credit card account, you can take advantage of an introductory interest rate. This interest rate will usually be significantly lower than the normal interest rate. In some cases, this introductory rate may be 0%.

The introductory interest rate is designed to encourage heavy use of the card when you get it. On most accounts, the introductory rate can be in effect from three to six months. It is therefore important to pay off the balance before the conventional interest rate comes into effect.

How credit card interest is calculated

Credit card interest rates are presented as an annualized percentage rate or (APR). However, the interest rate on your credit card is prorated from the time the grace period expires.

For example, let’s say you buy airline tickets for $500. Your credit card grace period is 20 days with an APR of 22.99%. You pay $250 of the $500 purchase within 7 days. Then you pay the remaining $250 40 days after purchase. The credit card will charge you a 22.99% APR for the 20 days following your grace period on the $250. The interest rate charged will be 0.869% on the $250, or $2.17.

What are the typical interest rates for credit cards?

According to WalletHub, the average credit card rate is 17.87 percent for new offers and 14.84 percent for existing accounts. The interest rate on a card may vary over time depending on the prime rate. This means that if the prime rate goes up, your interest rate may increase, even if you have a perfect and timely payment history.

How can you reduce the interest rate on your credit card?

Since your credit card interest rate can be as high as 29.99%, it’s important to keep it as low as possible. Here are some steps you can take to keep your credit card interest rate as low as possible.

1). Find a credit card with a low introductory interest rate or 0% interest rate

The first thing to do is to look for a credit card that offers you a particularly low introductory rate. Ideally, you should find a credit card that offers a 0% introductory rate.

If you have a credit card with a higher interest rate, you can transfer the balance from the high interest credit card to the low or no interest credit card.

2). Improve your credit rating

Another way to potentially reduce your credit card interest rate is to increase your credit score. Your credit rating is the result of your credit report from Canada’s two major credit reporting agencies: Equifax Canada and TransUnion Canada.

You can improve your credit rating by paying all your bills on time, reducing your credit utilization and making sure there are no past due notices on your account. You can request a free copy of your dossier de crédit every 12 months from both credit bureaus.

3). Ask for a lower interest rate

Finally, you can ask for a lower interest rate. A credit card company is more likely to reduce the interest rate on your credit card if you have an excellent history of making timely payments and using your credit card often.

Navigating credit card interest

A basic understanding of credit card interest rates will help you make smarter purchases and stay ahead of your credit card payments. Be sure to check the interest rates on your current credit card. Your wallet will thank you.

Frequently Asked Questions about credit card interest in Canada

Here are frequently asked questions in the milesopedia community about this card.

What is the typical credit card interest rate in Canada?

Most Canadian credit cards charge between 0% and 29.99% annually. According to the latest data, the average rate is 17.87% on new offers and 14.84% on existing accounts. Premium rewards cards usually sit between 19.99% and 22.99%, while no-fee “low-rate” cards (like the MBNA True Line^®) can drop to 8.99% to 12.99%. Cash advances and balance transfers typically attract a higher rate — often 22.99% to 24.99% — with interest accruing from day one.

How does the grace period work?

Most Canadian cards offer a grace period of 15 to 30 days. If you pay your full statement balance by the due date, you pay $0 in interest on purchases. The grace period applies only when you start the cycle at zero — once you carry a balance, new purchases start accruing interest from the transaction date. Always check your specific cardholder agreement, because some no-fee cards offer just a 17-day grace period vs. 21 days on premium cards.

How is interest calculated when I carry a balance?

Interest is prorated daily on the average daily balance. Example: a $250 purchase at 22.99% APR with a 20-day grace period costs about $2.17 in interest if left unpaid for 20 days. Two key rules to remember:

Cash advances accrue interest from the day of withdrawal — no grace period
Even partial payments don’t restore the grace period until the full balance is cleared at least one full cycle

Carrying a balance even for a single month can cost you 10x your reward earnings.

How do I reduce credit card interest charges?

