What is a good line of credit rate in Canada?

A good unsecured personal line of credit rate in Canada is prime + 1% to prime + 3% (approximately 5.95–7.95% in 2026). Secured lines of credit (backed by your home) offer lower rates of prime + 0.5% to prime + 1%. Your rate depends on your credit score, income, and relationship with the lender.

Is a line of credit better than a personal loan?

A line of credit is better if you need flexible, ongoing access to funds and only want to pay interest on what you use. A personal loan is better for a one-time fixed expense because it has fixed payments, a set repayment timeline, and potentially a lower rate. LOCs require more discipline since the revolving nature can lead to carrying a balance indefinitely.

How do I qualify for a line of credit in Canada?

Most banks require a credit score of 660+ (680+ for the best rates), stable income, a low debt-to-income ratio (under 40%), and clean credit history. Secured LOCs (using home equity) have easier approval since they are backed by collateral, but require sufficient home equity (usually 20%+).

Best Line of Credit Rates in Canada 2026

A personal line of credit is one of the cheapest ways to borrow in Canada, but the rate you get depends almost entirely on your credit score and whether you can offer your home as collateral. The best unsecured rates start around prime + 1% for borrowers with scores above 750, while a home equity line of credit drops rates to prime + 0.5%. Most Canadians don’t realize that LOC rates are negotiable — if you have a competing offer from another bank or credit union, your current lender will often match it.

Best Personal Line of Credit Rates

Unsecured Personal Lines of Credit

Lender	Rate	Minimum Credit Score	Minimum Income	Credit Limit
Desjardins	Prime + 1.0–3.5%	680+	Varies	$5,000–$50,000
National Bank	Prime + 1.0–4.0%	680+	Varies	$5,000–$50,000
Credit unions (avg)	Prime + 1.0–4.0%	660+	Varies	$5,000–$50,000
TD	Prime + 1.5–5.0%	680+	$35,000+	$5,000–$50,000
RBC	Prime + 2.0–5.0%	680+	$35,000+	$5,000–$50,000
BMO	Prime + 2.0–5.5%	680+	$35,000+	$5,000–$50,000
Scotiabank (ScotiaLine)	Prime + 2.0–5.0%	680+	$35,000+	$5,000–$50,000
CIBC	Prime + 2.0–5.5%	680+	$35,000+	$5,000–$50,000
Tangerine	Prime + 1.5–5.0%	700+	Varies	$1,000–$50,000
Simplii	Prime + 2.0–5.0%	680+	Varies	$5,000–$50,000

Prime rate as of March 2026: ~4.95%. Rates are variable and change with the Bank of Canada rate.

Secured Lines of Credit (Home Equity)

Lender	Rate	LTV Maximum	Minimum Equity	Credit Limit
TD (HELOC)	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
RBC Homeline	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
BMO Homeowner ReadiLine	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
Scotiabank STEP	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
CIBC Home Power	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
National Bank	Prime + 0.5–1.0%	65%	35% equity	$10,000–$500,000+
Desjardins	Prime + 0.5–0.7%	65%	35% equity	$10,000–$500,000+
Credit unions	Prime + 0.5–1.0%	65–80%	20–35% equity	$10,000–$250,000+

Rate by Credit Score

Your credit score is the single biggest factor in your LOC rate. The difference between a 760+ score and a 660 score is roughly 4–5 percentage points, which on a $20,000 balance means $800–$1,000 more in annual interest. Before applying, check your credit score for free through Borrowell or Credit Karma and take steps to improve it if you are below 720.

