BMO Preferred Rate Mastercard review

What the Preferred Rate Mastercard is for

This card is built for one job: making debt cheaper to carry. It earns no rewards on purchases. Instead, it charges 13.99% on purchases and 15.99% on cash advances, well below the 20.99% to 21.99% purchase rates on BMO rewards cards such as the CashBack World Elite and the Blue Rewards Mastercard.

Here’s what that gap means in practice. If you carry an average balance of $3,000 for a year, interest at 13.99% comes to about $420, compared with about $630 at 20.99%. That’s a simple estimate that ignores compounding, but the roughly $210 difference is more than seven times the card’s $29 fee.

The introductory offer

In place of a welcome bonus, BMO waives the $29 annual fee in the first year and offers a 0.99% introductory interest rate on balance transfers for 9 months.

Moving a $5,000 balance would cost about $37 in interest over those 9 months at 0.99%, compared with about $787 at 20.99%, assuming the balance stays the same. Check whether a transfer fee applies, and plan your payments so the balance is gone, or close to it, before the promotional period ends.

A simple plan is to divide the transferred amount by nine and pay at least that much each month. On a $5,000 transfer, that’s about $556 a month.

Fees, interest and the fine print

After the first year, the annual fee is $29, a little under $2.50 a month. BMO lists a 15.99% rate for cash advances and balance transfers, so a transferred balance still left when the promotion ends is charged less than the 20.99% to 21.99% purchase rates on BMO’s rewards cards.

Purchases in a foreign currency carry a 2.5% fee, so $1,000 spent abroad adds about $25. Even with a low rate, paying more than the minimum each month is what actually clears a balance, and the lower rate means more of each payment goes toward what you owe.

Insurance coverage

The card includes basic protection for things you buy with it. Read the insurance certificate for limits and exclusions.

• Extended warranty insurance
• Purchase security insurance for 90 days

Who it suits, and who should look elsewhere

The Preferred Rate Mastercard suits people who carry a balance from month to month, or who want a lower-rate card in reserve for large purchases they’ll pay off over time. For them, the interest savings matter far more than points or cash back.

If you pay your balance in full every month, the low rate does nothing for you. In that case, a no-fee rewards card would give you something back on the same spending. It can also serve as a backup card for emergencies, since its 15.99% cash advance rate is lower than the 23.99% charged by the BMO CashBack World Elite.

How it compares

The CIBC Select Visa Card also costs $29 a year with a first-year rebate and charges 13.99% on purchases. It applies that same rate to cash advances and balance transfers, and offers 0% on balance transfers for the first 10 months with a 1% transfer fee.

The MBNA True Line Mastercard has no annual fee, a 12.99% purchase rate and 0% promotional interest on balance transfers for 12 months, though a transfer fee applies. Its cash advance rate is 24.99%, much higher than the BMO card’s 15.99%.

Before you apply

The recommended credit score is 690 or higher, and BMO makes the final decision based on your full credit profile. Introductory rates and fee waivers can change, so confirm the current terms on the BMO website before applying.