Three actions matter most:

Pay your full statement balance every month — the only true 0% strategy
Move debt to a 0% balance-transfer card (like the MBNA True Line^®) for 12 months and pay aggressively
Call your issuer and request a lower rate — if you’ve been a steady payer for over a year, banks will sometimes drop your APR by 2–5 points

Also, work on your credit score: paying bills on time and keeping credit utilization under 30% will eventually qualify you for low-interest cards.

Our featured card

ExclusiveCompare

National Bank World Elite^® Mastercard^®

National Bank NBC RewardsFirst-Year Annual Fee Rebate

Annual fee: $0 $150No annual fee the first year; No annual fee the first year
Our valuation: $150Milesopedia first-year estimate First-year valueAnnual fee rebated$150Total$150Rewards on your spending are not included. The calculator that adds them from your own profile is on the card's page.; Milesopedia first-year estimateFirst-year valueAnnual fee rebated$150Total$150Rewards on your spending are not included. The calculator that adds them from your own profile is on the card's page.
Welcome offer: First Year Annual Fee Rebate; $150 annual fee rebated; Ends Nov 4, 2026

With Milesopedia, take advantage of an exclusive offer: your first-year annual fees are refunded with the National Bank World Elite Mastercard. This offer is exclusively available on the Milesopedia network, from June 30 to November 4, 2026.

Refund of the first-year annual fee (a $150 value) for the primary cardholder. This fee is charged to your new card account, then refunded as a credit on your statement within five months of opening your account, provided it remains open and in good standing.

The National Bank World Elite Mastercard is the best Mastercard credit card offered by NBC.

With this card, you earn up to 5 points per dollar on your purchases:

5 points per dollar for groceries and restaurants
2 points per dollar on gas and electric recharge purchases
2 points per dollar on recurring bills
2 points per dollar on À la carte Travel
1 point per dollar for all other purchases

And since it’s an NBC mycredit Mastercard, you can use it at Costco.

With this card, you have access to a $150 annual travel credit that you can use in any of these categories:

Airport parking
Baggage fees
Seat selection
Access to airport lounges
Airline ticket upgrades

What’s more, you can enjoy access to DragonPass airport lounges and unlimited access to the National Bank Lounge at Montreal-Trudeau.

Finally, Milesopedia has named the National Bank World Elite Mastercard as the Best Travel Credit Card in 2023, 2024, 2025, and 2026.

Legal

^® Mastercard and World Elite are registered trademarks, and the circles design is a trademark of Mastercard International Incorporated. National Bank is an authorized user.

^® The À LA CARTE REWARDS logo is a registered trademark of National Bank of Canada.

^® NATIONAL BANK OF CANADA LOUNGE is a registered trademark of National Bank of Canada.

^® À LA CARTE REWARDS PLAN is a registered trademark of National Bank of Canada.

^® Apple Pay is a registered trademark of Apple Inc., registered in the U.S. and other countries. Apple Inc. is not a sponsor of or participant in National Bank Mobile Banking Solutions.

^® Google Pay is a registered trademark of Google LLC. Use of this trademark is subject to Google Inc. Permissions.

^TM À LA CARTE TRAVEL is a trademark of National Bank of Canada. The À la carte Travel agency is owned by Transat Distribution Canada Inc. and holds a Quebec permit (No. 753141).

^TM À LA CARTE REWARDS is a trademark of National Bank of Canada.

^® THE TOTAL, THE CONNECTED and NATIONAL BANK are registered trademarks of National Bank of Canada.

* Mastercard^® World Elite^®

The National Bank^® World Elite^® Mastercard^® credit card was voted best Mastercard credit card by Milesopedia in 2026, 2025 and 2024.

The National Bank^® World Elite^® Mastercard^® credit card was voted best travel credit card by Milesopedia in 2026, 2025 and 2024.

Every year, Milesopedia reviews credit card offers from major financial institutions and establishes its Ranking based on over 150 criteria such as fees, welcome offer, minimum income required, number of points per category, account credits, insurance, airport lounge access, etc.