Credit Score	Unsecured LOC Rate	Secured LOC Rate
760+ (excellent)	Prime + 1.0–2.0%	Prime + 0.5%
720–759 (very good)	Prime + 2.0–3.0%	Prime + 0.5–0.7%
680–719 (good)	Prime + 3.0–5.0%	Prime + 0.7–1.0%
660–679 (fair)	Prime + 5.0–7.0%	Prime + 1.0–1.5%
Below 660	Likely declined	May qualify with strong equity

Line of Credit vs Other Borrowing Options

Feature	Unsecured LOC	Secured LOC (HELOC)	Personal Loan	Credit Card
Typical rate	Prime + 1–5%	Prime + 0.5–1%	6.99–12.99% (fixed)	19.99–22.99%
Rate type	Variable	Variable	Fixed or variable	Fixed
Access to funds	Revolving	Revolving	Lump sum	Revolving
Repayment	Interest-only minimum	Interest-only minimum	Fixed monthly	Minimum payment
Collateral	None	Home equity	None	None
Best for	Flexible ongoing needs	Large borrowing, low rate	One-time fixed expense	Short-term convenience

Interest Cost Comparison: $20,000 Borrowed

This table shows why borrowing method matters more than most people think. On $20,000, the annual interest on a HELOC ($1,090) is less than a third of what a credit card charges ($4,198). Even an unsecured LOC at $1,590/year is dramatically cheaper than carrying a credit card balance. If you are currently paying credit card interest, switching to a line of credit or personal loan should be your first priority.

Borrowing Option	Rate	Monthly Interest	Annual Interest Cost
HELOC	5.45%	$91	$1,090
Unsecured LOC	7.95%	$133	$1,590
Personal loan (fixed)	9.99%	$167	$1,998
Credit card	20.99%	$350	$4,198
Payday loan equivalent	390%+	$6,500+	N/A (short-term)

How to Get the Best LOC Rate

Strategy	Potential Impact
Have a credit score of 750+	Access best rate tiers
Bank where you have your mortgage	Loyalty negotiating leverage
Ask for rate matching	Banks will often match competitor offers
Consolidate banking (chequing + savings + mortgage)	Bundle discounts
Opt for a secured LOC if you own a home	~2–4% lower rate
Apply at a credit union	Often 0.5–1% lower than Big 5 banks
Negotiate at renewal/review	Annual rate reviews are an opportunity
Maintain a low utilization ratio	Using less than 30% of limit helps maintain rate

LOC Minimum Payments: The Trap

This is the most important thing to understand about lines of credit: the minimum payment is interest only, which means your balance never decreases. On $20,000 at 7.95%, the interest-only payment is just $133/month — affordable, but you will owe $20,000 forever if that’s all you pay. Set up automatic payments well above the minimum. Even bumping to $400/month cuts your repayment from infinity to 5 years and reduces total interest from infinite to $4,025.

Balance	Interest Rate	Interest-Only Payment	Time to Pay Off (Interest-Only)
$5,000	7.95%	$33/month	Never (balance doesn’t decrease)
$10,000	7.95%	$66/month	Never
$20,000	7.95%	$133/month	Never
$50,000	7.95%	$331/month	Never

Most LOCs only require interest-only payments, meaning you’ll never pay down the balance unless you actively pay more than the minimum. Set up automatic payments above the minimum to pay down principal.

Repayment Schedule: $20,000 at 7.95%

Monthly Payment	Time to Pay Off	Total Interest Paid
$133 (interest only)	Never	Infinite
$250	10 years, 2 months	$10,408
$400	5 years	$4,025
$600	3 years	$2,558
$1,000	1 year, 9 months	$1,516

When to Use a Line of Credit

Good Uses	Bad Uses
Emergency fund backup	Everyday spending
Home renovations (HELOC)	Vacations
Debt consolidation (lower rate)	Keeping up a lifestyle you can’t afford
Bridge financing (short-term)	Investing (unless Smith Manoeuvre strategy)
Self-employed income smoothing	Paying minimum bills on other debts
Education costs	Impulse purchases

The Bottom Line

The cheapest line of credit rates go to borrowers with excellent credit who bank with credit unions or negotiate with their primary lender. If you own a home, a HELOC will always beat an unsecured LOC by 2–4 percentage points. Whichever type you choose, commit to paying more than the interest-only minimum — otherwise you are renting money indefinitely rather than repaying it.