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This month's significant number: 13 - DFSIN - SFL

This month’s significant number: 13

More specifically, 13 years and 6 months. That’s the length of time it would take you to repay a balance of $5,000 on your credit card by making the minimum payment every month.

September 05, 2024

In Canada, the minimum payment required each month to avoid defaulting on a credit card is determined in different ways by different issuers. It usually represents between 2% and 4% of the balance or $10, whichever is higher. In Quebec, since August 2023 the minimum payment has been set by legislation at 4% of the balance (5% for all newly issued cards), and it will increase progressively each year. The calculation given here is based on a minimum payment of 4% and an interest rate of 19.90%. 

The lower the minimum payment, the longer it will take you to pay off your credit card if you only pay the minimum each month. Another telling example? A balance of just $1,000 would take close to 26 years to repay if you made a minimum payment of 2% every month, and would cost over $3,000 in interest. Paying the equivalent of 4% of the balance each month instead would reduce the repayment period to about 8 years, while reducing your interest cost to a little over $600. 

These calculations persuasively demonstrate the importance of good credit management, starting with the prompt repayment of borrowed money. 

The following sources were used to prepare this article: 

Government of Canada, “Paying off your credit card.” 

Journal de Montréal, “Cartes de crédit: le paiement minimum va passer à 4%, qu’est-ce que ça veut dire?.” 

Office de la protection du consommateur du Québec, “Minimum Payment: Maximum Interest.”