The Pros and Cons of Low Interest Credit Cards

The BMO Preferred Rate Mastercard stands out as an excellent choice for those looking for a balance transfer credit card with a low interest rate and added benefits. Despite charging an annual fee, the competitive 13.99% interest rate, along with other features, make it a compelling option. 

Pros

• Annual fee rebate: The $29 annual fee is rebated for the first year
• Additional cardholder protection: The Zero Dollar Liability provides protecting against against unauthorized purchases.This card also includes free extended warranty which doubles the manufacturer’s warranty up to one year and purchase protection

Cons

• Higher promotional balance transfer rate: This card has a higher promotional rate for balance transfers compared to other balance transfer credit cards

For those looking to reduce their credit card debt, the MBNA True Line Mastercard comes packed with helpful features. The card has no annual fee and a below-average purchase interest rate of 12.99% on purchases. For anyone trying to work themselves out of debt and rebuild their credit score, the 0% promotional annual interest rate for 12 months provides an excellent head start.

Pros

• Best promotional balance transfer offer on the market: A promotional balance transfer of 0% is available for a full year helping pay down or eliminate credit card debt (note: there is a 3% balance transfer fee)
• Fixed low interest rate: The low interest rate of 12.99% is fixed and won’t change regardless of your credit rating, income, or the bank’s prime lending rate
• Accessibility: No annual fee and no income requirements to qualify making it very accessible

Cons

• Lack of additional benefits: This card does not include insurance or other benefits
• Restrictions for Quebec residents: Offer not available to residents of Quebec

The Scotiabank Value Visa stands out as an excellent balance transfer credit card for students and newcomers to Canada, offering a favourable 0% introductory interest rate on balance transfers for the first 6 months.  With no minimum income requirement and a low 12.99% interest rate, this card is a great option for consolidating debt. However, it’s important to consider that there are no rewards or additional perks with this card. 

Pros

• Annual fee waiver: Waived annual fee if you have a Preferred or Ultimate banking package with Scotiabank 
• Rental car discount: Get a 25% discount on rental cars at participating Avis locations
• Installment payment option: Pay off purchases of $100 or more with no-interest monthly installments as part of the Scotia SelectPay program

Cons

• No rewards or cash back: This card does not offer any rewards or cash back earning potential 
• No additional perks or features

The MBNA Rewards Platinum Plus manages to punch above its weight, offering impressive rewards on everyday spending despite the fact it has no annual fee or any specific income requirements.

The MBNA Points program is also flexible and easy-to-understand, making it a perfect fit for points beginners or anyone who doesn’t want to deal with elaborate rewards charts or maps. The drawbacks: the card doesn’t offer much in the form of perks or travel emergency insurance and comes with rewards caps that can put a ceiling (albeit a mostly negligible one) on your ability to rack up bonus points.

MBNA Rewards Platinum Platinum – Quick review

The Pros

• The MBNA Rewards Platinum Plus has no annual fee.
• It earns up to 4 points per dollar spent (2% in travel rewards) on eligible restaurant, grocery, digital media, membership and household utility purchases during the first 90 days  , and 2 points‡ for every $1 spent on eligible purchases in those categories thereafter – in both cases, these earn rates apply until $10,000 is spent annually in the applicable category.
• You’ll earn at least 1 point per dollar (1% in travel rewards) on all other everyday purchases. In comparison, many other no fee rewards cards start earning rewards from as little 0.5%.
• MBNA points values are easy to calculate. 1 point = 1 cent when redeemed for travel, or 1 point = 1% in travel rewards.
• You can redeem MBNA points from virtually any airline of your choice.
• Aside from travel rewards, MBNA points also offer great value on gift card redemptions (1 point = around 0.8 – 0.9 cents on gift cards).
• The card doesn’t come with any specific income requirements.
• Cardholders will receive mobile device insurance, purchase assurance and extended warranty benefits.
• As a Mastercard, the MBNA Rewards Platinum Plus is accepted virtually everywhere.

The Cons

• There is an annual spend cap on bonus categories. You’ll earn 4x the points eligible restaurant, grocery, digital media, membership and household utility purchases during the first 90 days, and 2 points‡ for every $1 spent on eligible purchases in those categories thereafter – in both cases, these earn rates apply until $10,000 is spent – after which you’ll earn the standard 1 point per dollar.
• You must use MBNA Rewards’ proprietary website when redeeming points, which means you can’t use points to book travel directly from an airline or hotel provider.

Everyday earn rate

The MBNA Rewards Platinum Plus lets you rack up points faster than virtually any other no annual fee travel credit card in Canada.

You’ll earn:

• 4 points per dollar on eligible restaurant, grocery, digital media, membership and household utility purchases during the first 90 day, and 2 points‡ for every $1 spent on eligible purchases in those categories thereafter – in both cases, these earn rates apply until $10,000 is spent annually in the applicable category
• 1 point per dollar on everything else

When considering most rival no fee travel credit cards will earn you the equivalent of 0.5 to 1 point per dollar on everyday purchases, the MBNA Rewards Platinum really manages to stand out.

