Canada's criminal interest rate is 35% per annum. It is set by the Criminal Interest Rate Regulations, SOR/2024-114, under section 347 of the Criminal Code, and it applies across the country.
| Item | Value | Source |
|---|---|---|
| Criminal rate of interest (effective annual rate) | 35% per annum | Criminal Code s.347; SOR/2024-114 |
| Instrument that sets the rate | Criminal Interest Rate Regulations, SOR/2024-114 | Department of Justice (Criminal Code s.347) |
| Where it applies | Agreements or arrangements for credit across Canada | Criminal Code s.347 |
Canada's criminal interest rate is 35% per annum. It is set by the Criminal Interest Rate Regulations, SOR/2024-114, under section 347 of the Criminal Code. Crossing that line is not merely a consumer-protection problem; the Criminal Code makes it an offence. This page explains where the rate comes from, what it applies to, how it differs from provincial payday caps, and what to check before you sign a credit agreement.
Where the 35% rate comes from
Section 347 of the Criminal Code makes it an offence to enter into an agreement or arrangement for credit where the effective annual rate of interest exceeds the criminal rate, or to receive interest at a rate above that ceiling. The rate itself is defined in the Criminal Interest Rate Regulations, and the current regulations, SOR/2024-114, set the criminal rate at 35% per annum. Because this is federal criminal law, it applies in every province and territory, but it works alongside provincial consumer-protection and payday-lending rules rather than replacing them.
The effective annual rate is not simply the advertised nominal interest rate. It is calculated in the manner set out in the Criminal Code and the regulations, which can bring certain fees and charges into the calculation. That is why two loans with the same headline rate can have very different effective annual rates once the full cost of borrowing is counted. The authoritative text is published at Criminal Code s.347, and the Financial Consumer Agency of Canada explains borrowing costs more generally on its loans hub.
What the criminal rate applies to
Section 347 is drafted broadly and refers to agreements or arrangements for credit. The regulations create limited exceptions for certain products and for charges that would otherwise be caught, so the provision is not a blanket ban on every fee. In practical terms, the criminal rate is the outer boundary of what a lender may charge, while provincial rules set lower, product-specific ceilings for things such as payday loans.
Because the calculation is technical, the safe approach for a borrower or co-signer is to focus on the total cost of borrowing rather than the headline rate. Ask the lender for the total dollar cost over the term and for the annualized cost of the credit. If those figures seem inconsistent with the disclosed rate, ask the lender to explain the calculation in writing before you sign.
How it differs from provincial payday caps
Provincial payday caps and the federal criminal rate answer different questions. The provincial cap sets the maximum a licensed payday lender may charge for a short-term payday loan in that province. The federal rate sets a general outer limit on the effective annual rate for credit agreements across Canada. A payday loan that complies with a provincial cap may still carry an annualized cost far above 35%, because the provincial payday regime is a specific, authorized framework.
This is why it is misleading to compare a payday-loan fee with a credit-card annual percentage rate as if they were the same measure. They are calculated differently and regulated under different regimes. For consumer credit generally, the criminal rate and the provincial consumer-protection rules together define the boundaries, and the lender's own disclosure tells you the terms you are actually agreeing to.
How to use this information
- Read the credit agreement and locate the disclosed cost of borrowing and the annual rate, if one is stated.
- Ask the lender for the total dollar cost of the credit over the full term, not just the periodic payment.
- Compare that total with what you would pay under a lower-cost product, such as a line of credit or a personal loan, where you qualify.
- If you believe a charge may exceed the criminal rate, do not sign first and sort it out later.
- Keep copies of the agreement and any disclosures, and note the dates.
- If you need guidance on a specific agreement, consult a licensed professional or the appropriate regulator rather than relying on a general summary.
What this means for co-signers
A co-signer should treat the criminal rate as context, not as a comfort. The fact that a loan is below the criminal rate does not make it affordable, and it does not reduce the co-signer's obligation. Before signing, confirm the total cost, the payment schedule, and what happens on default. Common mistakes include focusing on the advertised rate instead of the total cost, assuming a provincial cap automatically protects a co-signer, and signing without reading the default and acceleration clauses.
- Do not assume a compliant loan is a low-cost loan.
- Do not rely on a rate quoted verbally; ask for the disclosure in writing.
- Do not co-sign for an amount you could not repay if the borrower stopped paying.
- Do not ignore renewal or rollover terms, which can increase the total cost.
Because the criminal rate is a ceiling and not a fixed price, most mainstream lenders price well below it. The rule matters most at the margins: for high-cost credit products, for private lending, and for any agreement where fees are bundled into the cost of borrowing. If you are unsure whether a particular charge counts toward the effective annual rate, ask the lender to explain the calculation in writing. Where the amount is significant, or where the terms are complex, it is reasonable to seek independent advice before signing.
It is also worth noting that the criminal rate applies to the agreement itself, not to the people who sign it. A co-signer cannot rely on the criminal rate to escape an obligation that is otherwise lawful, and a co-signer who signs a high-cost loan inherits the same cost structure as the borrower. Reading the disclosure and asking for the total cost of borrowing is the most effective protection available to a co-signer.
Finally, keep in mind that federal and provincial rules can change. The 35% figure is the current criminal rate, but the regulations behind it can be amended, and provincial payday caps move more often. Before you rely on any figure, confirm it against the current text on the Department of Justice website or the relevant provincial regulator. A short check at the source is far cheaper than discovering later that a rate or limit has changed.