Interest rates are a standard component of credit cards, but have you ever found yourself wishing yours weren’t quite so high? The BMO Preferred Rate MasterCard proves that this dream scenario can, in fact, come true.
Protect yourself from high interest rates by opting for a card with some of the lowest rates on the market.
|You Are Interested If||You rarely pay off your credit card bills in full each month and you’re sick of paying expensive interest fees on that balance.|
|Brief Description||The BMO Preferred Rate MasterCard offers customers a very competitive interest rate in exchange for having no reward system and fewer bonuses than some other cards.|
|Main Requirements||You don’t need much to get this card – just $15,000 a year in income is sufficient to potentially qualify if your credit is decent.|
|Card Type||This is a low-interest credit card with no rewards associated with it.|
Fees and Interest
|Purchase Interest Rate||All purchases are charged 11.9% interest.|
|Cash Advance||Cash advances are also charged interest at a rate of 11.9% each year.|
|Balance Transfer||Even balance transfer charges get to benefit from that 11.9% interest rate.|
|Income Requirements||You can make as little as $15,000 per year and still be approved for this credit card.|
|Household Income Requirements||The BMO Preferred Rate MasterCard does not permit application based on household over individual income.|
|Annual Fee||It costs $20 per year to have this card in your possession.|
|Welcome Bonus||You can start off by paying only 3.99% interest on any balance transfers in the first 9 months (1% transfer fees still apply, however).|
|How To Earn Points||This card doesn’t include a points system, preferring to give users access to lower interest rates instead.|
|Benefits||The BMO Preferred Rate MasterCard comes with the same built-in purchase protection and extended warranties that all this company’s cards provide, but nothing more than that.|
About BMO Preferred Rate MasterCard
Credit cards come with high interest rates that compound and build on expenses over time. This is a well-known fact and a generally accepted risk involved with using them. That’s why the generally recommended practice for credit cards is to pay them off in full at the end of every month if you can, and as soon as you can if not – in other words, you want to avoid carrying a balance if you can help it. If you never reach the end of your interest-fee grace period during each billing cycle, it doesn’t matter what the interest rate on your card is, because you’ll never pay it.
Of course, that adage assumes that everything in your life is predictable and manageable, as well as that your income is high enough and your expenses low enough to sustain regular payments. This isn’t the case for all people; for some, paying the credit card bill has to come second to purchase necessities like food and heat. These peoples’ credit needs are a little different from the rest. The BMO Preferred Rate MasterCard is a card customized for people who find themselves often carrying a balance on their card and paying a lot of money for having done so. It’s available to people with very low incomes, an important feature since this group is the most like to have trouble with large credit debts. This card allows customers to pay just 11.9% interest on any charges they make to their card, whether they’re regular purchases, cash advances or balance transfers. This is only a little more than half of what most of this provider’s cards charge, an incredible discount that can really help to lower the damage of interest fees on large balances that go unpaid for a long time.
It’s important to note that this benefit even carries over to payments with late penalties added onto them, further increasing its value. BMO has a consistent policy of raising the applicable interest rates on all of their cards in cases of 2 months of non-payment in any 12-month period. This policy also applies to the BMO Preferred Rate MasterCard, but the penalty is significantly lower – the rate only rises to 16.90% instead of the 24.99% rate that is applicable to all other cards. For obvious reasons, you do not want to end up in a position where you will be paying this rate, but even if you do have a mishap or two and end up being penalized, you will still be paying noticeably less than you would with another card at the standard rate. This can be another important aspect to consider if you anticipate that you might have this problem somewhere down the line.
In order to see the full extent of the difference the lower rates make, it’s helpful to do some projected calculations. For example, let’s say you anticipate potentially carrying a relatively low balance of $1,000 over the course of a year, paying just $100 a month towards it. With this card’s 11.9% interest rate, you would pay $58.45 in interest before you managed to fully repay the bill. At 19.99%, a more typical interest rate for other BMO cards, you would pay $102.98, or almost double the BMO Preferred Rate MasterCard amount. This discrepancy only grows along with the size of the balance you’re carrying, and many people’s accounts are regularly in the red by several thousands of dollars.
You can see just how easily you’ll be able to benefit from the lowered rates, but is it worth giving up the extra perks and the possibility of rewards? Only you can say for sure, but the answer is almost certainly yes if you are going to be charged any interest at all. The card comes with the most important standard credit card benefits (extra warranty coverage and purchase protection), and everything else that is typically offered (trip insurance, car rental bonuses, etc.) has only niche uses at best. You won’t miss these extras, so they’re safe to give up. As for rewards, while the idea is nice, many people never accumulate enough points for anything substantial or desirable, so the points end up going to waste anyway. Forgoing them in favor of something that will definitely help you right away is just good sense, assuming you’re part of the target market for this card.
The BMO Preferred Rate MasterCard is like few other credit cards you’ll ever have but in a really good way. The excellent rates it offers do not come without sacrifices and do not completely wipe out the impact of interest on your final credit card bills, but users who regularly pay interest fees will certainly notice the difference. While rewards programs are somewhat speculative (you might spend enough to get enough points for what you want before that item disappears from the catalog or increases in price, but then again, you might not), discounted interest rates pay off right away. This, combined with the low income eligibility threshold, makes this card perfect for lower earners who want a credit option that is financially safer for them than most.
BMO (or as you might know it, the Bank of Montreal) is one of the biggest banking corporations in Canada and has been around in one form or another since the 1800’s. They offer an extensive range of credit card options, obviously including this one and a full range of banking services from their hundreds of branches across the country. They helped to pioneer Canada’s financial sector and they still contribute heavily to it now, even having added multiple subsidiaries in other nations to expand into the global market.
What We Think
The BMO Preferred Rate MasterCard is markedly different from most credit cards, and that kind of major divergence never pleases everyone. This card will never get you points that you can use to pay for a trip to Cuba or a new barbecue, no matter how long you have it or how much you use it, and this can prove frustrating to people who have come to expect these extras to come with their credit cards. This is doubly true considering that despite the lower rate, you’ll still be paying a fair chunk of interest each month, and you’ll even be responsible for paying an annual fee on top of it all.
Although all of this might be hard to swallow at first, if you’re the right kind of credit card user, you’ll find that you’ll save more than enough to make up for it with the greatly reduced interest rates this card offers. It’s all a matter of what you need – this is a niche product, but it’s exactly what some people need from a card, whether they realize it or not. If you run the appropriate calculations and discover that the BMO Preferred Rate MasterCard will, in fact, produce a favorable result in your case, we highly recommend that you apply for it.