Annual Percentage Rate (APR)
The Annual Percentage Rate, or APR, is the annualized cost of borrowing on a credit card expressed as a percentage. It applies only when you carry a balance past your payment due date — if you pay your statement in full each month, you pay zero interest regardless of the APR. The APR is not the same as the annual fee; it is purely the interest component.
Canadian credit cards typically carry three distinct APRs depending on how funds are used: a purchase rate, a cash advance rate, and a promotional balance transfer rate. The rates are fixed by the issuer and remain the same regardless of the Bank of Canada’s policy rate, unlike variable-rate mortgages.
Quick Facts
| Rate Type | Typical Canadian Range |
|---|---|
| Standard purchase rate | 19.99% |
| Cash advance rate | 21.99% – 22.99% |
| Low-rate card purchase rate | 10.99% – 12.99% |
| Promotional balance transfer | 0% – 3.99% (limited period) |
| Penalty/default rate | Up to 25.99% (some issuers) |
Canadian Context
The 19.99% standard purchase rate has been the industry norm in Canada for decades and is not directly tied to the Bank of Canada’s overnight rate. The US often sees the same convergence around a standard rate, but American cards vary more widely (15%–30%) due to a more competitive and fragmented market. In Canada, low-rate cards (10.99%–12.99%) are a distinct niche product — they rarely offer rewards but save significant interest for those who carry balances. The Financial Consumer Agency of Canada (FCAC) regulates disclosure requirements for APR.
Related Glossary Terms
Information on this page is provided for general educational purposes. Card terms, fees, and benefits change frequently — always verify details directly with the card issuer before applying.