Credit Card Payoff Calculator

Credit Card Interest and the Minimum Payment Trap

Credit card interest in Canada is among the highest of any consumer lending product. The standard rate on most major bank cards is 19.99% APR for purchases and 22.99% for cash advances. Retail store cards often charge 25–29.99%. Low-rate cards exist in the 8.99–13.99% range but typically come with annual fees. Interest is charged daily on the average daily balance once the grace period is lost — meaning if you carry any balance past the due date, new purchases begin accruing interest immediately with no interest-free period.

The minimum payment trap is a well-documented problem. There is no single national rule: issuers typically set the minimum at 3% of the outstanding balance or $10, whichever is greater, and Quebec has required at least 5% since August 1, 2025. At these levels most of each payment still goes to interest rather than principal. A $5,000 balance at 19.99% APR paid down with the minimum alone would take about 21 years and cost roughly $6,000 in interest — more than the original balance. At Quebec’s 5% minimum the same balance clears in about 10 years with roughly $2,400 of interest. Since 2010, Canadian credit card statements must show how long it would take to pay off the balance with minimum payments only.

Payoff Timeline: $5,000 Balance at 19.99% APR

If you are carrying credit card debt, consider a balance transfer to a promotional 0% card (typically 6–12 months at 0%, then the standard rate applies). A personal line of credit at 7–10% or a debt consolidation loan can also cut your interest cost significantly. The Financial Consumer Agency of Canada (FCAC) recommends paying at least double the minimum, always paying on time to avoid late fees and credit score damage, and prioritizing the highest-rate card first (the avalanche method). Canadians collectively hold over $100 billion in credit card debt, making disciplined repayment one of the most impactful financial habits you can build.