Credit cards unlikely to feel impact of rising rates, expert says

As annual inflation in Canada hits its highest point in more than 30 years, interest rates could rise faster and higher, making mortgages and bank loans more expensive.

But consumers are unlikely to feel their pocketbooks tighten further when it comes to interest rates on their credit cards, which shouldn’t be affected by rate hikes.

“There is no direct correlation,” according to Natasha Macmillan, director of day-to-day banking and credit card specialist at, an online website that allows Canadians to find and compare different financial products, including credit cards.

Macmillan says credit card interest rates have generally not kept up with rate hikes or cuts issued by the central bank.

“They generally haven’t seen a lot of swings, especially lately. That’s why we don’t expect any kind of significant change and certainly no correlation with the target interest rate that we’re seeing.

Earlier this month, the Bank of Canada raised its benchmark rate by half a percentage point to one per cent, the biggest hike in more than 30 years, and warned that further rate hikes were ahead. coming. The benchmark rate has remained below 3% since the 2008 financial crisis.

Credit card issuers typically make money in a variety of ways, such as charging transaction fees to businesses and interest to cardholders.

According to a 2019 Research Report published by the Government of Canada.

Since interest rates on reward credit cards are generally set at around 19.99% in Canada, a significant portion of Canadians pay a high amount of interest, the government notes. The cash advance interest rate for credit cards is even higher, ranging from 21.99% to 24.99%, according to There are also low-interest credit cards that only charge around 10 to 12 percent, Macmillan says.

The government notes that credit card interest rates can increase five percent or more if the required minimum monthly installments are not paid by the due date, an increase which may be temporary or permanent.