Certain restrictions apply. For more information, see the Rewards Plan section or the Plan Rules applicable to point accumulation.
Grace period:
No interest is charged on purchases made during the month if the cardholder pays the full balance of their account within twenty-one (21) days of the statement date. This grace period does not apply to cash advances and balance transfers. Minimum payment: if your account balance is less than $10, you must pay the balance in full. If you reside in the province of Quebec, your minimum payment is 5% of your account balance plus any overdue amount, or $10, whichever is greater. If you reside outside Quebec, your minimum payment is 2.5% of the credit card account balance plus any overdue amount, or $10, whichever is greater. Account statement: an account statement is sent monthly.
Table of examples of credit fees calculated over a 30-day period

Annual interest rate $500 $3,000

22.49% $9.24 $55.45

20.99% $8.63 $51.76

13.2% $5.53 $33.16

9.2% $3.78 $22.68

*Variable interest rate in effect as of September 1, 2021.
Balance transfers and cash advances are subject to National Bank credit approval. Each amount transferred cannot be less than $250.
Exclusive to World Elite Mastercard cardholders. Presentation of the physical credit card and boarding pass is required to access the lounge.
The National Bank^® Lounge is accessible to customers traveling on international flights only (excluding flights to Canada and the United States).
You benefit from free and unlimited access with one guest and two children aged 12 and under.
Until October 4, 2026 (date subject to change), customers can enter the National Bank Lounge three hours before their flight departure time. From October 5, 2026 (date subject to change), access will be authorized for a maximum duration of 2 hours (3 hours for customers who hold a Private Banking 1859^® World Elite^® Mastercard^® credit card).
National Bank customers who are not World Elite ^® Mastercard ^® cardholders can also access the current lounge based on current rates and benefit from a 25 % discount on these rates :
63,24 $ taxes included for adults (excluding discount)
$40.24 taxes included for children aged 2 to 12 (excluding discount)
free for children under 2 (excluding discount)
The entry fee is subject to change without notice and is the responsibility of the lounge operator.
Subject to providing the required supporting documents in the manner and within the prescribed timeframe. Certain conditions may apply. Only the primary cardholder of a National Bank World Elite Mastercard (Cardholder) whose account is in good standing can request a « Travel Fee Reimbursement ». « Account in good standing » means an account linked to the credit card that does not violate the Credit Card Agreement in any way and on which no restrictions apply. For example, and without limitation, the associated annual fees must have been paid in full. The maximum reimbursement of $150 can be requested from January 1 to December 31 of each year.
Eligible expenses are:
airport parking
baggage fees
seat selection
airport lounge access worldwide
airline ticket upgrades
A reimbursement request must be made within 60 days of the purchase date. Travel expenses must be charged to the National Bank World Elite Mastercard credit card account. The maximum reimbursement of $150 is applicable per account. Please allow up to 7 business days for the reimbursement to be processed from the date your request is submitted. National Bank reserves the right to request additional supporting documents for validation purposes (e.g., invoices). You must keep all receipts and supporting documents for a period of 12 months from the date you made your reimbursement request. An unused reimbursement in one year cannot be carried over to the next year. You can make your request online at rewards.nbc.ca or by calling 1-800-341-8083 (toll-free) for an agent to assist you with your travel fee reimbursement request.
Point accumulation on grocery and restaurant spending depends on the total gross monthly amount charged to the credit card account, across all categories. Earn 5 points per dollar spent on eligible grocery and restaurant purchases. The 5 points per dollar accumulation is valid for the first $2,500 of gross monthly purchases charged to the account. Beyond this amount, eligible grocery and restaurant spending will earn 2 points per dollar. The calculation of the gross monthly purchase amount is based on monthly billing. A grocery purchase means a purchase made at a merchant whose primary business is selling food, such as a grocery store, delicatessen, supermarket, fruit store, or specialty food store. Meal kit subscriptions and meal delivery services are eligible. Therefore, this definition excludes, among others, retail stores and big-box stores whose primary business is selling non-food items. Some merchants may sell products or services identical or similar to those of eligible merchants, or are separate merchants located on the same premises as eligible merchants, but are classified by Mastercard in different categories. Purchases made from other merchants only earn base reward points. A restaurant purchase means a purchase made at a restaurant, including quick-service restaurants, bars, discotheques, nightclubs, and taverns. To view the full list of Mastercard codes associated with eligible merchants, download the À la carte Rewards Plan^® terms and conditions document.
These protections apply if the purchases or rental are paid for in part with the card before departure, except, if applicable, for out-of-province medical-hospital insurance for which it is not necessary to charge the purchase of an à la carte trip and for baggage delay protection where the full cost of transport must have been charged to the card. All these protections apply to the primary cardholder, their spouse and/or their dependent children when they (spouse and dependent children) travel with the cardholder. Extended warranties apply to most new items purchased with the card, in Canada or abroad, provided the manufacturer’s warranty exists and is valid in Canada. Certain conditions, limitations and restrictions apply. For more information and details regarding your insurance coverage, please consult the insurance certificate linked to your card.
Subject to credit approval by National Bank.
Certain conditions apply. Visit mastercard.ca for more information. See all credit card terms and conditions.
To earn 2 points per dollar spent, you must pay for your gas or electric charging purchases at a gas station or certain big-box stores. Some merchants may sell products or services identical or similar to those of eligible merchants, or are separate merchants located on the same premises as eligible merchants, but are classified by Mastercard in different categories. Purchases made from other merchants only earn base reward points. To view the full list of Mastercard codes associated with eligible merchants, download the À la carte Rewards Plan^® terms and conditions document.
Recurring bill payments are defined as payments made monthly or regularly that are automatically charged by the merchant to your National Bank World Elite Mastercard. Not all merchants offer recurring payments, and not all recurring payments are considered recurring bill payments. Therefore, some payments may not qualify for accelerated reward points.
To earn 2 points per dollar spent, you must pay for your eligible purchases through the À la carte Travel^TM agency section of our À la carte Rewards^TM site.
For example, if you spend $400 monthly on groceries, $200 on gas, $100 on recurring bills and $150 on other purchases, the $850 spent will generate 2,750 points, broken down as follows: 2,000 points for grocery spending (since the total gross monthly amount is $850, which is less than $2,500), 400 points for gas spending, 200 points for recurring bills and 150 points for other purchases.
Insurance up to $1,000 in case of breakage, loss or theft of mobile devices for a maximum period of 2 years following the date of purchase. Subject to purchasing the device with the National Bank World Elite Mastercard or a phone service subscription paid by recurring payments from your National Bank Platinum Mastercard starting September 1, 2022. For all conditions, please consult the insurance certificate linked to your card.