Here’s a break down how much you can earn on the credit card based on an average monthly spending scenario of $1,500 in the following categories:

There is a small caveat worth calling out, however: the bonus categories have an annual spending cap. You’ll earn 4 points per dollar on the first 90 days on on eligible restaurant, grocery, digital media, membership and household utility purchases. If you spend over $1,000 within a year in a particular category, like say groceries, you’ll earn 1 point per dollar on any grocery purchases from $5,001 and beyond till the end of the year. 

While the annual spending caps are a drawback, there’s some silver lining. 

• For one, the caps are set reasonably high at $10,000 annually, which means they won’t come into effect at all unless you spend an average of over $415 per month on groceries, gas, or dining. In other words, you’ll likely earn double the points on all or the vast majority of your spending in bonus categories. 
• Secondly, even if you do hit the cap, you’ll still continue to earn rewards on bonus categories but just at a slightly lower rate of 1 point per dollar. That’s still a solid rewards rate that manages to out-earn most other no fee travel credit cards in Canada. 
• Finally, the cap resets every year.

MBNA Points redemption 

Points value overview

For travel

MBNA Rewards is first and foremost a travel points program, which means you’ll get the most value out of each MBNA point when redeeming for travel rewards including:

• Flights
• Vacation packages
• Hotel stays
• Car rentals
• Cruises

You’ll get a return of 1 cent per point (the equivalent of 1% cash back in travel savings) when using points for any of those aforementioned travel rewards. You can start redeeming for travel in increments of as little as 100 points, so you won’t have to rack a giant pile of points before you can start putting them to good use. You’ll also have the flexibility to book travel from virtually any airline, and won’t be resurrected to a limited number of partner carriers or worry about seat restrictions, black out dates or elaborate rewards charts.

There is a drawback though. You must use MBNA’s proprietary travel search engine and can’t price match or apply points against purchases you made on your own directly from an airline, hotel, or travel provider.

For gift cards

If you want to use points for rewards other than travel, you can get some pretty solid value when redeeming for gift cards.

On average, you’ll get around 0.8 to 0.9 cents per point on gift cards, which is only slightly less than what you’d typically get out of your points on travel rewards. That’s impressive, especially when considering some other points programs offer a quarter or even half as much value on gift card rewards versus travel redemptions. 

The MBNA Rewards website includes quite a large catalogue of physical gift card and e-gift card options including: Amazon, Walmart, Wayfair, Home Depot, Hudson’s Bay, eBay, Uber, and more.

For cash credits

When using points for cash credits to pay off your credit card balance, you can redeem points in increments of 200 points for $1. That works out to 0.5 cents per point, which is half the value you’d get when using points for travel (1 cent) and about half what you’d get on gift card redemptions (0.8-0.9 cents).

When redeeming points for cash credits, you’ll also need to have at least 10,000 points accumulated.

All things considered, it’s better to use points for travel or gift cards, and if you’re looking for rewards to reduce your balance, a straight-up cash back credit card may be a better option.

For merchandise

The value of your points when redeeming for merchandise can vary considerably, depending on the item in question. Overall though, you’ll usually get around 0.7 cent per point. So if you’re planning on using points for non-travel rewards, it’s probably better to go the gift card route over redeeming for a specific item.

MBNA Rewards’s online merchandise catalogue is quite vast and covers virtually every product line – from electronics and toys to kitchen appliance and jewelry. 

Fees, income requirements, and more

One of the best features of the MBNA Platinum Plus is its low barrier to entry – there are no annual fees and you won’t need to meet a specific income to get approved.

As per usual for a rewards credit card, you won’t owe any interest if you pay off your balance on time and in full every month, but if you do carry a balance from one month to the next, an annual purchase interest rate of 19.99% will kick in. Annual interest rates on cash advances is 24.99% while balance transfers is set at 22.99%, which is about average.

Side perks and insurance

Along with the basic coverage of purchase protection and extended warranties (up to one year) available on most credit card, the MBNA Platinum Plus also comes with purchase assurance. 

With purchase assurance, most items you bought on your credit card will be covered in the event they’re damaged, lost or stolen within 90 days of the transaction date up to a lifetime value of $60,000. Note though, some items are excluded included art, jewellery, consumable goods, and several electronics. 

The card also comes with three other major types of insurance including:

• Common carrier accidental death and dismemberment insurance: up to $1,000,000)
• Trip cancellation insurance / unexpected return home: up to $2,000
• Rental collision/damage waiver insurance: including up to $2,000 in personal effects coverage

The card’s rental car insurance, in particular, stands out for also offering personal effects coverage, which means if your rental car is stolen and some of your personal belongings along with it, you’ll receive some compensation for your belongings.

The one major drawback of the card’s insurance coverage is it doesn’t include any travel medical emergency coverage (e.g. coverage of healthcare bills if you’re sick while abroad), lost or delayed baggage insurance, or trip cancellation insurance. All things considered though, these benefits are rarely offered by other entry-level fee credit cards.

Bottom line

The MBNA Rewards Platinum Plus easily takes the top spot in our rankings as the best no fee travel card in Canada, and is an easy choice if you’re looking for an entry-level rewards card that costs nothing to carry and can help get a seat on a free or discounted flight faster.