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On August 1, 2025, minimum credit card payments will be increased to 5%. The purpose of this measure is to limit the risk of overindebtedness. However, you should be aware that making minimum payments is not a medium-term solution. Here’s what you should know.
By making only the minimum payment on your credit card, you’re postponing the debt and you’ll end up paying much more due to high interest rates.
Your credit rating may not drop immediately, but your debt will increase, which will discourage lenders.
To avoid getting bogged down in debt, adopt certain sound financial habits.
Paying off the minimum balance on your credit card gives you the impression that you’re in control of your finances. However, in reality, you end up in a cycle of debt that’s difficult to escape from. Every month, interest accrues on your balance, which increases the total cost of your purchases.
When you make minimum payments on your credit card, you meet your bank’s requirements. You’re not at risk of getting calls from debt collectors and paying the minimum amount is always better than paying nothing at all.
However, since you’re not paying off your full balance, you’ll incur interest. This interest adds up month after month, including on your day-to-day purchases.
If you continue the cycle, your debt will increase and it’ll take a long time to pay it off. Furthermore, lenders are wary of high debt ratios. They could decide to refuse you a loan application, such as a mortgage.
In short, even if making minimum credit card payments doesn’t directly affect your credit rating, it could significantly impact your borrowing capacity.
Let’s use 34-year-old Joanne as an example. She decides to pay for her $5,000 appliances with her credit card, which carries a 19.9% interest rate. If she pays the minimum monthly payments (5%) only, it’ll take her just under 10 years to pay the balance and she’ll have spent close to $7,433 in total.
To find out how much your purchases actually cost when you make minimum payments, use our online tool to calculate the cost of your credit cards.
Minimum credit card payments will be officially increased from 4.5% of the total balance to 5%. This requirement, which is already effective for users who acquired a credit card after 2019, will apply to all Quebecers.
The objective is to raise awareness of indebtedness and encourage accelerated debt repayment to reduce interest costs.
This is the cornerstone. You’ll see where your money is going and you can make adjustments, if necessary. Our online tools can help you.
Avoid impulse buying! If you’re unable to pay off your balance in full, try to pay more than the minimum balance at least. The goal is always the same: pay as little interest as possible.
If you’ve accumulated debts, paying off your credit card debt first is a good idea. Credit cards often carry the highest interest rates.
If your debts are weighing on you and you’re feeling under pressure, speak to one of our Licensed Insolvency Trustees who can help you take stock and find tailored solutions for your situation.
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