Annual interest rate	$500	$3,000
22.49%	$9.24	$55.45
20.99%	$8.63	$51.76
13.2%	$5.53	$33.16
9.2%	$3.78	$22.68

Annual fee

Primary card$150

Additional card$50

Annual income required

Individual$80,000

Household$150,000

Conversion fees

2.5%

Earning rate

5xRestaurants
5xGroceries
2xTravel
2xBills & recurring payments
2xGas & EV
1xAll spending

Value

1st Year Value$778

2nd Year Value$923

Card benefits

Airport lounge access$400

Travel creditsIncluded

Travel insurance

Travel medical (under 55)Up to $5,000,000 / 60 days

Travel medical (55-64)Up to $5,000,000 / 31 days

Travel medical (65+)Up to $5,000,000 / 15 days

Trip CancellationUp to $2,500

Trip InterruptionUp to $5,000

Delayed BaggageUp to $500

Lost BaggageUp to $1,000

Flight DelayUp to $500

Travel AccidentIncluded

Purchase protection

Purchase ProtectionIncluded

Extended Warranty+2 years

Mobile DeviceUp to $1,000 / 2 years

Auto Rental CollisionUp to $65,000 / 48 days

Our editorial integrity

Our reviews and rankings are based on an objective assessment. Advertisers do not influence our content. We may receive compensation through some links; our analysis and opinions remain independent.