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What can increase your credit card’s APR?

Pay your balance on time to minimize interest rate increases.

Credit cards’ interest rates van be variable or moved to a different tier by your credit card company. This means if you now pay 20% interest on your purchases, you could pay up to 30% in the future if you’re not careful. On the positive side, there is one situation where you can see your interest rates drop. You should also know that all banks are required to notify you if they intend to increase your rate before they actually do it.

Why might your credit card’s APR increase?

If your card’s interest rate isn’t fixed, there are four reasons it could increase:

  1. Late payments.
    If you have multiple missed payments, most credit card providers will impose a penalty APR, usually up to 30%. Some card providers will reverse it once you keep your payments on time for at least 6 months, but most of them will keep this APR indefinitely. You can always try calling your credit card company once you’ve made a series of on-time payments to see if they’ll reconsider and lower your rate.
  2. Intro APR period ends.
    Credit cards that come with a 0% intro APR period on purchases, balance transfers or both, will get an APR increase once the intro period ends. In most cases, you will lose your 0% APR if you miss even one payment, regardless of whether or not the intro APR period has expired yet.
  3. Change in the prime rate.
    The Bank of Canada (BoC) occasionally makes changes to the prime rate. A change in the BoC rate will only directly affect your credit card’s APR if you have a variable rate credit card, which is uncommon in Canada as most credit cards have fixed rates. But even with a variable rate card, not every rate change will increase your APR. When the BoC makes a rate cut, your credit card APR should decrease, as well.
  4. Your credit score has dropped.
    If your credit score sees a substantial drop in a short period of time, credit card providers may increase your APR to minimize the risk. While this is less common, your credit card agreement may give your card issuer the right to change your APR at their discretion. Read through your agreement carefully to see if your card company has that leeway.

What should I do if my APR increases

If for some reason your APR increases, here’s what you should do:

  • Pay your balance on time. This is the obvious one. If you pay your balance in full before it’s due, you won’t accrue any interest on your purchases. The longer history you have of on-time payments, the more likely your insurer will lower your APR.
  • Build your credit. This one applies if your card issuer increased your APR because of a drop on your credit score. Typically, once you improve your credit score, your card provider should lower your APR.
  • Get a lower APR credit card. If you have outstanding debt and you can’t pay it off with a higher APR, consider applying for a balance transfer credit card. This can help you consolidate your debt and pay it off without paying interest.
  • Negotiate. Call your card provider and ask them to lower your APR. Note, this could work only if you have a good or excellent credit score and if you’ve demonstrated good financial habits.

Compare low-interest credit cards

If you want to make a large purchase on a credit card and pay it off with minimal interest after some months, or if you’re looking to move your debt from a higher interest credit card, look for cards with low intro APR period on purchases, balance transfers or both.

Name Product Purchase Interest Rate Cash Advance Rate Annual Fee Minimum Income Reward
HSBC +Rewards™ Mastercard®
$0 annual fee for the first year ($25 thereafter)
Earn 2 Points for every $1 spent on eligible dining or entertainment purchases.
Get 20,000 Points (up to $100 in value), plus get a 1st year annual fee waiver. Apply by September 27, 2021.
BMO Preferred Rate Mastercard
Take advantage of an introductory balance transfer offer, annual fee waiver in the first year, and low purchase and cash advance interest rates.
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Scotiabank Value Visa Card
Save on interest for 6 months by consolidating your higher-rate balances with the balance transfer offer, and get an on-going 12.99% interest rate on purchases, cash advances and balance transfers.
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by August 31, 2021.
BMO Rewards Business Mastercard
$0 annual fee for the first year ($120 thereafter)
Earn 3 BMO Rewards points for every $1 you spend on gas, office supplies, cell phone bills and internet bills, and earn 1.5 BMO Rewards points for every $1 you spend elsewhere.
Get 50,000 points and the $120 annual fee waived in the first year.
Business Platinum Card from American Express
Earn 1.25 Membership Rewards points for every $1 spent on eligible purchases
Earn a Welcome Bonus of 75,000 Membership Rewards points in your first three months of Cardmembership.
American Express Business Gold Rewards Card
Earn 2 Membership Rewards points for every $1 spent on eligible purchases at select American Express merchant suppliers in Canada (choose 3 suppliers), and earn 1 Membership Reward point for every $1 spent on eligible purchases elsewhere
Earn a Welcome Bonus of 50,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months.
National Bank Syncro Mastercard
8.90% or prime + 4.00%
Enjoy low purchase interest, cash advance and balance transfer rates.

Compare up to 4 providers

Bottom line

Your credit card APR could easily vary depending on your financial circumstances. This means, in some situations, such as changes in the prime rate, expiration of an intro APR period or if you consistently make late payments — your card provider may increase your APR.

To avoid this, look for cards with a fixed interest rates or cards with a low intro APR period on purchases and balance transfers.

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