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.