Credit Card Minimum Payments in Canada — The Real Cost

Paying only the minimum on your credit card is one of the most expensive financial decisions you can make. Here's exactly what it costs.

How Minimum Payments Are Calculated in Canada

Canadian credit card minimum payments are set by each bank but typically follow one of these formulas:

• Percentage method — 2%–3% of your outstanding balance
• Fixed + interest method — $10 + all interest accrued that month
• Flat minimum — A fixed dollar amount (e.g., $25) if your balance is small

The minimum is whichever is greater — usually around $10–$25 for small balances. As your balance decreases, so does the minimum payment, which is exactly the trap: it feels manageable but takes decades to clear.

The Shocking Cost of Minimum Payments Only

Balance	Interest Rate	Min. Payment (est.)	Time to Pay Off	Total Interest Paid
$1,000	19.99%	~$20–$30 declining	~8 years	~$730
$4,265 (avg Canadian)	19.99%	~$85–$130 declining	~20+ years	~$4,900+
$100	19.99%	~$200–$300 declining	~27+ years	~$13,000+

On the average Canadian credit card balance of $4,265 at 19.99%, making only minimum payments would take over 20 years and cost more in interest than the original debt.

Canadian Regulations on Minimum Payments

Since 2022, federal regulations require Canadian credit card statements to show a "minimum payment warning" — informing cardholders how long it will take to pay off the balance making only minimum payments. This disclosure is now mandatory on all credit card statements in Canada.

How Much Should You Pay Each Month?

The answer is simple: pay your full statement balance every month. This results in zero interest charges. If you can't pay in full, pay as much above the minimum as you possibly can. Every extra dollar reduces the principal faster and cuts future interest dramatically.

Even going from $85 minimum to $200/month on a $4,265 balance at 19.99% cuts payoff time from 20+ years to under 2.5 years and saves thousands in interest.

What Happens If You Miss a Minimum Payment?

• Late payment fee: $25–$45 charged immediately.
• Credit score damage: one missed payment drops your score significantly.
• Potential penalty rate: some cards increase your interest rate to 24.99%–26.99%.
• Account flagged: ongoing credit monitoring by Equifax and TransUnion.

Better Alternatives to Minimum-Payment Debt

If you're stuck in a minimum payment cycle, consider: a 0% balance transfer card (MBNA True Line Mastercard offers up to 12 months at 0%), a debt consolidation loan at 8%–15%, or a credit counselling debt management plan. Switching everyday spending to KOHO's prepaid Visa stops new charges from accumulating while you pay off existing debt.