If the Visa bill is not paid in full by the due date, the balance effectively becomes a loan at the prescribed interest rate. Interest on loans to borrowers resident in other countries may be subject to withholding tax imposed by the borrower’s country of residence, in this case, subject to the Canadian/USA tax treaty. Canadian banks are required with a few exceptions to remit a certain percentage of the loan interest to the US government. As a general rule, Canadian banks gross up the interest amounts payable by a U.S. borrower to come to the desired interest rate otherwise chargeable to a Canadian borrower.

It’s a lot of paper works and most U.S. banks probably for economic/business reasons, cannot be bothered. Conversely, most Canadian banks also will not issue credit cards to non resident. Can you imagine the works involved by the bank if a U.S. resident holding a CIBC Aerogold Visa decides to carry a balance and pays some interests? …. Filling out the forms and remitting to CRA, etc. There may also be statutory reporting as to the “domicile” of borrowers by Canadian banks, so much loans to Mexico, Brazil and Argentina, etc. Collection of accurate data will be a nightmare.

Similarly, any interest bearing bank accounts are also subject to non resident withholding tax. For US residents holding Canadian bank accounts, there is a mandatory 10% withholding on interest paid. I surmise that there is a reciprocal arrangement by virtue of the tax treaty compelling the U.S. banks to do the same. Unless the “volume” justifies, the U.S. bank may simply decide not to open an account for Canadian for the foregoing reasons. Not worth the effort.